The taxpayer was a manager of a corporation, which held real estate. He arranged to sell the property to a corporation ("Newco") that was owned equally by a numbered corporation that he wholly owned and a third party purchaser. The $1.8 million transfer price, funded entirely by the third party, represented only 50% of the property's value. The taxpayer was convicted of fraud for the transaction.
V.A. Miller J. found that the transfer of the property to Newco resulted in the inclusion in the taxpayer's income of half the value of the property, as the transfer had been made pursuant to the taxpayer's directions. Half of the value of the property was for the benefit of the taxpayer's numbered corporation, and that amount would have been included in income pursuant to s. 15(1) if it had been received by the taxpayer directly.
However, the Minister's reassessment was statue-barred.