245 of the Act, also known as the GAAR, which “superimposed a prohibition on abusive tax avoidance, with the effect that the literal application of provisions of the Act may be seen as abusive in light of their context and purpose” ( Canada Trustco, at para. This established principle was affected by the enactment of s. Arnold, “Reflections on the Relationship Between Statutory Interpretation and Tax Avoidance” (2001), 49 Can. This principle, derived from the rule of law, has been deemed the “foundation stone of Canadian law on tax avoidance” (B. 11, citing Commissioners of Inland Revenue v. However, where tax provisions are drafted with “particularity and detail”, a largely textual interpretation is appropriate in light of the well-accepted Duke of Westminster principle that “taxpayers are entitled to arrange their affairs to minimize the amount of tax payable” ( Canada Trustco, at para. " Like all statutes, tax legislation must be interpreted by conducting a “textual, contextual and purposive analysis to find a meaning that is harmonious with the Act as a whole” ( Canada Trustco, at para. Paragraphs 29 and 30 of the Majority Reasons written by Justice Côté state: The well-accepted Duke of Westminster principle states that “taxpayers are entitled to arrange their affairs to minimize the amount of tax payable.” The Duke Still Lives On! What resonated with me were general comments about the GAAR and about the "Duke of Westminster" principle (The Duke) pertaining to tax planning. The reasons of the majority and the minority are both interesting to read for many reasons. This case involved the application of the General Anti Avoidance Rule (GAAR) in section 245 of the Income Tax Act and "treaty shopping." The taxpayer was successful with the judges splitting 6-3 in their views. On November 26, 2021, the Supreme Court of Canada released its decision and reasons in Her Majesty the Queen and Alta Energy Luxembourg S.A.R.L., 2021 SCC 49. Yet many are not contributing to the system that has given them such roaring success.The Duke of Westminster Principle Still Lives On for Tax Planning Big corporations reaped the rewards and reported both soaring stock prices and record profits. Unprecedented spending on the Canada Recovery Benefit (CRB) and the Canada Recovery Sickness and Caregiving Benefits kept our economy from crumbling. Canadians understood the price tag would be high, but that it was necessary. The way Canadians looked at our public services and spending changed. The public service implemented major programs to keep the economy going. Our government pulled out all the stops to keep Canadians afloat. Then in 2020, COVID-19 turned our world upside down.
Canadians began to understand what was happening. The wealthiest companies and politicians scrambled to cover up the leaks. Those reports exposed billions of dollars routed through low-tax countries to avoid paying tax where it’s owed. Since then, the Panama Papers and Paradise Papers brought a lot of attention to tax fairness. In 2015, the new Trudeau government reversed some of the cuts, but many concerns remained about the lasting impact of those cuts and reduced capacity. Our members worried the cuts would hinder their ability to reclaim tax revenue. PIPSC members working on criminal investigations and on files related to offshore tax evasion saw their capacity reduced. Shortly after my election as the institute’s president, then-prime minister Harper announced cuts to the CRA that would have eliminated 4,000 positions and nearly $1 billion from its budget. I am heartened by the growing support we see from Canadians for tax fairness. For years, our members have identified concerns about tax avoidance through aggressive transfer pricing or profit-shifting strategies, and the need for the CRA to bring home this missing revenue.
CANADA REVENUE AGENCY CONTACT PROFESSIONAL
The Professional Institute of the Public Service of Canada (PIPSC) represents 12,000 auditors, forensic accountants, economists, actuaries and finance professionals at the Canada Revenue Agency (CRA). Given her experience in this portfolio, the public interest in this issue in the last campaign and the throne speech’s focus on economic resiliency, I expect Minister Lebouthillier will want to focus on tax fairness. Once again, the Honourable Diane Lebouthillier was appointed minister for national revenue. Last week, Her Excellency the Right Honourable Mary Simon read her first speech from the throne laying out the government’s plans. It was released right after a federal election where the major parties all spoke about tax fairness. It exposed shell games that large corporations and the ultra rich use to avoid paying taxes.
After the Panama Papers and Paradise Papers, a third global investigation into tax avoidance recently hit the media this fall: the Pandora Papers.
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