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Tax avoidance in Canada and the future of the GAAR

Author(s): Pooja Mihailovich, Amanda Heale

Jan 11, 2023

The Canadian Income Tax Act (Tax Act) contains a general anti-avoidance rule (GAAR) which can negate tax benefits arising from “abusive” tax avoidance transactions. These are transactions that satisfy the requirements of the law, but are found to be contrary to the spirit or underlying policy of the legislation or its specific provisions.

In the 2020 Fall Economic Statement, the federal government announced its intention to undertake a public consultation on modernizing Canada’s anti-avoidance rules, including the GAAR. In Budget 2022, the federal government maintained its intention to “strengthen” the GAAR, but acknowledged that the GAAR should not interfere with legitimate commercial and family arrangements...

Read or listen to this Legal Year in Review 2022 article