Case information

Taxation — Income tax — Assessment — General anti-avoidance rule — Must a “series of transactions or events” be found on the facts of each case or may a series be constructed from tax consequences in isolation, without regard to the supporting transactions or events from which they arise?

Case summaries are prepared by the Office of the Registrar of the Supreme Court of Canada (Law Branch). Please note that summaries are not provided to the Judges of the Court. They are placed on the Court file and website for information purposes only.

Through a series of transactions, an insolvent mining company was reorganized and re-named Madison Pacific Properties Inc. It became a shell but for losses. Madison Venture Corporation and Vanac Development Corp. acquired all non-voting shares and under half of its voting shares. Madison Pacific Properties Inc. carried on a new real estate business. It used capital loss carry-forwards and non-capital losses to reduce income and capital gains reported in income tax returns, including in 2009, 2011 and 2013. The Minister of National Revenue reassessed those three years, applied the general anti-avoidance rule, and disallowed the deductions. The Tax Court of Canada and the Federal Court of Appeal dismissed appeals.