"To GAAR or not to GAAR-that is the question:" Canadian and Australian attempts to combat tax avoidance

In both Canada and Australia the relevant governments found their initial legislative attempts to combat tax avoidance to be ineffective. In time in each country it was concluded that the respective general avoidance provisions were of limited application and avoidance provisions were of limited application and ineffective to combat the sophisticated tax avoidance schemes promoted by tax advisers. In Canada it was determined that Income Tax Act, R.S.C 1985, s. 245(1) would be repealed and replaced with a general anti-avoidance rule ('GAAR') contained in a new s. 245 ITA. The Australian government similarly decided to replace Income Tax Assessment Act, Cth. 1936, s. 260 with a new general anti-avoidance measure, Part IVA ITAA. This article compares and contrasts the Canadian and Australian GAARs. Through the evaluation of each regime the article seeks to identify which model is most effective. It will be sen which model is most effective. It will be seen that both regimes have some features that are preferable to the other and thus both GAARs might be improved by incorporating aspects of the other anti-avoidance model.