Quote:
Originally Posted by troutman
How is the Smith manoeuvre going to avoid GAAR now?
A central issue in the case is the interpretation of an Income Tax Act principle, called the General Anti-Avoidance Rule (GAAR).
Enacted in 1988 to reduce abusive tax avoidance, the GAAR can make legal transactions illegal for being a "misuse or abuse" of the rules.
If something seems to good to be true . . .
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I just read the decision that fredr123 posted (and thanks for that!). There is a significant distinction here between the Smith Manoeuvre and this decision; these funds were borrowed and bought shares of a family owned business.
I'm certainly no expert on the law, but that is a huge distinction between the plain-jane Smith Manoeuvre and what took place here. That is not to say that the Smith Manoeuvre is fool-proof; there are certain versions that I think are offside and its a matter of time.