Pooja Mihailovich, Joanne Vandale
Feb 15, 2023
With the federal government considering changes to the general anti-avoidance rule (GAAR), the tax landscape in Canada may be on the brink of a new era, suggest Pooja Mihailovich and Joanne Vandale in their article published by Bloomberg Tax.
The government released a consultation paper last summer outlining several potential changes aimed at making the GAAR more robust. Although the paper identifies ways to expand the GAAR, it does not articulate why the government believes the law falls short of meeting its objective of targeting transactions that cause abusive tax avoidance. Rather, it simply proceeds on the basis that changes are necessary to modernize the GAAR.
A number of suggested revisions could be detrimental to routine tax planning. One suggested change is to have taxpayers rather than the tax authority bear the burden of establishing that the disputed transactions are consistent with the policy underlying the relevant statutory scheme. This would put taxpayers in the difficult position of having to demonstrate the underlying policy of the relevant statutory scheme and then positively prove that they did not misuse or abuse it. Submissions made in response to the consultation paper have questioned the need for the proposed amendments, given the GAAR’s overwhelming success rate.
Read the full article posted by Bloomberg Tax on February 15, 2023.