2024-1008251I7 IC 88-2 and new GAAR
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA. Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Principal Issues: Whether conclusions reached in examples in IC 88-2 remain the same under the new GAAR, considering the new economic substance test.
Position: Yes. All conclusions remain the same.
Reasons: See below.
Author:
Ton-That, Marc
Section:
245(2)
February 28, 2024
Venetia Putureanu Headquarters
Director Income Tax Rulings Directorate
Tax Avoidance Division Marc Ton-That
International and Large Business Directorate
Attentionn: Patrick Bilodeau 2024-100825
IC 88-2 and amended section 245
We have reviewed IC 88-2 and IC 88-2 Supplement 1 in light of the amendments proposed to section 245 (“amended section 245”) in the November 28, 2023 Notice of Ways and Means Motion, and which received first reading in the House of Commons on November 30, 2023 (Bill C 59).
The potential application of the amended section 245 is dependent on a full review of all the facts and circumstances of each particular case. Furthermore, the application of the amended section 245 must be in accordance with the object, spirit and purpose of such provision and of the other provisions that are relied upon by the taxpayer as well as, ensure that economic substance receives proper consideration.
That being said, our general view is that the conclusions reached in the examples provided in IC 88-2 and IC 88-2 Supplement 1 should remain the same under the amended section 245.
Any change of position would be applicable on a prospective basis only.
XXXXXXXXXX.
We trust the above comments to be of assistance.
Stephane Prud’Homme
Director
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
cc. Costa Dimitrakopoulos
Director General
Income Tax Rulings Directorate
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