The taxpayer held units of a listed mutual fund trust (Fording Canadian Coal Trust), which disposed of all its assets to Teck Cominco Ltd. in a non-rollover transaction, thereby realizing a fully taxable gain. It distributed all of the sales proceeds (cash and shares of Teck Cominco) to its unitholders including the taxpayer, and immediately thereafter redeemed its units in their hands for a nominal amount.
Hogan J. found that the distribution to the taxpayer gave rise to an income inclusion to the taxpayer under s. 104(13). The taxpayer argued that the transaction was substantively similar to a sale of his shares resulting in a capital gain. However, it is not generally open to the courts to disregard the form of a transaction, especially where the form of the transaction is specifically chosen to effect specific tax consequences.