Which of the Following Statements Regarding GAAR Is True

question 2

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)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)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:

DVD Clubs

Membership-based services or groups that distribute DVDs, often through mail order, allowing members to rent or purchase movies and television shows.

Truth-In-Lending Act

A US federal law designed to promote the informed use of consumer credit by requiring disclosures about its terms and cost.

Finance Charge

The actual cost of a loan in dollars and cents.