In Atlantic Packaging Products Ltd. v R, 2018 TCC 183, the taxpayer sold one of its divisions (the “Tissue Division”) to an arm’s length purchaser. In connection with the sale, it sold 68% of the assets of the division to a subsidiary for Common Shares. The taxpayer sold the remaining assets of the division and the Common Shares of the subsidiary to the purchaser. The CRA reassessed on the basis that s 54.2 of the Income Tax Act did not apply to the sale of the Common Shares and that the sale was on income account. The Tax Court upheld the reassessment.
Category: 54.2
