Jones v. The Queen, 96 DTC 6016 (FCA)

The sale of a property by a corporation ("Ascot") owned by the taxpayer to the taxpayer's father for less than the property's fair market value did not result in the application of s. 56(2) to the taxpayer given that he genuinely believed that the property was sold at fair market value. The word "desire" in s. 56(2) established a subjective test of what it was that the taxpayer wanted to achieve.

Before finding that s. 56(2) did not apply to the taxpayer, Décary J.A. stated (at p. 6019):

The fact that the application of subsection 56(2) may lead to harsh consequences is an additional reason for the Court, when it assesses the evidence in a case where the motive is not obvious, not to infer to hastily that a taxpayer had evinced a desire such as to attract the application of the provision.