On January 13, 1999, a newly-incorporated corporation ("New Supervac") was leased the assets of an unrelated corporation ("Old Supervac"), coupled with an option to acquire those assets and the right to also acquire all the shares of Old Supervac. The business was restored to profitability in short order, and New Supervac then acquired the assets on October 7, 1999, acquired the shares of Old Supervac (now, an empty shell) on November 17, 1999 and amalgamated with it on January 1, 2001. The amalgamated New Supervac paid a capital dividend in the fall of 2004 to one of the taxpayers (with such capital dividend being further distributed), and the Minister applied s. 83(2.1) to the capital dividends.
In response to the taxpayers' submission that too much time had passed between the different transactions for them to be one series of transactions, Trudel JA noted (at paras. 17-19) that Copthorne indicated that sometimes the elapsed time would be a relevant factor in this determination, and that Boyle J had made a finding of fact that, at the time the decision was taken to pay a capital dividend, New Supervac had taken into consideration the capital dividend account that had been acquired with the Old Supervac shares.