Federal Court of Appeal Rules in GAAR Case

In Canada v. Oxford Properties Group Inc., 2018 FCA 30, the Federal Court of Appeal allowed in part the Crown’s appeal and referred the reassessment of the taxpayer back to the Minister of National Revenue for reconsideration.

The taxpayer had been reassessed pursuant to the general anti-avoidance rule (GAAR) found in section 245 of the Income Tax Act in respect of a series of transactions that took place over five years. The series of transactions undertaken by the taxpayer involved transferring three real estate properties to partnerships, increasing the adjusted cost base of the partnership interests, and then selling the partnership interests to tax-exempt entities without tax being paid on the latent recapture and accrued gains in the properties. The Federal Court of Appeal held that the transactions frustrated the object, spirit and purpose of the Income Tax Act and therefore amounted to abusive tax avoidance.

Prepared by: Jenna Himelfarb

Jenna is a partner practicing in the firm’s Toronto office. Jenna advises clients on the tax aspects of a wide variety of matters, including corporate reorganizations and restructurings, mergers and acquisitions and cross-border structures. She also practises in the areas… more »