11 October 1996 APFF Roundtable, 7M12910 - APFF ROUND TABLE -- summary under Subsection 245(4)

Where $500,000 worth of common shares of Opco are sold by its individual shareholder to a corporate purchaser, following which the purchased shares are purchased for cancellation by Opco for $500,000 and the purchaser then purchases the remaining net assets of Opco from Opco, RC will consider that the economic substance of the transaction is that the purchaser is buying assets rather than shares, and that there is a series of transactions one of the effects of which is to affect a significant reduction in the assets of Opco in order to avoid tax that would have been payable on distribution of its property to the individual shareholder. Accordingly, GAAR will apply on the basis that former s. 247(1) would have applied to the transactions.