CRA indicates that capital gains crystallization transactions are not per se GAARable

Regarding transactions (including non-arm’s length transactions) to crystalize accrued capital gains prior to June 25, 2024, CRA, after referring to the proposed amendments to s. 245, stated:

[T]he 2024 Federal Budget does not contain any limits on the eligibility of capital gains for the current inclusion rate where such gains are realized prior to June 25, 2024 and … the delay in the implementation of the increased inclusion rate is a deliberate policy choice. In light of this … where a taxpayer crystallizes an accrued capital gain prior to the increase in the capital gains inclusion rate, the GAAR would generally not apply to redetermine the inclusion rate in respect of the crystallized capital gain.

However, CRA indicated that GAAR scrutiny might be merited where tax benefits were engaged in addition to avoiding the increased inclusion rate, for example, surplus-stripping transactions.

Neal Armstrong. Summary of 29 April 2024 External T.I. 2024-1016011E5 under s. 245(4).