The taxpayer, her cousin (“McAllister”) and her father held 40%, 40% and 20% of the common shares of Brown’s Paving Ltd. (“BPL”), respectively, and her father also had voting control through special voting shares (representing over 90% of the voting rights). The taxpayer sold her shares of BPL to the personal holding company of McAllister.
Graham J found that BPL was not connected to Corco immediately after the sale, as required by s. 84.1(1). It was conceded not to be connected under s. 186(1)(b) (Corco held under 10% of the voting rights) and Corco did not control BPL pursuant to s. 186(2) given that there was no evidence that Corco did not deal at arm’s length with the person (the appellant’s father) who held over 90% of the voting rights over the BPL shares.