Seeking to protect herself from being sued by her brother, the taxpayer transferred title to all her real properties for no consideration to corporations under her majority control. She reported rental and business income and expenses from these properties while her accountant did the same in the corporations' returns. The Minister's reassessment included in the taxpayer's income a taxable capital gain from her transfers to the corporations, and gross negligence penalties.
Hogan J. found that the taxpayer had retained beneficial ownership of the properties, and that the corporations held the properties under an implied agency agreement. Following the transfer, the taxpayer continued to operate the business properties in a personal capacity. All invoices for repairs and renovations, and all rent cheques were addressed to her personally, and all income and expenses went into or came from her personal bank accounts. She also held the mortgage obligations in 2003 and 2004. She transferred the mortgages to one of the corporations in 2005 but became a guarantor. The corporations held themselves out as owning the property in limited instances, but in totality the taxpayer's and corporations' conduct supported finding an agency relationship.