Canada: Budget 2023 general anti-avoidance rule consultation, KPMG comments
KPMG submitted comments in response to Finance’s public consultation
KPMG submitted comments in response to Finance’s public consultation
KPMG submitted comments [PDF 193 KB] in response to the Department of Finance’s public consultation on the legislative proposals to amend the general anti-avoidance rule (GAAR).
In its submission, KPMG tax professionals recommend that Finance clarify aspects of the proposals, including to clarify the various terminology used within the preamble, elaborate on how to measure a “significant lack” of economic substance and replace the proposed automatic penalty with a discretionary penalty based on criteria.
KPMG tax professionals also state that Finance needs to publish revised legislative proposals in draft form for an additional opportunity to comment.
Background
The GAAR is generally intended to enable tax authorities and courts to deny a tax benefit that results from abusive tax avoidance transactions. The 2023 federal budget introduced draft legislation to amend the GAAR. Finance stated that the proposed amendments are intended to modernize and update the GAAR, and were the result of Finance’s public consultation in August 2022. Read TaxNewsFlash
Read a June 2023 report prepared by the KPMG member firm in Canada
The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 3712, 1801 K Street NW, Washington, DC 20006.