What is the impact of a party's tax structure on the transfer of pellets from one party to the other?

Canada (Federal), Canada

The following excerpt is from Wabush Iron Company Limited v. The Queen, 2009 TCC 239 (CanLII):

The parties were free to structure their affairs as they wished and their choice with respect to the nature of their relationship insofar as the transfer of the pellets is concerned must determine the tax consequences of those transactions to each party. (Friedberg v. Canada [1991] F.C.J. No. 1255)

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