CRA indicates that whether a GAAR proposal letter is issued before a Headquarters/GAAR Committee referral generally turns on whether the GAAR issue is familiar

In discussing the role of the GAAR Committee, CRA indicated that where the transactions under audit by the Tax Services Office are similar to situations which already have resulted in a recommendation to apply GAAR, generally the TSO will go ahead and issue a proposal letter and obtain the taxpayer’s representations - and then subsequently refer the matter to Headquarters, with the taxpayer’s representations, to obtain the GAAR recommendation.

Where the matter instead has not been previously considered by the GAAR Committee, the TSO will refer the matter to Headquarters prior to issuing of the proposal letter – so that it would generally only issue a proposal letter if Headquarters recommends GAAR’s application. Headquarters will generally, in turn, refer the matter to the GAAR Committee for consideration.

Neal Armstrong. Summary of 29 November 2016 CTF Annual Roundtable, Q.7 under s. 245(2).