Federal Tax - General Anti-avoidance Rule (GAAR). Deans Knight Income Corp. v. Canada
In Deans Knight Income Corp. v. Canada (SCC, 2023) the Supreme Court of Canada addressed an Income Tax case involving the 'transfer' of unused losses, here centering on the GAAR (general anti‑avoidance rule). These quotes (from paras 51-74) characterize the GAAR test.
. Deans Knight Income Corp. v. Canada
In Deans Knight Income Corp. v. Canada (SCC, 2023) the Supreme Court of Canada addressed an Income Tax case involving the 'transfer' of unused losses, here centering on the GAAR (general anti‑avoidance rule). These quotes are a general history of the GAAR doctrine:
A. Background to the General Anti-Avoidance Rule. Canada (Attorney General) v. Collins Family Trust
 The present appeal is not the first time this Court has considered the GAAR. A review of its origins and role within the Act nonetheless provides useful background.
 In 1988, Parliament enacted the GAAR in s. 245 of the Act, partially in response to this Court’s decision in Stubart Investments Ltd. v. The Queen, 1984 CanLII 20 (SCC),  1 S.C.R. 536. In Stubart, this Court rejected a literal approach to interpreting the Act. At the same time, it also rejected an interpretation of a precursor to the GAAR that would have required transactions to have a bona fide business purpose. Instead, it offered guidelines to limit unacceptable tax avoidance arrangements. Parliament viewed the decision in Stubart as an inadequate approach to the problem of tax avoidance (Canada Trustco Mortgage Co. v. Canada, 2005 SCC 54,  2 S.C.R. 601, at para. 14).
 Moreover, abusive tax avoidance had become a problem of significant concern for Parliament. Taxpayers, aided by expert advice, increasingly devised complex legal transactions to avoid tax in ways unintended by Parliament. Once the avoidance mechanisms relied on became evident, either from advance ruling requests or tax assessments, Parliament would react to “plug” the loopholes in the Act to prevent future use. The problem was that increasingly convoluted rules were vulnerable, creating new loopholes to exploit. This Court described this cycle in Stubart as “the action and reaction endlessly produced by complex, specific tax measures aimed at sophisticated business practices, and the inevitable, professionally-guided and equally specialized taxpayer reaction” (p. 580; see also D. A. Dodge, “A New and More Coherent Approach to Tax Avoidance” (1988), 36 Can. Tax J. 1, at p. 4). As this “cycle of action and reaction” between creative tax planners and Parliament continued, the Act grew in size and complexity (Department of Finance, Guidelines for Tax Reform in Canada (1986), at p. 7).
 Despite these efforts, Parliament was unable to curb the proliferation of tax avoidance schemes. Corporate tax revenues in 1985-86 “were $1.2 billion lower than the initial budgetary forecasts”, a shortfall which “was considered to be caused largely by the unexpected application of loss carryforwards” (Dodge, at p. 3; see also W. J. Strain, D. A. Dodge and V. Peters, “Tax Simplification: The Elusive Goal”, in Report of Proceedings of the Fortieth Tax Conference (1989), 4:1, at pp. 4:43 and 4:52‑53).
 The GAAR was Parliament’s chosen mechanism to interrupt this cycle. In the 1987 White Paper on Tax Reform, the government recognized that specific anti-avoidance rules are “not always desirable” because they “make the tax system more complex; they sometimes create additional unintended loopholes, and they do not deal with transactions completed before the amendments become effective” (see Department of Finance, The White Paper: Tax Reform 1987 (1987), at p. 57; see also B. J. Arnold and J. R. Wilson, “The General Anti-Avoidance Rule — Part 2” (1988), 36 Can. Tax J. 1123, at p. 1140). A new general anti-avoidance rule was meant to overcome some of these disadvantages. The novel approach found within the GAAR explains why, upon its enactment, Parliament was able to remove certain specific anti-avoidance rules that it felt were sufficiently addressed by a general rule (White Paper, at p. 57; Triad Gestco Ltd. v. Canada, 2012 FCA 258,  2 F.C.R. 199, at paras. 52‑53; Department of Finance, Tax Reform 1987: Income Tax Reform (1987), at p. 129; Dodge, at p. 8; Department of Finance, Modernizing and Strengthening the General Anti-Avoidance Rule: Consultation Paper, 2022 (online), at pp. 16 and 19-20; see also Arnold and Wilson, at p. 1148).
 In light of the foregoing, the GAAR is best understood as a way to overcome the disadvantages of a system based solely on specific rules (White Paper, at p. 57; Dodge, at p. 8). The GAAR was a choice, made by Parliament, to complement its specific anti-avoidance efforts with the enactment of a general rule. To achieve this aim, the GAAR “draws a line between legitimate tax minimization and abusive tax avoidance” (Trustco, at para. 16). Abusive tax avoidance can involve unforeseen tax strategies (Canada v. Alta Energy Luxembourg S.A.R.L., 2021 SCC 49, at para. 80). For example, in Alta Energy, this Court treated evidence of Parliament’s knowledge and acceptance of the tax strategy at issue as a relevant consideration when ascertaining its intent. However, the GAAR is not limited to unforeseen situations; as this Court has explained, it is designed to capture situations that undermine the integrity of the tax system by frustrating the object, spirit and purpose of the provisions relied on by the taxpayer (Lipson v. Canada, 2009 SCC 1,  1 S.C.R. 3, at para. 2; Copthorne Holdings Ltd. v. Canada, 2011 SCC 63,  3 S.C.R. 721, at paras. 71-72; see also The Gladwin Realty Corporation v. The Queen, 2020 FCA 142,  6 C.T.C. 185, at para. 85; D. G. Duff, “General Anti-Avoidance Rules Revisited: Reflections on Tim Edgar’s ‘Building a Better GAAR’” (2020), 68 Can. Tax J. 579, at p. 591).
B. The Relationship Between the GAAR, the Duke of Westminster Principle and Uncertainty
 The GAAR must also be understood in light of its relationship to the Duke of Westminster principle. In Commissioners of Inland Revenue v. Duke of Westminster,  A.C. 1 (H.L.), Lord Tomlin recognized the foundational principle that “[e]very man is entitled if he can to order his affairs so as that the tax attaching under the appropriate Acts is less than it otherwise would be” (p. 19). The principle that taxpayers can order their affairs to minimize the amount of tax payable has been affirmed by this Court on numerous occasions (see, e.g., Stubart, at p. 552; Trustco, at para. 11; Copthorne, at para. 65).
 The Duke of Westminster principle, however, has “never been absolute” (Lipson, at para. 21) and it is open to Parliament to derogate from it. Parliament has done so through the GAAR. The GAAR does not displace the Duke of Westminster principle for legitimate tax planning. Rather, it recognizes a difference between legitimate tax planning — which represents the vast majority of transactions and remains unaffected, consistent with the Duke of Westminster principle — and tax planning that operates to abuse the rules of the tax system — in which case the integrity of the tax system is preserved by denying the tax benefit, notwithstanding the transactions’ compliance with the provisions relied upon. Even where the purpose of a transaction is to minimize tax, taxpayers are allowed to carry it out unless it results in an abuse of the provisions of the Act (Lipson, at para. 25). Where the transaction is shown to be abusive, the Duke of Westminster principle is “attenuated” by the GAAR (Trustco, at para. 13).
 In establishing a general anti-avoidance rule that operated to deny tax benefits on a case-specific basis, Parliament was cognizant of the GAAR’s implications for the level of certainty in tax planning. Parliament sought to balance “the protection of the tax base and the need for certainty for taxpayers” (Department of Finance, Explanatory Notes to Legislation Relating to Income Tax (1988), at p. 461). The GAAR was enacted to be “a provision of last resort” to address abusive tax avoidance only and was therefore not designed to create more generalized uncertainty in tax planning (Trustco, at para. 21; Copthorne, at para. 66). Some uncertainty is unavoidable when a general rule is adopted (Dodge, at p. 21; Copthorne, at para. 123). However, a reasonable degree of certainty is achieved by the balance struck within the GAAR itself.
 First, as Professor Jinyan Li noted, “the GAAR cases generally involve situations that do not concern the majority of taxpayers, and the transactions are well planned and executed on the basis of professional tax advice” (“‘Economic Substance’: Drawing the Line Between Legitimate Tax Minimization and Abusive Tax Avoidance” (2006), 54 Can. Tax J. 23, at p. 40). The GAAR only scrutinizes transactions motivated by tax avoidance, and even a tax-motivated transaction that is consistent with the object, spirit and purpose of the provisions of the Act is unaffected by the GAAR (see Explanatory Notes, at p. 461). By virtue of the rigorous analysis required by s. 245, the GAAR only affects a small subset of transactions, largely conducted by sophisticated parties with the ability to properly evaluate the risks inherent in a GAAR reassessment. Indeed, this is precisely what occurred in the present case: the prospectus relating to the appellant’s IPO expressly recognized the risk of a successful challenge to the use of the Tax Attributes.
 Second, a proper application of the GAAR methodology serves to ensure reasonable certainty in tax planning (P. Samtani and J. Kutyan, “GAAR Revisited: From Instinctive Reaction to Intellectual Rigour” (2014), 62 Can. Tax J. 401, at p. 403). The GAAR is not a tool to sanction conduct that courts find immoral (Copthorne, at para. 65; Alta Energy, at para. 48). Rather, courts must conduct an “objective, thorough and step-by-step analysis” (Copthorne, at para. 68). Within this analysis, the principles of certainty, predictability and fairness do not play an independent role; rather, they are reflected in the carefully calibrated test that Parliament crafted in s. 245 of the Act and in its interpretation by this Court. It is to this test that I now turn.
In Canada (Attorney General) v. Collins Family Trust (SCC, 2022) the Supreme Court of Canada canvassed principles of tax law on the extent to which taxpayers may intentionally, even retroactively, structure their situations to avoid tax - here involving the use of equity [paras 12-27].
. Canada v. Alta Energy Luxembourg S.A.R.L.
In Canada v. Alta Energy Luxembourg S.A.R.L. (SCC, 2021) the Supreme Court of Canada reviewed principles of the federal income tax 'general anti-avoidance rule' (GAAR):
A. General Anti-Avoidance Rule (“GAAR”). Canada v. Deans Knight Income Corporation
 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. 10). 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. 11, citing Commissioners of Inland Revenue v. Duke of Westminster,  A.C. 1 (H.L.)). This principle, derived from the rule of law, has been deemed the “foundation stone of Canadian law on tax avoidance” (B. J. Arnold, “Reflections on the Relationship Between Statutory Interpretation and Tax Avoidance” (2001), 49 Can. Tax J. 1, at p. 3).
 This established principle was affected by the enactment of s. 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. 1). Thus, if the Minister can establish abusive tax avoidance under the GAAR, s. 245 of the Act will apply to deny the tax benefit even where the tax arrangements are consistent with a literal interpretation of the relevant provisions (Copthorne Holdings Ltd. v. Canada, 2011 SCC 63,  3 S.C.R. 721, at para. 66). The GAAR applies both to the abuse of provisions found in the Act and to the abuse of provisions found in a tax treaty (s. 245(4)(a)(i) and (iv) of the Act; s. 4.1 of the Income Tax Conventions Interpretation Act, R.S.C. 1985, c. I-4).
 Applying the GAAR involves a three-part process meant to determine: (1) whether there is a tax benefit arising from a transaction; (2) whether the transaction is an avoidance transaction; and (3) whether the avoidance transaction is abusive (Canada Trustco, at para. 17). As mentioned above, the third part is the only one in issue before this Court. To determine whether a transaction is abusive, this Court has set out a two-step inquiry (Canada Trustco, at paras. 44 and 55). Under the first step, the provisions relied on for the tax benefit are interpreted to determine their object, spirit, and purpose. The second step is to undertake a factual analysis to determine whether the avoidance transaction at issue is consistent with or frustrates the object, spirit, and purpose of the provisions.
 The onus rests on the Minister to demonstrate the object, spirit, and purpose of the relevant provisions and to establish that allowing Alta Luxembourg the benefit of the exemption would be a misuse or an abuse of the provisions (Canada Trustco, at para. 65). Abusive tax avoidance occurs “when a taxpayer relies on specific provisions of the Income Tax Act in order to achieve an outcome that those provisions seek to prevent” or when a transaction “defeats the underlying rationale of the provisions that are relied upon” (Canada Trustco, at paras. 45; see also para. 57; Lipson v. Canada, 2009 SCC 1,  1 S.C.R. 3, at para. 40). Abusive tax avoidance can also occur when an arrangement “circumvents the application of certain provisions, such as specific anti‑avoidance rules, in a manner that frustrates or defeats the object, spirit or purpose of those provisions” (para. 45).
 Canada Trustco recognized that the line between legitimate tax minimization and abusive tax avoidance is “far from bright” (para. 16). As a result, “[i]f the existence of abusive tax avoidance is unclear, the benefit of the doubt goes to the taxpayer” (Canada Trustco, at para. 66; see also Copthorne, at para. 72).
 Before I proceed, it is important to sound some notes of caution.
 First and foremost, tax avoidance is not tax evasion, and there is no suggestion by either party that the transaction in this case was evasive. In addition, tax avoidance should not be conflated with abuse. Even if a transaction was designed for a tax avoidance purpose and not for a bona fide non-tax purpose, such as an economic or commercial purpose, it does not mean that it is necessarily abusive within the meaning of the GAAR (Canada Trustco, at paras. 36 and 57; see also Lipson, at para. 38). The purpose of a transaction is relevant mainly to characterize it as either an avoidance transaction or a bona fide transaction and, specifically, to assess the abusive nature of the transaction. In their factual analysis, courts may consider whether an avoidance transaction was “motivated by any economic, commercial, family or other non-tax purpose” (Canada Trustco, at para. 58). However, a finding that a bona fide non-tax purpose is lacking, taken alone, should not be considered conclusive evidence of abusive tax avoidance. Justices Rowe and Martin are taking exactly that approach, and it colours their entire analysis. Moreover, such a finding should not be allowed to impair the proper interpretation of the relevant provisions in a manner that makes substantive economic connections or the presence of a bona fide non-tax purpose a condition precedent to every tax benefit; the goal is to ensure the relevant provisions are properly interpreted in light of their context and purpose (Canada Trustco, at para. 62).
 Second, it is also important to distinguish what is immoral from what is abusive. It is true, as reiterated in Copthorne, that the GAAR is a legislative measure by which “Parliament has conferred on the court the unusual duty of going behind the words of the legislation to determine the object, spirit or purpose of the provision or provisions relied upon by the taxpayer” (para. 66). But, in Copthorne, Rothstein J. was quick to note the limits to that legislative mandate. In contrast to what my colleagues are proposing, Rothstein J. observed that courts should not infuse the abuse analysis with “a value judgment of what is right or wrong nor with theories about what tax law ought to be or ought to do” (para. 70). Taxpayers are allowed to minimize their tax liability to the full extent of the law and to engage in “creative” tax avoidance planning, insofar as it is not abusive within the meaning of the GAAR (para. 65). Therefore, even though one may consider treaty shopping in tax havens to be immoral, this is not determinative of a finding of abuse.
 Finally, the abuse analysis is not meant to be a “search for an overriding policy of the Act that is not based on a unified, textual, contextual and purposive interpretation of the specific provisions in issue” (Canada Trustco, at para. 41). The focus of the interpretation is on the object, spirit, and purpose of the specific provisions and not on the broader policy objective of the Act or of a particular tax treaty. Therefore, policy objectives such as “avoiding double taxation” and “encouraging trade and investment” that are found in bilateral tax treaties cannot be invoked to override the wording of the provisions in issue.
 The GAAR was enacted to catch unforeseen tax strategies. However, the use of conduit corporations, “legal entit[ies] created in a State essentially to obtain treaty benefits that would not be available directly”, was not an unforeseen tax strategy at the time of the Treaty (“Commentary on Article 1” of the 1998 OECD Model Treaty, at para. 9). Indeed, it was far from being a novel phenomenon that emerged subsequently to the signing of the Treaty. Back in the 1970s, the “Commentary on Article 1” of the 1977 OECD Model Treaty criticized tax planning strategies involving conduit corporations (paras. 8-9). This was also an issue discussed by learned authors (see, e.g., A. A. Knechtle, Basic Problems in International Fiscal Law (1979), at p. 115; D. R. Davies, Principles of International Double Taxation Relief (1985), at paras. 1.13 and 3.22). And more contemporaneously to the Treaty, the “Commentary on Article 1” of the 1998 OECD Model Treaty discussed the use of conduit corporations as well.
In Canada v. Deans Knight Income Corporation (Fed CA, 2021) the Federal Court of Appeal summarized the GAAR (general anti-avoidance rule):
The general anti-avoidance rule. Canada v. CHR Investment Corporation
 Section 245 of the Act, the GAAR, was enacted in 1988 as a means to combat abusive tax avoidance in light of the failure of specific anti-avoidance rules to effectively accomplish this objective.
 The Supreme Court has provided significant guidance as to the proper interpretation of section 245. See for example Canada Trustco Mortgage Co. v. Canada, 2005 SCC 54,  2 S.C.R. 601 and Copthorne Holdings Ltd. v. Canada, 2011 SCC 63,  3 S.C.R. 721.
 As described in Copthorne (at para. 33), three questions must be determined under section 245:
Was there a tax benefit? A tax benefit is defined in subsection 245(1) of the Act and includes a reduction of tax.
Was the transaction giving rise to the tax benefit an avoidance transaction? and
Was the avoidance transaction giving rise to the tax benefit abusive?
 An avoidance transaction is defined in subsection 245(3) of the Act. It includes a transaction that results in a tax benefit and is not undertaken primarily for bona fide non-tax purposes. An avoidance transaction also includes a transaction that is part of a series of transactions that results in a tax benefit. Guidance on how to determine an avoidance transaction where there is a series is provided in Copthorne at para. 40:
… [I]t is necessary to determine if there was a series, which transactions make up the series, and whether the tax benefit resulted from the series. If there is a series that results, directly or indirectly, in a tax benefit, it will be caught by s. 245(3) unless each transaction within the series could ‘reasonably be considered to have been undertaken or arranged primarily for bona fide purposes other than to obtain [a] tax benefit.’ … Where there is an avoidance transaction, the tax benefit that results from that transaction or from a series of transactions that includes that transaction is to be denied (subsection 245(2) of the Act).
 However, subsection 245(4) of the Act provides that a tax benefit is not to be denied unless the avoidance transaction is abusive. Although the term "“abuse”" is not defined in the Act, it has been extensively discussed in the jurisprudence.
 In determining whether a transaction is an abuse, the analysis is to proceed in two steps (Copthorne at paras. 69 and 71). The first step is to determine the object, spirit and purpose or underlying rationale of the relevant provisions of the Act. Then the court must determine if the avoidance transaction falls within or frustrates that underlying rationale.
 If the tax benefit results from a series of transactions and not from the avoidance transaction by itself, the court is to focus the abuse analysis on the avoidance transaction but view it in the context of the series of transactions (Copthorne at para. 71).
 At the second step of the abuse analysis, the Crown must clearly demonstrate that the transaction is an abuse of the Act (Copthorne at para. 72).
In Canada v. CHR Investment Corporation (Fed CA, 2021) the Federal Court of Appeal stated basic principles of the GAAR tax rule (General Anti-Avoidance Rule):
 The Supreme Court of Canada, in Canada Trustco Mortgage Co. v. Canada, 2005 SCC 54, at para. 66 (Canada Trustco) (and confirmed in Copthorne Holdings Ltd. v. Canada, 2011 SCC 63, at para. 33) (Copthorne) set out the three requirements that must be satisfied in order for the GAAR to be applied:. Eyeball Networks Inc. v. Canada
. There is a tax benefit resulting from a particular transaction; In this matter, the issue that will be litigated when CHR’s appeal is heard by the Tax Court is the third requirement – was there abusive tax avoidance? The requested undertakings in issue in this appeal must be considered in light of the issue that is to be ultimately determined in this matter. The scope of discovery questions and hence undertakings that are to be fulfilled is framed by the issues as set out in the pleadings, which in this case have been limited to the issue of whether the transactions completed by CHR resulted in an abuse of the relevant provisions of the Act.
. The particular transaction is an avoidance transaction; and
. The avoidance transaction is abusive i.e. the tax benefit frustrates the object, spirit or purpose of the provisions relied upon by the taxpayer.
 In determining whether there is abusive tax avoidance, the first step is to identify the object, spirit or purpose of the relevant provisions of the Act. This is completed based on a textual, contextual and purposive analysis of the relevant provisions to determine their rationale (Copthorne, at para. 70). For ease of reference in these reasons, the object, spirit or purpose of the relevant provisions will be referred to as the rationale of these provisions.
 The determination of the rationale of the relevant provisions is a question of law (Canada v. Oxford Properties Group Inc., 2018 FCA 30, at para. 39).
In Eyeball Networks Inc. v. Canada (Fed CA, 2021) the Federal Court of Appeal considers the application of s.160(1) of the ITA, which deals with the transfer of property to non-arm's length parties for less than fair market value:
 As affirmed by this Court, the purpose of subsection 160(1) is to protect the tax authorities against any vulnerability that may result from a transfer of property between non-arm’s length persons for a consideration that is less than the fair market value of the transferred property (Canada v. 9101-2310 Québec Inc., 2013 FCA 241 at para. 60). The four cumulative criteria triggering the application of subsection 160(1) are "“clear”" and "“self-evident”" (Livingston at para. 17):. Gladwin Realty Corporation v. Canada
- The transferor must be liable to pay tax under the Act at the time of the transfer;
- There must be a transfer of property;
- The transferee must be a person with whom the transferor was not dealing at arm’s length or to an otherwise designated transferee;
- The fair market value of the property transferred must exceed the fair market value of the consideration given by the transferee for the property.
 However, when dealing with property whose value varies depending on who holds it, it is the value of the property as it stands in the hands of the transferor at the time of the transfer that governs (see Canada v. Gilbert, 2007 FCA 136 at para. 21; Hewett v. Canada,  F.C.J. No. 1541, 98 D.T.C. 6003 (F.C.A.) [Hewett FCA] affirming Hewett v. Canada,  2 C.T.C. 2560, 62 A.C.W.S. (3d) 1235 [Hewett TCC]). Conversely, when dealing with consideration capable of similar variations, it is the value of the consideration as it stands in the hands of the transferee at the time of the transfer that governs. This is made clear by subparagraph 160(1)(e)(i) which refers to the value of the consideration given rather than received.
 There are good reasons for this symmetry in the determination of the respective values. Just as it makes sense for the value of the property transferred to be determined as it stands in the hands of the transferor since this is what would have been available to the Minister for attachment if the transfer had not taken place (Hewett FCA at para. 2; Hewett TCC at paras. 48-56), there would be no justification for allowing the Minister to recover the transferor’s tax debt from a transferee who gave fair market value consideration for the property transferred to it.
In Gladwin Realty Corporation v. Canada (Fed CA, 2020) the Federal Court of Appeal sets out briefly the criteria for applying the General Anti-avoidance Rule (GAAR):
 In order to conclude that GAAR applies, the Tax Court judge had to answer three questions in the affirmative: was there a tax benefit? If so, were the transactions which gave rise to this benefit avoidance transactions? If so, were the avoidance transactions abusive? (Copthorne Holdings Ltd. v. Canada, 2011 SCC 63,  3 S.C.R. 721 [Copthorne], para. 33, citing Canada Trustco at paras. 18, 21, 36).
C. Statutory Interpretation in the Context of the GAAR
 The Tax Court judge properly instructed himself as to the exercise that must be undertaken in construing the relevant provisions in a GAAR context (Reasons, para. 33):
The first step involves identifying the object, spirit and purpose of the relevant rules. Statutory interpretation under the GAAR differs from traditional word-based interpretation. Whereas, under the traditional rule of statutory interpretation, the analysis seeks to determine what the meaning of a provision is, under the GAAR, statutory interpretation is used to determine the object, spirit or purpose of the provision. The object, spirit or purpose is the rationale underlying the provision. Transactions may be found to be abusive of a provision’s underlying rationale, even though they are consistent with the literal, contextual and purposive meaning of the words of the statute. [Copthorne, para. 70 and Canada v. Oxford Properties Group Inc., 2018 FCA 30,  4 F.C.R. 3 [Oxford], paras. 40-46 are cited in support.] It follows that a GAAR analysis can lead to a result that is different from that obtained by a traditional, textual, contextual and purposive interpretation focused on the meaning of the words. Indeed, this must be so given that (Copthorne, para. 109):
[w]hen the Minister invokes the GAAR, he is conceding that the words of the statute do not cover the series of transactions at issue. Rather, he argues that although he cannot rely on the text of the statute, he may rely on the underlying rationale or object, spirit and purpose of the legislation to support his position.And that:
if the Court [was] confined to a consideration of the language of the provisions in question, without regard to their underlying rationale, it would seem inevitable that the GAAR would be rendered meaningless [Copthorne, para. 111, citations omitted].