In order for Brother to avoid the application of s. 84.1 to his sale of half the shares of Opco to his sister’s corporation (Sister-Holdco), he first transfers those shares on a s. 85(1) rollover basis to a Newco formed by him (Brother-Portfolioco), which then sells the shares to Sister-Holdco, and claims the capital gains reserve because most of the sales proceeds are deferred.
CRA indicated that it would not apply s. 245(2) because of the specific creation of Brother-Portfolioco to avoid s. 84.1.