In order to make promissory notes that he had donated to a charitable foundation cease to be non-qualifying securities, the taxpayer arranged for the Foundation to sell those promissory notes to a corporation ("Sweet") owned as to 90% by his nephew, with Sweet issuing notes with identical terms to the Foundation as consideration for the purchase.
In rejecting a submission of the Crown that the "non-qualifying security" provisions of the charitable gift rules were intended to prevent donors from claiming a charitable tax credit for the value of the gift when they still retain control of the funds from which the obligation would be satisfied (which was the case on the facts in this case), the Court noted (at para. 58) that nothing in the text of the provisions supported this purpose, and that the associated Budget statements instead referred only to loan-back situations, which was not the case in the transactions under consideration before the Court.