Précis: Pangea entered into a letter agreement concerning the sale of shares of Public Mobile Holdings Inc. and received $3,000,000 from Thomvest Seed Capital Inc. (another shareholder of Public Mobile Holdings Inc.):
 In 2013, Telus Communications Inc. offered to purchase all the shares of Public Mobile Holdings Inc. At the time, the shares were owned by three shareholders, one of which was Pangaea. Pursuant to a unanimous shareholders’ agreement, Pangaea had a veto right such that the other shareholders could not sell their shares without Pangaea’s consent.
 Pangaea made it clear that it was not willing to sell at the price offered. In order to induce Pangaea to accept the offer, another shareholder, Thomvest Seed Capital Inc., provided a payment to Pangaea pursuant to a letter agreement. Under the agreement, Thomvest paid $3,000,000 to Pangaea in return for Pangaea’s agreement to execute a proposed share purchase agreement with Telus. In the share purchase agreement, the three shareholders of Public Mobile would each agree to sell its shares to Telus. Shortly after the letter agreement with Thomvest was signed, the share purchase agreement was executed.
 Thomvest withheld Part XIII tax on the $3,000,000 payment to Pangaea. Pangaea sought a refund of the tax from the Minister of National Revenue which was denied. The Minister also issued an assessment of the tax to Pangaea pursuant to subsection 227(7) of the Act. Pangaea appealed from this assessment to the Tax Court.
Pangea lost in the Tax Court and appealed to the Federal Court of Appeal. The sole question for the Court of Appeal was whether the $3,000,000 was paid in respect of a restrictive covenant. The Court of Appeal concluded that it was and dismissed the appeal with costs fixed in the amount of $1,500 inclusive of disbursements.
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