Tax - Ch2 Solutions

Tax - Ch2 Solutions - Solutions to Key Concept Questions K...

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Solutions to Key Concept Questions KC 2-1 [ITA: 245(2) – GAAR] The GAAR provision in ITA 245(2) is to be used when specific anti-avoidance provisions do not suffice. For the GAAR to apply, the following four conditions must be met: 1) No other provision of the Act stops the taxpayer from achieving the intended tax advantage, 2) A tax benefit results from a transaction or part of a series of transactions, 3) The transaction is an avoidance transaction, in that, it was not undertaken primarily for bona fide purposes other than to obtain the tax benefit, and 4) The transaction is an abusive transaction, in that, it can reasonably be concluded that the tax benefit would result in a misuse or abuse of the Act, read as a whole. The transactions described in each of the four situations: Are not subject to any other anti-avoidance rule in the Act, A tax benefit results in each case, and The transactions have been undertaken primarily to obtain a tax benefit and are, for that reason, avoidance transactions.
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Tax - Ch2 Solutions - Solutions to Key Concept Questions K...

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