A discordant jurisprudence: what does it mean to be ‘Acting in Concert’?

Aug 30, 2021 1 MIN READ
Authors
Matias Milet

Partner, Tax, Toronto

Emily Gilmour

Associate, Tax, Toronto

Under the Income Tax Act (Canada) taxpayers are deemed to not deal at arm’s length if they are “related”. In all other circumstances, taxpayers will be dealing at non-arm’s length (NAL) where they are factually NAL. In determining whether persons who are not related are dealing at arm’s length, courts have generally held — and the Canada Revenue Agency agrees — that persons do not deal at arm’s length in three circumstances:

  • there is a common mind directing the bargain for both parties
  • one party de facto controls the other; or
  • the parties are acting in concert without separate interests.

Originally written for International Tax (Wolters Kluwer CCH), this article covers:

  • The directing mind test
  • De Facto control test
  • Acting in concert without separate interests test
  • Acting in concert without separate interests
  • Acting at arm’s length vs. an arm’s length relationship
  • Captive parties

Read the full article here [PDF]

This article was first published in International Tax, Report No.118, June 2021.