Indema Ltd. v. The Queen, 92 DTC 6244, [1992] 1 CTC 309 (FCTD) -- summary under Investment Business

The taxpayer was incorporated in 1972 in order to act as a distributor, but four years later its objects were extended and in 1978 it agreed to provide management and administrative services to two connected companies and in the taxation years in question it derived over 97% of its gross income as fees from those corporations. Jerome A.C.J. found that the taxpayer was not carrying on a "non-qualifying business" for purposes of former s. 125(6)(f), i.e., a "business the principal purpose of which is to provide managerial, administrative, financial, maintenance or other similar services ..." to connected businesses given that it was brought into existence to fulfill a genuine business purpose unrelated to the current dispute, it continued to enjoy distributor status in the taxation years under dispute and it fulfilled an objective of obtaining efficiency from a financial and accounting point of view. Accordingly, there are other sound business purposes, some predating and some entirely independent, of those described in s. 125(6)(f).