Stubart Investments Ltd. v. The Queen

Holding

Bona fide transactions undertaken for genuine business reasons will generally be respected for tax purposes, even where tax considerations also motivated the structure.

Facts

Stubart transferred a profitable business to a related loss company in order to use the losses against the business profits.

Reasoning

Justice Estey developed a principled approach to statutory interpretation in Canadian tax law that gave appropriate weight to bona fide commercial transactions even when tax considerations played a role. The decision is foundational for Canadian GAAR analysis.