The Three Steps Of GAAR

Please see Vern Krishna's latest article for the Taxnet Pro: Tax Disputes & Resolution Centre titled, "The Three Steps of GAAR" where he discusses the general anti-avoidance rule as a statutory commercial commercial purpose test. There are two types of tax avoidance; tax mitigation and "abusive" tax avoidance. Parliament enacted GAAR to combat "abusive" tax avoidance. Tax mitigation uses the Westminster principle which allows taxpayers to mitigate their taxes by arranging their affairs in any lawful manner. The GAAR is a statutory commercial purpose test that looks at all of the steps of a transaction or series of transactions to determine whether the arrangement "abuses" the Act or is within the policy of the statute.