Document Type

Book Chapter

Publication Date


Source Publication

Arnold, ed. The GAAR: Past, Present and Future. Canadian Tax Foundation, forthcoming


The “misuse or abuse” exception under subsection 245(4) of the Income Tax Act draws the line between acceptable and unacceptable tax avoidance. As a “safety valve” or “relieving provision,” this exception has proved to be the “most crucial and controversial single factor in the application of the GAAR.” Whether a transaction that lacks economic substance is subject to the general anti-avoidance rule (GAAR) is the question considered in this chapter.