Mr Ken Jiang

Ken Jiang


Corporate Tax

Non-arm's length and Section 84.1 of Income Tax Act
Canada | 18 November 2016

The anti-surplus stripping rule in Section 84.1 of the Income Tax Act can apply where an individual taxpayer transfers shares of a corporation to another corporation with which the taxpayer does not deal at arm's length. In a recent case, two taxpayers attempted to use their capital gains exemptions to access corporate surplus by selling their shares to an arm's-length party. Interestingly, only one of the taxpayers succeeded in court.