CRA accepted that GAAR did not apply where a taxpayer deliberately triggered the application of s. 55(2) – but has notified Finance

Less overall tax is paid if, rather than Opco paying a taxable dividend to one of its shareholders (A, an individual), A rolls his shares into a new Holdco, Opco redeems the shares now held by Holdco (but without any s. 55(5)(f) designation being made by Holdco so that all of the redemption proceeds are subject to capital gains treatment under s. 55(2)), and then Holdco pays a capital dividend to A.  CRA commented:

[T]he GAAR committee…recommended that the GAAR not be applied [in a similar file] having regard to the current state of the jurisprudence.

Nonetheless, the CRA is concerned by this type of tax planning, which in particular, is contrary to the integration principle. Accordingly, we have brought our concerns…to…Finance.

See also 16 June 2014 STEP Roundtable Q. 7, 2014-0522991C6.

Neal Armstrong. Q. 15 of 9 October APFF Roundtable under 2015 APFF Conference.