Yes, the law was technically followed.   But the cra could not care less about the technicality of the law being followed.  They care more about the spirit of the law being followed.  Was it done simply to avoid paying taxes?  The answer seems to be yes.  Ask Conrad black who was made to pay dearly for similar stick handling of his affairs with the sole purpose of avoiding to pay taxes to understand the consequences of flouting the spirit of the law.