It’s frustrating for clients when I tell them that about the “series of transactions” concept as it relates to related party butterflies. I tell them there’s no bright line test for what constitutes a series so that there is always some uncertainty about what it will mean in any particular case. The issue is not academic, however. In 3295036 Canada Inc. v Agence du revenu du Québec, 2020 QCCA 1435, the taxpayer company purchased shares in 1996 under a Quebec shuffle, sold them in 2000 and deducted the resulting capital loss in 2007 and 2008. ARQ’s reassessments were upheld in part because the acquisition of the shares in 1996 was treated as part of the same series of transactions that included the sale in 2000.
