Description
With the appearance of the Supreme Court decision in Canada Trustco Mortgage Co. v. The Queen, 2005 DTC 5523, the rules for the application of the General Anti-Avoidance Rule (“GAAR”) were clarified, and the courts have subsequently treated the law relating to these rules as well settled. For GAAR to apply there must be: (a) a tax benefit; (b) an avoidance transaction having no other bona fide purpose than the obtaining of a tax benefit; and (c) abusive tax avoidance which is inconsistent with the object, spirit, or purpose of the provisions being relied upon by the taxpayer to justify the claiming of the tax benefit. While these rules are clear enough, the fact situations which taxpayers present to the Minister are what make any GAAR analysis really entertaining. Three recent cases demonstrate this.