Harquail v. The Queen, 99 DTC 1318 (TCC) -- summary under Start-Up and Liquidation Costs

Whether shares sold by the taxpayer qualified as qualified small business corporation shares turned on whether a subsidiary was engaged in an active business at the relevant times. The subsidiary had rights to a waterfall site that could be developed for the production of electricity. Although various activities, such as negotiations, took place during the relevant period, Garon T.C.J. found that the subsidiary had not actually started to carry on business given that in order for a decision to be made to proceed with the proposed venture, it was necessary first to obtain the agreement of Hydro-Quebec to purchase electricity at an acceptable price, which had not yet occurred.