The taxpayer's common law husband transferred significant blocks of shares of a TSXV-listed public company, of which he was CEO, to the taxpayer at times at which he owed over $1.4 million in income taxes. D'Arcy J. accepted the Minister's valuation of the transferred shares, so that the taxpayer's appeal of the Minister's assessment under s. 160 was dismissed.
The report of the taxpayer's purported expert witness, that a substantial "blockage discount" should be applied to the share valuation, was rejected, as the witness was a friend and de facto advocate and was experienced in investor relations rather than valuation. Conversely, the report of the Minister's expert was accepted.
In such report:
- The fair market value of a share block on a particular day was based on the five-day VWAP immediately preceding that day (para. 100).
- To that value discounts in the range of 1.3% to 3.6% were applied to reflect that it would take between 16 and 44 days to sell each block (para 101).