SCC dismisses taxpayer’s appeal in Deans Knight (2023 SCC 16)
Today, by a 7:1 majority, the Supreme Court of Canada dismissed the appeal of Deans Knight Income Corporation (“Deans Knight”) from a 2021 decision of the Federal Court of Appeal that upheld the application of the general anti-avoidance rule (the “GAAR”) in the Income Tax Act (Canada). Justice Rowe delivered the reasons for the majority while Justice Côté dissented. The majority applied the GAAR to find that the transactions undertaken by Deans Knight frustrated the underlying rationale of subsection 111(5) which would have otherwise restricted the taxpayer’s utilization of its historic losses following the relevant series of transactions.
A detailed analysis of the decision will be posted on our blog in the coming days.