GAAR - bona fde business, investment or Family purposes *...

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The General Anti-Avoidance Rule - GAAR * GAAR stipulates that when a person is involved in an "avoidance transaction," tax will be adjusted to deny the beneft that would have resulted From the transaction or From the series oF transactions * A tax beneft is a reduction, avoidance, or deFerral oF tax or an increase in the reFund oF tax. All tax planning activities attempt to achieve one or more oF these * In order For a transaction not to be considered an avoidance transaction, its primary objective must be other than to obtain a tax beneft * In the words oF the CRA, "a transaction will not be an avoidance transaction iF the taxpayer established that it is undertaken primarily For
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Unformatted text preview: bona fde business, investment or Family purposes * This establishes a business purpose or economic reality test to distinguish between acceptable and unacceptable planning activities * The "misuse or abuse" criterion states that even when an avoidance transaction occurs, the anti-avoidance rule will not be applied iF it may reasonable be considered that the transaction would not result in a misuse or abuse oF the provisions oF the Income Tax Act as a whole * ThereFore, For a tax plan to be rejected, it must Fail that business purpose test and, in addition, must be extreme to the extent that it is not within the "spirit" oF the tax system as a whole...
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This note was uploaded on 02/05/2012 for the course ACC 522 taught by Professor A.vena during the Spring '11 term at Ryerson.

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