Joint Committee suggests a list of examples of transactions which should not be considered to be a GAAR abuse

The Joint Committee notes that the Explanatory Notes examples regarding the proposed GAAR amendments do not reflect that many tax planning strategies utilize a series of transactions which navigates around inappropriate tax consequences in ways that likely were not specifically contemplated by Parliament.

The Committee suggests that the Explanatory Notes provide more examples of acceptable transactions, for instance:

• Those identified in IC88-2 and the IC88-2 Supplement.
• Post-mortem pipeline transactions.
• PUC distributions to non-resident shareholders of Canadian-resident private corporations.
• The use of a Bidco to step-up PUC to fair market value on the purchase of a Canadian corporation.
• Acquiring 10.1% of the relevant shares of a corporation so that Part IV tax is inapplicable.
• The use of cash damming and other tracing techniques where funds-tracing is relevant.
• Debt-slide (a.k.a., ATR-66) transactions.

Neal Armstrong. Summary of Joint Committee, “GAAR Proposals and Self-Help Transactions,” 13 October 2023 Joint Committee Submission under s. 245(4.1).