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The Supreme Court of Canada made a decision in  on November 26, 2021.

In 2011, two American firms founded an American company for the purpose of acquiring and developing unconventional oil and natural gas properties. Alta Energy Partners Canada Ltd. (“Alta Canada”), a wholly owned Canadian subsidiary of that company, was incorporated in order to carry on that business. A restructuring of Alta Canada was undertaken in 2012. As part of the restructuring, Alta Energy Luxembourg S.A.R.L. (“Alta Luxembourg”) was incorporated under the laws of Luxembourg and its shares were issued to a new Canadian partnership. On the same day, Alta Luxembourg purchased all of the shares of Alta Canada. In 2013, it sold those shares, realizing a capital gain in excess of $380 million. Payment for the shares was organized so that Alta Luxembourg did not receive any of the sale proceeds. Following the sale, Alta Luxembourg did not conduct any other business or hold any other investments.

The capital gain was reported to the Luxembourg tax authorities and was subject to full taxation under Luxembourg’s domestic laws. In its Canadian tax return for 2013, Alta Luxembourg claimed an exemption from Canadian tax on the basis that the gain was not included in its “taxable income earned in Canada” under (b) of the &�Բ�����;(“”) because the shares were “treaty‑protected property” under art. 13(4) and (5) of the Convention between the Government of Canada and the Government of the Grand Duchy of Luxembourg for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and on Capital&�Բ�����;(“Treaty”). Article 13(4) of the Treaty creates an exemption for residents of Luxembourg from Canadian tax arising from a capital gain on the alienation of shares the value of which is derived principally from immovable property situated in Canada and in which the business of the company was carried on.

The Minister denied the treaty exemption. Alta Luxembourg appealed to the Tax Court of Canada. The Minister argued that the business property exemption in art. 13(4) of the Treaty did not apply and, in the alternative, if the shares did qualify as treaty‑protected property, that the general anti‑avoidance rule (“GAAR”) in  of the  should apply. The Tax Court found that the shares were treaty‑protected property. With respect to the GAAR, the parties agreed that the restructuring was an “avoidance transaction” as defined in  of the  that resulted in a tax benefit. The Tax Court held that the avoidance transaction did not result in a misuse or abuse of the provisions of the  or the Treaty. The Federal Court of Appeal dismissed the Minister’s appeal, which raised only the issue of whether the GAAR applied.

Professor Brown and Joseph Bogle's article "" from the Dalhousie Law Journal was cited in the decision, which considers how the Multilateral Convention (MLI) will impact access to treaty benefits in Canada by applying the new MLI measures to treaty shopping cases previously challenged under the GAAR.