New penalty remains as GAAR legislation tabled – Investment Executive

Pooja Mihailovich

Dec 8, 2023

The recent federal budget implementation bill (Bill C-59) made several changes to the general anti-avoidance rule (GAAR) legislation announced in August and applied slightly harsher penalties.

Speaking to Investment Executive, Pooja Mihailovich, partner in Osler’s Tax practice, highlighted the consistencies between Bill C-59 and the August draft GAAR proposal. She referenced the three-year extension to the statutory limitation period for assessment or reassessment and the lowering of the threshold for an avoidance transaction to a transaction where the tax benefit is “one of the main purposes.”

Bill C-59 also modifies the test for transactions determined to be lacking economic substance. “There are still concerns with how the test will apply in practice,” Pooja said. She also comments on the exploratory notes issued with the implementation bill that state that misuse and abuse will still be the “starting point” for any transactions considered for lacking economic substance.

“It remains to be seen how the proposed economic substance test will interact with the existing misuse and abuse analysis, which is rooted in examining the policy of the relevant provisions as opposed to starting the analysis with a finding that there has been a misuse and abuse,” she added.

Read the entire article published in Investment Executive.