In order to facilitate the disposition of shares of departing employees who had purchased their shares under an employee share ownership plan (ESOP), Opco forms and injects funds into a new company (Buyco), which uses those funds to purchase the employee’s Opco shares. In finding that there generally would be a resulting deemed dividend under s. 84.1, CRA stated:
[G]iven the degree of accommodation provided by Buyco to the departing employees and the parties' lack of separate interests, the better view is that the employees and Buyco are generally not dealing at arm's length. This … is consistent with … 2007-0243171C6, 2002-0166655 and 2004-0103061E5 … Petro-Canada and … RMM … .