Can CRA provide an update on the measures that were put in place for the administration of the “principal purpose test” (“PPT”) contained in the MLI? CRA indicated that:
The new Treaty Abuse Prevention Committee (the “TAP Committee”) will be chaired by the Director of the International Division at Income Tax Rulings, and will include a representative of the Legislative Policy and Regulatory Affairs Branch, the International Relations and Treaty Offices Division of the Legislative Policy Directorate, the International and Business and Investigation Branch, the Tax Avoidance Division, and the International Tax Division. The Committee will also include the Tax Legislation Division of the Department of Finance, and the Tax Legal Services Division of the Department of Justice.
The TAP Committee will be in charge of making recommendations on the application and non-application of the PPT (or its equivalent, depending on the Treaty). It will make recommendations to the Rulings Directorate regarding advance tax rulings, and to the International and Large Business Directorate for proposed assessments.
The proceedings of the TAP Committee will mirror those of the GAAR Committee. Where a s. 245(1) “tax benefit” emanates from a bilateral treaty, the TAP Committee is charged with considering both the PPT and the GAAR, taking over GAAR responsibility from the GAAR Committee in this Treaty context.