Shell Canada Ltd. v. Canada, 99 DTC 5669, [1999] 3 SCR 622, [1999] 4 CTC 313 -- summary under Tax Avoidance

By services, 28 November, 2015

After referring to arguments, based on decisions in Bronfman Trust and Stubart, that courts should look through transactions that impose tax according to their true economic and commercial effects, McLachlin J. stated (at p. 5677):

"However, this Court has made it clear in more recent decisions that, absent a specific provision to the contrary, it is not the Courts' role to prevent taxpayers from relying on the sophisticated structure of their transactions, arranged in such a way that the particular provisions of the Act are met, on the basis that it would be inequitable to those taxpayers who have not chosen to structure their transactions that way ... ."

She also indicated (at p. 5677) that inquiring into the "economic realities" of a particular situation:

"wrongly invites a rule that where there are two ways to structure a transaction with the same economic effect, the Court must have regard only to the one without tax advantages."

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taxpayers entitled to rely on structure of their transactions
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