Which of the Following Statements Regarding GAAR Is True

question 3

Multiple Choice

Which of the following statements regarding GAAR is true?

• A) The purpose of GAAR is to catch tax evaders.
• B) The Canada Revenue Agency states that "A transaction will not be an avoidance transaction if the taxpayer establishes that it is undertaken primarily for bona fide business, investment or family purposes."
• C) When an avoidance transaction takes place, the anti-avoidance rule is automatically applied in all circumstances.
• D) Individuals who organize their affairs in order to pay as little tax as possible will automatically be subject to GAAR.

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Definitions:

New Venture Creation

The process of conceiving, developing, and launching a new business entity, typically characterized by innovation and risk.

Management Team

A group of individuals responsible for overseeing the daily operations of a business and executing its strategy.

Spontaneous Collaboration

The unplanned coming together of individuals or groups to work on a project or solve a problem collectively.

Price-Cutting

A strategy where businesses reduce the price of their goods or services to attract more customers or undercut competitors.