On April, 23rd, 2014, Canada's Federal Court of Appeal released a decision on the application of Section 95(6)(b) of Canada's Income Tax Act. Under Section 95(6)(b), the acquisition or disposal of shares in a foreign affiliate can be deemed to have not taken place if the alleged purpose of the acquisition or disposal is to avoid, reduce, or defer tax payments.
In practice, the Canadian tax authorities have made use of the rule whenever the acquisition or disposal of foreign affiliate shares pro…