Canada v. Gillette Canada Inc., 2003 DTC 5078, 2003 FCA 22 -- summary under Subsection 15(2)

Some of the shares held by the taxpayer in its French subsidiary were purchased for cancellation by the subsidiary in consideration for the assignment to the taxpayer of a note (denominated in French francs) owing to the subsidiary by a French partnership whose principal partner was the U.S. parent of the taxpayer. A month later, the note was converted into indebtedness denominated in Canadian dollars. The Court rejected a submission that this conversion gave rise to a loan so that ss.15(2) and 214(3)(a) applied. No debtor-creditor relationship existed and the assignment did not involve the discharge of any obligation by the partnership -- the partnership merely happened to be the maker of the note which was assigned in payment; and the Canadian-dollar note was issued and accepted as replacement for the original note in circumstances where the terms remained the same except for the currency of payment.