Tax Planning & The GAAR

There is a three part test that determines whether a tax planning transaction is considered to have been taken solely for the purposes of tax avoidance. The three part test involves:

• Whether there is a tax benefit arising from a transaction;
• Whether the transaction is an avoidance transaction under subsection in the sense of not being “arranged primarily for bona fide purposes other than to obtain the tax benefit”; and
• Whether the avoidance transaction is abusive.