On December 16, 2011, the Supreme Court of Canada (SCC) released its long-awaited GAAR decision in Copthorne Holdings Ltd v. The Queen, 2011 SCC 63, which was argued in January 2011. This Tax memo provides a comprehensive commentary on the SCC’s decision. For an overview of the case, see our Tax memo: New Supreme Court of Canada ruling on GAAR—Copthorne Holdings Ltd.
In a unanimous decision, the SCC held that the general anti-avoidance rule (GAAR) in section 245 of the Income Tax Act (the Act) applied to a series of transactions entered into by the corporate group of which the taxpayer was a part. These transactions had the effect of duplicating cross-border paid-up capital (PUC). PUC can be a valuable tax attribute because Canadian tax rules allow a corporation to return PUC to a non-resident shareholder without withholding tax.
Read this tax memo for our analysis of the GAAR ruling.
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