The author asks whether Agence du revenu du Québec c. Custeau, 2020 QCCA 1496, aff’g 2018 QCCQ 5692 (discussed here) reverses a trend that gave an expanded meaning to the phrase “series of transactions” in subsection 248(10) of the Income Tax Act (Canada). The author identifies Copthorne Holdings Ltd. v R, 2011 SCC 63, as the start of a trend that continued with Groupe Honco Inc. v R, 2013 FCA 128, 3295036 Canada Inc. c. Agence du revenu du Québec, 2020 QCCA 1435. According to the author, the three key conclusions from Copthorne about a series are as follows:
- Transactions do not have to be preordained to be part of a series; rather, they must have been completed “in relation to” or “because of” the series. Although a “strong nexus” is not required, there must be more than a “mere possibility” or a connection with an “extreme degree of remoteness” (paragraphs 43 and 47).
- The length of time between the series and the related transaction may be a relevant consideration in some cases (paragraph 47).
- A transaction does not have to be completed in contemplation of a subsequent series in order to be connected thereto. A transaction may be connected both prospectively and retrospectively to a series (paragraphs 54 and 56).
Dominic Bédard-Lapointe “‘Series of Transactions’: Has Its Expansion Halted?” Canadian Tax Focus 11:2 (May 2021)