Which of the Following Statements Regarding GAAR Is True

question 5

Multiple Choice

Which of the following statements regarding GAAR is true?

• A) The purpose of GAAR is to catch tax evaders.
• B) When an avoidance transaction takes place, the anti-avoidance rule is automatically applied in all circumstances.
• C) 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."
• D) GAAR can correctly be defined as "Organizing one's affairs in a manner that results in paying the least amount of tax possible."

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Definitions:

Impartial Third Party

A neutral individual or entity not involved in a dispute who may assist or help resolve issues without bias.

Casualty Insurance Coverage

Insurance that protects an individual or entity against loss or damage to property or individuals, typically covering accidents.

Effective Date

The date on which something, such as a law, agreement, or policy, becomes officially operational or enforceable.

Corporate Insurance

A type of insurance coverage designed to protect corporations from financial losses due to events such as property damage, liability claims, and employee-related risks.