The taxpayer (a Canadian subsidiary of a U.S. corporation ("Gillette Boston")) contributed a 9.9% interest in a French partnership that was 90% owned by Gillette Boston, to a French subsidiary ("Oral B France") in consideration for shares. The partnership repurchased the partnership interest held by Oral B France in exchange for a note, Oral B France repurchased the shares in its capital held by the taxpayer in exchange for an assignment of the note, and the note was converted into a loan with the loan not being repaid until almost five years later.
Rip T.C.J. found that s. 214(3)(a) did not apply to deem there to be a payment in respect of the loan owing to the taxpayer because s. 214(3)(a) did not apply to amounts owing by a partnership (stating at para. 43 that "a partnership is clearly disinguished from a person ... .".