In This Episode:
- What exactly is GAAR?
- What is the difference between tax lawyers and accountants?
- Let’s look at the facts about the Canada Trust Code
- GAAR vs. the Westminster Principle
- Why you should not confuse tax avoidance and tax evasion
“A tax lawyer is the best individual to take a look at this and be able to give proper advice to the client.”
– Ken Gordon
Is tax avoidance okay in Canada? Will I be penalized by the CRA for tax planning activities under the General Anti-Avoidance Rule (GAAR)? These are the questions Dave Sanderson and Ken Gordon will discuss in this episode.
Here’s a bit of background. The Westminster Principle gives Canadians the right to plan their affairs to minimize an individual’s tax liability. The Canadian judicial system supports that everyone is entitled to manage their tax affairs. However, the General Anti-avoidance Rule (GAAR), enacted in 1988, limits every Canadian’s tax planning activities. The GAAR could invalidate a tax transaction if it were determined that it was done with the primary intent of achieving tax benefits. The court uses a three-part test to decide whether or not to apply GAAR in a business transaction.
So how can Canadian taxpayers protect themselves from triggering the application of GAAR? Understanding the rule of law is the key. But if you are uncertain if the CRA will perceive your tax planning affairs as abusive tax avoidance, you should seek the advice of a tax lawyer or a tax expert.
Let’s hear the conversation around this topic as Dave and Ken interpret the GAAR and how you, as a taxpayer, can exercise your right to manage your affairs and your tax liability. After all, there’s a big difference between tax avoidance and tax evasion. And there should be no confusion about it.