Please elaborate on the statement in draft IC71- 17R5, para. 43, that s.247(2)(b) is one of the Act’s “anti-avoidance provisions.” Where there is an s. 247(2)(b) assessment, will CRA restrict the taxpayer’s access to the relevant Treaty Mutual Agreement Procedure (MAP) provision? CRA responded:
- Canada’s position is that any assessment that relies on a domestic anti-avoidance rule will be eligible for MAP consideration - but Canada will simply present the Canadian position relying on that anti-avoidance rule to the other Competent Authority for potential relief by the other country.
- The finalized IC (like the draft) will refer to s. 247(2)(b) (like GAAR) as such a rule, given that it applies only where transactions are undertaken mainly for tax benefits rather than business reasons.
- Thus, if it is a primary position of the CRA that 247(2)(b) applies then, as with GAAR assessments, Canada will simply present that position to the other Competent Authority and, if there is double-taxation, seek relief from the other country.