The taxpayer was incorporated by a non-resident individual carrying on a proprietorship. It then acquired assets of the proprietorship (comprising cash and accounts receivable) for a total of $118,342 and assumed accounts payable of $118,342 (for a difference of $63,015). The Minister assessed the taxpayer for failure to remit Part XIII tax under s. 215(1) on the basis that the proprietor was deemed to receive a dividend 0f $63,015 (perhaps under ss. 15(1) and 214(3)(a), although Angers J referred instead to s. 212.2).
The taxpayer did not establish that the $63,015 difference corresponded to a transfer of goodwill. Angers J. noted that there was "no information concerning a client's list or regarding reputation, location, or brand loyalty" (para. 19). Whatever goodwill existed was personal goodwill towards the proprietor rather than commercial goodwill towards the proprietorship, and therefore was not transferable. He then stated (at para. 21):
[T]he question to ask to determine whether goodwill is personal is this: if the person withdraws from the business will any goodwill remain?