Carter v. R., 99 DTC 585, [1999] 2 CTC 2553 (TCC) -- summary under Agency

In order to implement an income splitting strategy, the taxpayer opened up trading accounts with brokerage firms which were guaranteed by his wife acting on his instructions; his wife, following his instructions, opened up brokerage accounts at the same firms which he guaranteed; and a family corporation opened up accounts with the brokerage firm which accounts were guaranteed by him and her. A hedging strategy then was implemented under which short positions taken in common shares in one account would have a corresponding long position (e.g., through the purchase of warrants and treasury bills) in another account. Teskey TCJ. found that the taxpayer's wife, whose only action was to open up the accounts in her name and to guarantee the other accounts, and who did so on instructions from the taxpayer, was the taxpayer's agent, as was the corporation, so that losses purportedly realized by the taxpayer were offset by gains in other accounts.