All the voting shares of a corporation ("Nortex") which manufactured resin-coated wood panels, were acquired by a subsidiary of a predecessor of the taxpayer ("2432"). Nortex was then wound-up into 2432, and 2432 amalgamated with the predecessor of the taxpayer.
Nortex's former business of manufacturing fibreglass panels for sale to 2432 which used the panels in the manufacture of boxes for trailers and semi-trailers did not satisfy the test in s. 111(5)(a)(ii) given that there was no evidence that income derived from the sale or development of the panels made up substantially all the income attributable to the 2432 business. In addition, the Court did "not see how property which loses its identity when incorporated into an end product can be described as property similar to the end product" (p. 6608).