CRA indicates that it could assess the same cross-border transaction both under GAAR and the PPT
CRA indicated that the GAAR Committee “may offer a useful model” for ensuring consistency of application of the MLI principal-purpose test (“PPT”) within the CRA when the MLI comes into effect. PPT ruling requests will be entertained when this occurs.
Although CRA continues to contemplate the application of GAAR to transactions undertaken primarily to secure a tax benefit accorded by a tax treaty (and has done so), it considers that in appropriate circumstances, the PPT and GAAR could apply as alternative assessing positions.
CRA considers it to be premature to assess how the case law on s. 245(4) will inform the PPT’s application.
Neal Armstrong. Summary of 21 November 2017 CTF Annual Conference Roundtable, Q.8 under Treaties - MLI - Art. 7(1).