Canada: U.S. and Canada Tax Law: What to Watch for in 2011

This perspective takes a look back at tax developments in the United States and Canada in 2010 and offers a look forward to 2011 for possible developments affecting the U.S. and Canadian taxation of international companies and investors.


From an historical perspective, 2010 was a relatively calm year in terms of U.S. tax developments, although it saw a flurry of important legislation at the end of the year, setting the stage for major change in 2011 and beyond.

Short review of U.S. tax developments in 2010

In the U.S., much of what was expected did not occur, and quite a bit of the unexpected did. The year began with Democrats in control of both houses of Congress as well as the White House, but Republicans succeeded in delaying many expected changes that were supported by the Democrats until November, when a bruising election shifted control of the House of Representatives to the Republicans and ushered in a new era in U.S. tax politics. Among the developments that were anticipated but did not occur:

  • enactment of provisions treating "carried interests" as ordinary income;
  • coordinating inclusion and deductions attributable to deferred offshore earnings; and
  • temporary reduction in tax rates on dividends from foreign subsidiaries to stimulate repatriation of offshore earnings.

Among the developments that were not anticipated:

  • passage of health care reform legislation including an increase, effective in 2013, in the Medicare payroll tax and a new 3.8% tax on investment income earned by U.S. individuals;
  • enactment of a broad new reporting system for documenting U.S. investors in foreign accounts (so-called "FATCA");
  • new reporting rules for uncertain tax positions; and
  • adoption of several pieces of legislation designed to reduce the availability or value of foreign tax credits (including rules for certain foreign acquisitions, foreign tax credit streaming transactions, and averaging rules for foreign tax credits triggered by section 956 inclusions).

In addition, the year ended with a two-year extension of the 2001 Bush tax cuts for all individual taxpayers (including, against strong Democratic opposition, those with annual earnings above $250,000). The extension also continues the 15% long-term capital gain rates and the 15% rate for qualifying dividends and reduces the rate of social security and self employment taxes by 2% for 2011. This significant piece of legislation also resolved (for two years) the uncertainty over the fate of the U.S. estate tax. While many observers were predicting that the rate and exemption level would be restored to the 2009 level (of 45% and $3.5 million, respectively), the legislation that was enacted reduces the rate of estate tax for 2011 and 2012 to 35% and sets the exemption at $5 million (or $10 million for a married couple). While foreign individuals are generally not eligible for the unified credit, Canadian individuals can benefit from a modified form of the credit under the Canada- United States Income Tax Convention (1980). The estate tax rules were unexpectedly amended in several other taxpayer-friendly respects:

  • for 2012, the $5 million unified credit will be adjusted for inflation;
  • the gift tax and the generation-skipping transfer tax exemptions are increased to $5 million; and
  • a new election permits the first-to-die spouse to allocate his or her unused unified credit to the surviving spouse (eliminating the need for a marital credit shelter trust).

For individuals who died in 2010, the expiration of the estate tax was not repealed, so such estates escape the estate tax unless the executor elects to be subject to the tax (which may be desirable for smaller estates that can benefit from the basis step-up rules without being subject to a material amount of estate tax). Individuals also had a once-in-a-lifetime opportunity to transfer assets in 2010 free of generation-skipping tax (although such transfers were subject to gift tax if they exceeded the $1 million credit available in 2010 for inter vivos gifts).

Outlook for U.S. international tax developments in 2011

Because the income and estate tax extensions are effective for only two years, taxpayers continue to face significant uncertainty over the long term. The extensions will expire during the next presidential election, so the political dynamics of the tax cuts will continue to reverberate. Other significant sources of uncertainty going into 2011 are:

  • the pending adoption in 2011 of the International Financial Reporting Standards ("IFRS") and its more "principles-based" approach to reporting and disclosure of uncertain tax positions;
  • overdue reports from various commissions and committees on fundamental tax reform; and
  • continuing pressure to address the long-term U.S. federal deficit.


Given the vast uncertainties, it may be dangerous to make predictions as to what 2011 holds, but here is what we expect during the first half of 2011:

  • There will be serious discussion about significant tax reform, but little progress in enacting changes to the present tax system.
  • However, the "pay-go" rules in Congress will result in continued enactment of ad hoc revenue raisers, mainly from the items identified in the past two administration budgets (and reflected in the so-called "Green Book"), including some form of carried interest legislation, continued restriction on the use and value of foreign tax credits, and more limited exceptions from subpart F for related party payments.
  • Certain relief provisions may be allowed to expire, including those affecting relief from cancellation of indebtedness income and the non-taxation of gain from small business stock held for five years.
  • The administration will issue additional guidance under FATCA, and foreign financial institutions will have to determine whether to cease doing business with U.S. clients prior to 2013.

Implications of these predictions

Given the limited outlook for continued low rates on high income earners, individual and other noncorporate taxpayers should demand corporate dividends paid in larger quantities sooner rather than later. (Note: this affects foreign public and private companies with a significant U.S. shareholder base as well as U.S. public and private companies, since dividends paid by foreign publicly traded or treaty resident corporations also qualify for a reduced 15% tax rate.)

Similar reasoning may propel taxable as opposed to tax-free transactions in 2011 and 2012 (note that this affects both assets sales as well as sales of stock of closely held and publicly traded businesses). A sale for buyer notes gives the seller a choice of accelerating the income, and deferral of gain on notes of more than $5MM (face amount) also attracts a nondeductible interest charge.

U.S. companies should pressure Congress for renewed relief from U.S. tax on repatriation of foreign earnings. Even if proceeds are not used to fund more qualified dividend payments, in the uncertain economic environment more U.S. companies should now be prepared to accelerate tax since the legislative proposals about averaging foreign tax credit baskets, denying relief from debt financing, etc., should have softened the view that an earnings hit (for a 5% tax) is much better than the earnings hit that will eventually occur if repatriation occurs under the new tax regime. The 2005 temporary reduction in tax rates on foreign subsidiary dividends was scored with only a minimal negative impact on revenue, due to the expected repatriation of income that was otherwise being reported as "permanently" invested overseas. In fact, the lower rate resulted in an estimated $300 billion of foreign earnings being repatriated.

Impact of Tax Reform Commissions

Recent months have seen the release of no less than four different deficit reduction proposals, ranging from the report by the bipartisan, presidentially commissioned National Commission on Fiscal Responsibility and Reform to the progressive Schakowsky Deficit Reduction Plan. All of the plans seek to broaden the individual tax base by eliminating tax expenditures, such as the mortgage interest deduction, and would (with the exception of the Schakowsky plan) significantly reduce nominal tax rates for individuals and corporations. The National Commission's report proposes to move the United States to a territorial corporate tax system. These proposals would all be politically difficult to enact. Elimination of popular tax expenditures is likely to be especially controversial. The proposal to lower the cap on the home mortgage interest deduction has already been subject to widespread criticism at a time when home values have been under pressure.

The Domenici - Rivlin report (formally issued by the Bipartisan Policy Center) supports the imposition of a national sales tax or value added tax, perhaps on the basis that other countries have adopted one. Enactment would accelerate consumption into the preeffective date period (looking at the experience of other countries here for predictions of behavior would be instructive). While not a panacea, this seems to be a sensible approach, even though it would require growth in the ranks of tax administrators in the short term.


Corporate taxpayers in Canada are operating in an environment of declining tax rates, with the Canadian federal income tax rate falling from 18% in 2010 to 16.5% in 2011 (and to 15% by 2012). The corporate tax rates of many of the provinces are also expected to decrease in 2011 and over the next couple of years. For example, the Ontario corporate tax rate was reduced to 12% effective July 1, 2010 (resulting in a combined Canadian federal and Ontario provincial rate of 30%) and is expected to be gradually reduced each July 1 thereafter to 10% by July 1, 2013 (resulting in a combined Canadian federal and Ontario provincial rate of 25%). There continues to be no indication that recent government deficits will derail these tax rate changes.

Short review of Canadian international tax developments in 2010

A variety of significant Canadian international tax developments occurred in 2010, including statutory amendments to limit the circumstances in which non-residents are taxable on the disposition of shares of Canadian companies; Canada-U.S. tax treaty developments affecting U.S. limited liability companies and Canadian unlimited liability companies; the signing of 10 tax information exchange agreements; draft legislation to implement a proposed aggressive tax planning reporting regime; draft legislation targeting foreign tax credit generator schemes; revised non-resident trust proposals; and the abandonment of the foreign investment entity proposals. In addition, there were significant cases from the Federal Court of Appeal in the areas of transfer pricing, the general anti-avoidance rule and offshore trusts.

Relaxing Taxation of Foreign Investors

Non-residents of Canada are liable to Canadian taxation on gains from the disposition of taxable Canadian property ("TCP"), unless such gains are exempted by an income tax treaty. In addition, withholding and certification rules in section 116 of the Income Tax Act (Canada) (the "Canadian Tax Act") apply to a disposition by a non-resident of TCP (other than certain excluded property). Historically, all unlisted shares of Canadian corporations have been TCP. Effective March 4, 2010, the Canadian Tax Act was amended to exclude from TCP shares of corporations (and equity interests in other entities) that did not derive more than 50% of their value from Canadian real property, Canadian resource property and/or Canadian timber resource property.

The test must be satisfied throughout the 60 month period up to the time of testing. This is a very significant change in Canada's approach to the taxation of foreign capital and comes on the heels of another significant change that, effective January 1, 2008, eliminated Canadian withholding tax on interest (other than "participating debt interest") paid to arm's length non-resident lenders.

Canada-U.S. Tax Treaty Developments

  • U.S. Limited Liability Companies ("LLCs"). The Canada-United States Income Tax Convention (1980) (the "Treaty") was amended in 2008 to allow U.S. resident members of an LLC that is disregarded or treated as a partnership for U.S. tax purposes to claim Treaty benefits. The amendments to the Treaty affecting LLCs generally became effective on February 1, 2009. Prior to this, it was the long-standing position of the Canada Revenue Agency (the "CRA") that no such Treaty benefits were available because the taxpayer for Canadian tax purposes was the LLC, not the LLC's members, and since the LLC was not itself liable to U.S. income tax it was not a U.S. resident for the purposes of the Treaty even where its income was fully taxed in the U.S. in the hands of its members.
    On April 8, 2010, the Tax Court of Canada held in TD Securities (U.S.A.) LLC v. The Queen that the taxpayer ("TD LLC"), a disregarded entity for U.S. tax purposes, could claim the benefit of the Treaty as it existed prior to the 2008 amendments. The TD Securities case is discussed in greater detail in our Flashes dated April 13, 2010 and July 8, 2010 (available at ). The CRA did not challenge this decision, but has commented that the TD Securities case is only relevant to periods prior to the Treaty amendments accommodating LLCs becoming effective. However, the Treaty amendments do not deal adequately with all circumstances and, in spite of the comments by the CRA, the TD Securities decision may have broader and ongoing implications.
  • Unlimited Liability Companies (ULCs). Article IV(7)(b) of the Treaty became effective on January 1, 2010. When first announced, it was believed that Article IV(7)(b) would put an end to the use of ULCs by U.S. residents on the basis that payments by the ULCs to U.S. residents would no longer qualify for Treaty benefits. During 2010, the CRA provided a number of favourable interpretations of various planning alternatives that will allow U.S. residents in many circumstances to continue to access the benefits of the Treaty in respect of payments received from a ULC. The CRA's positions to date have not extended Treaty benefits to payments by ULCs to LLCs, which remain particularly problematic.

Tax Information Exchange Agreements (TIEAs)

Canada signed TIEAs with 10 countries in 2010. In 2007, the Department of Finance stated that, in order to enhance the government's tax enforcement tools, it would seek TIEAs with tax haven countries and, as an incentive for tax havens to enter into TIEAs with Canada, it expanded the range of dividends received by Canadian corporations from their foreign affiliates that are exempt from Canadian taxation to include dividends out of active business income from a jurisdiction with which Canada has a TIEA, in addition to dividends out of active business income from a jurisdiction with which Canada has tax treaty (as was previously the case). As a stick to go along with this carrot, active business income of a controlled foreign affiliate will be subject to tax in Canada on an accrual basis (in the same manner as foreign passive income) where the controlled foreign affiliate is resident in a jurisdiction that did not enter into a TIEA with Canada within 60 months after Canada either began or sought to enter into negotiations for a TIEA with that country.

Canada has now entered into a total of 11 TIEAs (although only one TIEA is in force thus far) and is currently in negotiations with 14 other countries. This programme will continue to expand, and is poised to provide major opportunities for changes in outbound Canadian tax planning by expanding the range of attractive jurisdictions for establishing foreign affiliates as a consequence of the government's primary goal of attacking the use of tax havens by Canadians to hide funds offshore.

Aggressive Tax Reporting

An aggressive tax planning reporting regime has been proposed, which is to take effect commencing in 2011 and will require the disclosure to the CRA of certain tax avoidance transactions based on the existence of certain "hallmarks". The most recent draft of the proposed rules is excessively broad and can in some cases be read to require the disclosure of common commercial transactions. Submissions have been made to the Minister of Finance and it is hoped that the rules will be revised to more properly align with their purpose. In the meantime, parties involved in transactions with material tax considerations will need to take these rules into account.

The province of Quebec has also proposed an aggressive tax planning reporting regime. Although there is some similarity, the proposed Canadian and Quebec regimes are not identical. Under both regimes, there are mandatory disclosure obligations which appear to target marketed tax transactions (although, as currently drafted, they are much broader in scope). However, the Quebec draft rules also propose a voluntary "preventive" disclosure regime for transactions that may be subject to the Quebec general anti-avoidance rule and impose penalties and extend the limitation period where the preventive disclosure is not made.

Foreign Tax Generators

Draft legislation targeting schemes referred to as "foreign tax credit generators" was released on August 27, 2010. The proposed legislation would restrict the entitlement to deductions and credits for foreign taxes in respect of foreign-source income of Canadian taxpayers and their foreign affiliates. These rules are proposed to be effective for taxation years that end after March 4, 2010 – the date on which the outline of the proposals was first announced.

Although the proposed rules are targeting very specific types of transactions involving hybrid instruments, they are broadly drafted and will adversely affect many common investment structures involving the use of hybrid instruments even where no inappropriate tax credits or deductions are generated. In addition, where the rules are triggered by a hybrid instrument of a foreign affiliate of a taxpayer, the draft rules appear to affect all foreign affiliates of all Canadian companies in the taxpayer's related group, and are not isolated to the particular foreign affiliate or foreign affiliate group where the hybrid instrument exists. It is expected that these rules will be revised to better focus on their intended target but, in the meantime, they present concerns in many surprising circumstances.

Foreign Investment Entities & Non-Resident Trusts

Complex proposals with respect to non-resident trusts ("NRTs") and foreign investment entities ("FIEs") were first introduced in the 1999 budget and substantially revised on several occasions over the following decade. In response to concerns from the tax community regarding the complexity of the proposals, combined with numerous technical problems, the 2010 budget announced further amendments to the proposed NRT rules and the abandonment of the FIE rules in favour of limited amendments to the existing offshore investment-fund property rules. These changes are reflected in draft legislation that was released for comment on August 27, 2010. This very sensible decision to scale back these proposals will greatly simplify tax reporting for many Canadians with international holdings. The NRT rules remain relevant to foreign trusts and Canadians with interests in them. While these rules remain very complex, a number of the egregious aspects of the prior proposals have been addressed, resulting in rules better focused on their target – the use of offshore trusts by Canadians to minimize Canadian tax.

Transfer Pricing Developments

Two transfer pricing decisions were rendered by the Federal Court of Appeal in 2010, representing the first significant judicial pronouncements in this area since 1962.

  • General Electric Capital Canada v. The Queen. The CRA's position to date has been that it is not reasonable for a subsidiary to pay fees to its parent in consideration for the parent guaranteeing the subsidiary's debt, based on an "implicit support" theory: the subsidiary receives no economic benefit for the guarantee since a parent would not permit its subsidiary to become insolvent and, with or without the guarantee, would be expected to take actions to protect the subsidiary's creditworthiness in order to, among other things, protect its investment and own good name. In General Electric, the CRA challenged the deduction of guarantee fees paid by a Canadian subsidiary to its indirect parent, in part on this basis. The Federal Court of Appeal affirmed the Tax Court of Canada's decision in favour of the taxpayer. The Tax Court held that implicit support derived from the related group was a relevant factor that it should consider as part of the circumstances surrounding the transaction. However, in the circumstances under consideration, the benefit received by the Canadian subsidiary from the guarantee exceeded the amount paid by the Canadian subsidiary for the guarantee by the indirect parent and, as such, the guarantee fees were deductible.
  • GlaxoSmithKline Inc. v. The Queen. The taxpayer in GlaxoSmithKline packaged and sold Zantac, a patented and trademarked drug, in Canada. The CRA argued that the taxpayer paid an unreasonable amount for its purchases from a related Swiss sister company of the active pharmaceutical ingredient for Zantac. The Zantac trademark and patents were owned by the taxpayer's parent and licensed to the taxpayer for use in Canada under a licensing agreement. Under the licensing agreement, the taxpayer was obligated to purchase the ingredient from the related Swiss company. According to the evidence, in the years in question, Canadian generic companies were able to purchase the ingredient for a price less than that paid by the taxpayer. On this basis, the Tax Court held that the taxpayer had paid an unreasonable amount for the ingredient. The Federal Court of Appeal reversed the Tax Court's decision because it did not consider "all relevant circumstances which an arm's length purchaser would have had to consider", particularly the license agreement with the parent.
    The Federal Court of Appeal sent the matter back to the Tax Court for reconsideration of a reasonable transfer price taking into account the licensing agreement. Leave to appeal to the Supreme Court of Canada has been sought in this case.

The General Anti-Avoidance Rule

The Federal Court of Appeal rendered two significant decisions in 2010 on the general antiavoidance rule ("GAAR") involving corporate, rather than personal, tax planning. The taxpayer succeeded in both cases.

  • The Queen v. Collins & Aikman Products Co. et al. In Collins & Aikman, the CRA applied GAAR to re-characterize the tax consequences of a series of transactions undertaken by the taxpayer that had the effect of increasing the paid-up capital of a Canadian corporation. Paid-up capital is an important tax attribute to non-resident shareholders of a Canadian corporation, as it can be used to distribute Canadian earnings to the non-resident shareholders without Canadian withholding tax. The Federal Court of Appeal affirmed the Tax Court of Canada's decision finding that GAAR did not apply to the series of transactions. This is in contrast to the Federal Court of Appeal's decision in 2009 finding against the taxpayer in Copthorne Holdings Ltd. v. The Queen, which also involved a series of transactions to increase paid-up capital. (The decision in Copthorne has been appealed to the Supreme Court of Canada and is scheduled to be heard on January 21, 2011.) The facts in Collins & Aikman and Copthorne can be distinguished in a number of respects, and it remains to be seen whether the two cases represent inconsistent views regarding transactions relating to paid-up capital or if they properly should be distinguished on the facts.
  • Lehigh Cement Limited v. The Queen. In Lehigh Cement, the taxpayer had debt outstanding to a related foreign corporation, the interest on which was subject to Canadian withholding tax. The interest coupons were "stripped" and sold to an arm's length party, which avoided the withholding tax in the circumstances. The Tax Court determined that GAAR applied to the transactions undertaken by the taxpayer and, as a result, the interest continued to be subject to Canadian withholding tax. The Federal Court of Appeal reversed that decision and concluded that the GAAR did not apply to deny the availability of the withholding tax exemption because there was no evident scheme in the Canadian Tax Act that had been avoided. Leave to appeal to the Supreme Court of Canada was denied.

Offshore Trust Cases

In St. Michael Trust Corp. v. The Queen (more commonly known as Garron et al. v. The Queen) and Antle et al. v. The Queen, the taxpayers claimed an exemption under the Canada-Barbados Income Tax Convention from Canadian capital gains tax on sales of shares of Canadian corporations by family trusts established in Barbados. The Federal Court of Appeal upheld the Tax Court of Canada's decisions in both cases, holding that the dispositions of the shares were subject to Canadian tax.

  • In St. Michael Trust Corp., each trust in that case was found to be resident in Canada and not Barbados based on the role played by the Canadian participants in the transactions. In coming to this conclusion, the Federal Court of Appeal confirmed the Tax Court of Canada's approach of applying the corporate residence test of central management and control in determining the residence of the trusts, arguably a new judicial development.
  • In Antle, it was held that the purported trust that realized the capital gain in question was not validly established and, as such, the capital gain was taxable in the hands of the Canadian settlor of the purported trust. The Federal Court of Appeal also stated that the purported trust was a sham because the parties involved had signed a trust document that indicated that the trustee had discretion and control over the trust property while the parties knew with sufficient certainty that the trustee possessed no such discretion or control. This decision may have applied a broader test for determining the existence of a sham than has previously been the case, and it will have to be seen if this represents a shift in judicial views or simply reflects the particular circumstances of this case. The taxpayer in Antle has applied for leave to appeal to the Supreme Court of Canada. The taxpayer in St. Michael Trust Corp. has not yet applied for leave (but still has time to do so).

Real Estate Investment Trusts

In 2007, in connection with the elimination of "income trusts", the Minister of Finance proposed a drastically new tax regime in Canada for Canadian public real estate investment trusts ("REITs"), subject to a grandfathering period until December 31, 2010 for qualifying, pre-existing REITs, in order to allow them to transition to the new rules. Whereas previously the term "REIT" in Canada was a very loose concept, the new tax regime requires REITs to satisfy a number of asset and revenue tests that limit their activities to earning passive rental income from real property. In anticipation of the end of the transition period on December 31, 2010, many REITs undertook substantial restructurings in 2010. On December 16, 2010, the Department of Finance released revised rules which loosened some of the very stringent income and asset tests in the REIT rules and resolved some technical uncertainties. While this was welcome news, the release of the legislation was late in the day for REITs that had already implemented reorganizations and, to a lesser extent, for REITS that had spent months planning December 31, 2010 reorganizations.

Outlook for Canadian international tax developments in 2011

It is not expected that there will be any new major tax proposals affecting tax rates generally or the general scheme of the Canadian Tax Act put forward by the current minority government in 2011 – the phasing in of scheduled rate reductions should continue. However, the 2010 federal budget announced that the government will explore the possibility of adopting a formal loss transfer system or consolidated tax reporting for corporate groups, regimes that have been available in the U.S. and U.K. for many years, and it is possible we may see proposals in this regard in 2011.

Comprehensive amendments to the foreign affiliate system have been in the works for many years, and they (or part of them) may be released by the Department of Finance in 2011. These proposals are likely to be influenced by a report by a government sponsored international tax panel delivered in December 2008. A number of the panel's suggestions have already found favour with the Department of Finance, although the full scope of its recommendations regarding foreign affiliate taxation is unlikely to be adopted. The international tax panel also recommended amendments to Canada's thin capitalization rules and it is unclear whether amendments in this regard will be forthcoming. Canada's international tax regime has been in a state of limbo for many years, and the need to move forward in some fashion becomes more pressing every day.

It is expected that the existing aggressive tax planning reporting and foreign tax generator proposals described above will be revised to be more consistent with their intended scope.

There may also be further developments in 2011 in the areas of beneficial ownership in the context of tax treaties, transfer pricing and GAAR.

  • Beneficial Ownership. In Prévost Car Inc. v. The Queen, the CRA argued that a shareholder was not entitled to benefits under the Canada- Netherlands Income Tax Convention in respect of dividends paid by the taxpayer to the shareholder because the shareholder was not the beneficial owner of the dividends. The CRA was unsuccessful at the Tax Court and, on February 26, 2009, the Federal Court of Appeal affirmed the Tax Court's decision. Although the Prévost decision is very helpful for non-residents investing in Canada through a third jurisdiction that has a beneficial tax treaty with Canada, it does not deal with "back-to-back" arrangements, and its significance in such circumstances is less clear. There is at least one case pending (Velcro Canada Inc. v. The Queen) concerning beneficial ownership for the purposes of a Canadian income tax treaty in the context of a back-to-back arrangement, which may clarify this issue. The Velcro case is scheduled to be heard by the Tax Court in February 2011.
  • Transfer Pricing. The General Electric case may be appealed to the Supreme Court of Canada and there may be further guidance by the Supreme Court of Canada (if leave to appeal is granted) or by the Tax Court in Glaxosmithkline Inc. v. The Queen.
  • GAAR. Three requirements must be met for GAAR to apply to a transaction: (i) there must be a tax benefit that results from a transaction or series of transactions; (ii) there must be an avoidance transaction; and (iii) there must have been abusive tax avoidance. The Supreme Court of Canada in Canada Trustco Mortgage Co. v. The Queen established a high threshold for concluding there has been abusive tax avoidance but it was not clear that this standard was applied by the majority of the Supreme Court in Lipson v. The Queen. The Supreme Court of Canada is scheduled to hear an appeal of the Federal Court of Appeal's decision in Copthorne Holdings Ltd. v. The Queen on January 21, 2011 and may provide further guidance in this regard. In addition, the Supreme Court may provide further guidance on the meaning of the phrase "series of transactions", a term that is fundamental to GAAR and which has received much judicial consideration in that context, although its scope remains unclear. The phrase also is highly relevant to rules dealing with tax "bumps" in mergers and acquisitions and to tax-effective divisive reorganizations, and some of the comment in the context of GAAR cases has been unhelpful in considering the meaning of the phrase in these other contexts.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions