Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Principal Issues: Can the CRA confirm its stand on the possible application of the GAAR to treaty shopping arrangements?
Position: Yes, the CRA confirms it continues to contemplate the application of the GAAR to treaty shopping arrangements.
Reasons: The GAAR applies to deny tax benefits arising under tax treaties with the same force as tax benefits arising under the Act.
2015 International Fiscal Association Conference
Question 2 - GAAR and treaty shopping
Considering recent developments, can the CRA outline its position on the possible application of the GAAR to treaty shopping arrangements?
The CRA does not view the comments on treaty shopping that were made in the February 2014 Budget as well as in the August 2014 Finance news release as precluding the application of the GAAR to treaty shopping arrangements.
The CRA continues to contemplate the application of the GAAR to transactions undertaken primarily to secure a tax benefit afforded by a tax treaty and, in fact, the GAAR Committee has recently approved the application of the GAAR to certain treaty shopping arrangements.
The GAAR may be contemplated even in circumstances where a non-resident would otherwise satisfy all of the relevant provisions of a treaty, including residency provisions, specific anti-avoidance rules, limitation on benefits provisions, and anti-conduit measures, if any. We would further note that where Canada's competent authority determines that a particular non-resident is entitled to the benefits of a treaty, for example under paragraph (6) of Article XXIX-A of the Canada-U.S. treaty, that determination would not preclude the application of the GAAR to transactions undertaken primarily to secure a tax benefit afforded by the treaty.
May 28, 2015
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 2015
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 2015