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ARTICLE · 13 APRIL 2023

Budget 2023: An Expanded General Anti-Avoidance Rule Is On The Horizon

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The Income Tax Act (Canada) (the "Tax Act") contains a General Anti-Avoidance Rule (the "GAAR") that disallows tax benefits arising from certain tax-motivated transactions where the Federal Government...

CanadaTax
Michael Friedman
Michael Friedman
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The Income Tax Act (Canada) (the "Tax Act") contains a General Anti-Avoidance Rule (the "GAAR") that disallows tax benefits arising from certain tax-motivated transactions where the Federal Government (the "Government") can establish that the transactions represent a misuse or abuse of the provisions of the Tax Act (i.e., the transactions result in "abusive tax avoidance").

When applying the GAAR, the Supreme Court of Canada has held that the burden rests with the Government to establish that a particular transaction or series of transactions gives rise to "abusive tax avoidance". The Supreme Court has sought to carefully set out the parameters of what constitutes "abusive tax avoidance". The Supreme Court has held:

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The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

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