In a January 26, 2017 Tax Court of Canada case (101139810 Saskatchewan Ltd. vs. H.M.Q., 2014-2389(IT)G) that the application of Subsection 55(2) in their case would result in double taxation and, therefore, contradict the principle of fairness.
The Court responded “To find that Subsection 55(2) should not apply on the basis of fairness would be to offend Parliament’s express legislative intention. Parliament has clearly provided for this result, presumably to limit the potential for tax avoidance through the use of tax planning techniques.”
For further information see Video Tax News Monthly Tax Update Newsletter, Issue No. 428