Canada v. Olsen, 2002 DTC 6770, 2002 FCA 3 -- summary under Subsection 84.1(1)

The taxpayer transferred shares of a corporation ("Leader") to corporations controlled by the taxpayer's children and spouses in consideration for promissory notes. Noël J.A. held that, as s. 186(4) provided that a payor corporation is connected with a particular corporation for purposes of Part IV when the former is controlled by the latter, the term "control" could only have the meaning assigned to it by subsection 186(2). Therefore, it followed that the reference to s. 186(4) in s. 84.1(1) included a reference to the notion of control as defined in s. 186(2), with the result that the taxpayer was deemed to receive a dividend based on the fair market value of the promissory notes received by him. (A submission of the Crown that the deemed dividend should be calculated instead on the basis of the fair market value of the transferred shares was rejected. S.84.1(1)(b), which like s. 69(1)(b), only applied where the parties did not deal at arm's length, provided for its own fair market value computation.)