Law360 Canada (May 26, 2023, 12:52 PM EDT) -- Appeal by Deans Knight Income Corporation (Deans Knight) from a decision of the Federal Court of Appeal which overturned the Tax Court’s decision allowing Deans Knight’s deductions of unused non-capital losses and other deductions. Deans Knight was a struggling Canadian public corporation that had approximately $90 million of unused non-capital losses and other deductions (collectively, “Tax Attributes”). It sought to monetize the value of these Tax Attributes and entered into an agreement with Matco Capital Ltd. (Matco), a venture capital company. A complex arrangement was devised and, from 2009 to 2012, Deans Knight deducted a majority of its Tax Attributes to reduce its tax liability. However, the Minister of National Revenue reassessed and denied these deductions. Deans Knight successfully appealed to the Tax Court. The Crown appealed. The Federal Court of Appeal set aside the Tax Court judgment concluding the transactions were abusive and the general anti‑avoidance rule (GAAR) applied to deny the tax benefits. Deans Knight appealed. It submitted that where Parliament had legislated with precision, as in the present case, where loss carryovers were denied in specific instances, the GAAR was not meant to play a role. It also argued the Federal Court of Appeal had substituted Parliament’s de jure control test with an ambiguous de facto control test. The main issue before the Court was whether the result of the particular series of transactions at issue was inconsistent with the rationale underlying s. 111(5) of the Income Tax Act (Act)....