n Comparative and International Law Journal of Southern Africa - Tapping into a quarter-century’s judicial experience with the Canadian General Anti-avoidance Rule (GAAR) : some insights for South Africa

Volume 49 Number 3
  • ISSN : 0010-4051


Increased tax avoidance globally has led the Organisation for Economic Cooperation and Development (OECD), with the sanction of the G20 countries, to launch an action plan on Base Erosion and Profit Shifting (BEPS), to assist and support governments across the world in an endeavour to counter tax avoidance. Anti-avoidance measures include legislative, judicial and administrative techniques. This article reviews the use of the judicial approach adopted in Canada, as this country has a long-established General Anti-avoidance Rule (GAAR) and is considered to be at the forefront in combating abusive tax avoidance. Although the previous South African GAAR had led to numerous judicial decisions, the current GAAR provisions have not yet been considered by South African courts. Through an evaluation of the Canadian judiciary’s quarter of a century experience with its GAAR, the article seeks to draw insights from the Canadian courts regarding the application of their GAAR. Notwithstanding the uncertainty surrounding the Canadian GAAR as a legal norm, it is submitted that the Supreme Court of Canada’s seven-step guide to the application of the GAAR can assist South African courts to distinguish objectively between legitimate tax planning and abusive tax avoidance.

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