Guide

Non-application of the anti-avoidance rule aimed at foreign affiliates

Author: John J. Lennard

On April 23, 2014, the Federal Court of Appeal rendered its long-awaited decision in Canada v. Lehigh Cement Limited (2014 FCA 103), in which it gave a strict interpretation of the anti-avoidance rule provided for in paragraph 95(6)(b) of the Income Tax Act, which applies when a person or partnership acquires or disposes of shares and “it can reasonably be considered that the principal purpose of the acquisition or disposition is to permit a person to avoid, reduce or defer the payment of tax […] that would otherwise be payable.” This decision is significant because, for a certain period of time, the Canada Revenue Agency showed a tendency to apply this provision on a general basis when assessing the structures of foreign affiliates of Canadian taxpayers.

Download this article.

Expertise

Related

Canadian and U.S. Tax Laws: A Review of 2019 and a Look Ahead to 2020

Jan. 30, 2020 - In our annual Tax Review and Outlook report, we look back at significant developments that shaped the Canadian and U.S. tax landscapes in 2019 and offer our predictions on what to expect in the year ahead. Key Canadian Developments in 2019 Proposed changes to the employee stock option rules...

U.S. Tax Laws: A Review of 2019 and a Look Ahead to 2020

Jan. 30, 2020 - Review of U.S. Tax Developments in 2019 In 2019, the U.S. tax world continued to be primarily concerned with developing guidance under the monumental Tax Cuts and Jobs Act (TCJA), which was enacted at the end of 2017. Major regulatory projects were proposed beginning in 2018,...