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Alternatives for testing for economic substance include: introducing a sole or dominant purpose test (under which, for example, “[w]here a taxpayer has no bona fide commercial or other non-tax purpose (or almost no such purpose), the relevant transactions could be considered to be sufficiently lacking in economic substance” (p. 24); determining whether a transaction has the potential for pre-tax profit after taking into account the costs of the transaction, which might then be compared to the tax savings (p.24); determining whether the transfers of rights and assumptions of obligations under the transaction affected the economic positions of the participants in the transaction (so that "[i]f the economic exposure of the participants to a transaction is not materially affected by the transfers of rights and obligations under the transaction, then the transaction can be said to be lacking in economic substance” (p. 25). assessing whether the legal form of the transactions differs significantly from the accounting treatment of the transactions (p. 26). ...

The Tax Court of Canada considered this issue in Crestglen Investments Limited [f.n. 9: Crestglen Investments Limited v. ...

In addition, an activity that might not ordinarily be classified as a business (such as buying, selling and holding investments) may be considered as such if it is carried on as a business endeavour. … 29. … [T]he fact that a partnership is formally registered under partnership law does not necessarily mean that a partnership (or business) actually exists. ...