Gabco Ltd. v. MNR, 68 DTC 5210, [1968] CTC 313 (Ex Ct) -- summary under Section 67

By dwpv, 28 November, 2015

A successful family-owned construction company followed a policy of paying bonuses to its employees in proportion to their shareholdings, which in turn were issued to them in proportion to their perceived contribution to profitability. The president and largest shareholder of the company hired his younger brother, who was 19 years old and had a dismal academic record, to act as his right-hand man. In accordance with the company's remuneration policy, the younger brother received bonuses and other remuneration which ranked second only to that received by the president. Before finding, in light of evidence that the two brothers worked together very well as a team and that the younger brother made a valuable contribution to the business, that the amount of remuneration paid to him was not unreasonable, Cattanach J. stated (p. 5216) that:

"It is not a question of the Minister or this Court substituting its judgment for what is a reasonable amount to pay, but rather a case of the Minister or the Court coming to the conclusion that no reasonable businessman would have contracted to pay such an amount having only the business consideration of the appellant in mind."

Topics and taglines
Tagline
"unreasonable" if no reasonable business would have paid it
d7 import status
Drupal 7 entity type
Node
Drupal 7 entity ID
338584
Extra import data
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