CRA GAAR / Aggressive Tax Planning Audit — Montreal CPA Firm Near You: Substance Over Form Defense

A CRA GAAR (General Anti-Avoidance Rule) or Aggressive Tax Planning (ATP) Audit is launched when the Canada Revenue Agency suspects that a transaction, while technically legal, was structured primarily to avoid tax rather than achieve a legitimate business objective.
Mackisen CPA Montreal represents corporations, family trusts, and professionals during these complex audits, proving that every transaction has commercial purpose, economic substance, and full compliance under Canadian tax law.

Legal Foundation

Law: Income Tax Act s.245 (General Anti-Avoidance Rule) — allows CRA to deny tax benefits where transactions misuse or abuse provisions of the Act.
Jurisprudence: Canada Trustco Mortgage Co. v. Canada (2005 SCC) — established CRA’s three-step GAAR test:

1. Was there a tax benefit?

2. Was the transaction primarily tax-motivated?

3. Was it abusive or contrary to the Act’s purpose?

Learning insight: GAAR doesn’t punish planning — it punishes pretense. Mackisen CPA ensures your structure is rooted in substance, not suspicion.

Why CRA Launches GAAR or ATP Audits

CRA’s Aggressive Tax Planning Division analyzes high-value or complex structures to identify artificial transactions.
Common audit triggers include:

• Corporate reorganizations that convert dividends into capital gains (s.84.1 or s.55).

• Loss transfers between related entities.

• Share redemptions or pipelines lacking business purpose.

• Hybrid financing or circular loan arrangements.

• Offshore or holding-company structures lacking operational substance.

Learning insight: CRA challenges motive — Mackisen CPA proves method.

CRA’s GAAR Audit Process

1. Transaction Identification: CRA reviews tax filings, reorganizations, and related-party transactions.

2. Information Request: CRA demands contracts, resolutions, and legal opinions.

3. Purpose Analysis: CRA examines whether the main intent was tax reduction.

4. GAAR Committee Review: CRA’s national GAAR Committee in Ottawa evaluates the case.

5. Proposal and Decision: CRA may issue a reassessment or withdraw the GAAR position if the defense proves commercial validity.

Learning insight: CRA uses hindsight — Mackisen CPA uses documentation. Proper records win GAAR cases.

Mackisen CPA’s GAAR Defense Framework

1. Transaction Mapping: Rebuild step-by-step flowcharts linking business logic and financial impact.

2. Purpose Documentation: Provide board minutes, financial models, and professional memos demonstrating commercial purpose.

3. Economic Substance Proof: Quantify operational, financial, or risk-management benefits beyond tax savings.

4. Comparative Benchmarking: Cite industry-standard practices and CRA interpretive guidance.

5. Legal Coordination: Partner with tax counsel for integrated CPA–legal defense submissions.

Learning insight: GAAR cases are won on organization, not argument. Mackisen CPA structures your file so logic leads every page.

Common CRA Findings in GAAR/ATP Audits

• Circular transactions: Funds returning to the same entity without economic change.

• Surplus stripping: Dividend conversions under s.84.1 or s.55 deemed abusive.

• Hybrid debt/equity instruments: Tax arbitrage without real risk.

• Artificial losses: Intercompany transfers that reduce taxable income without business purpose.

• Incomplete documentation: Missing resolutions or supporting legal opinions.

Mackisen CPA rebuilds every missing link between purpose, structure, and benefit — the foundation of GAAR compliance.

Learning insight: CRA assumes complexity equals avoidance. Mackisen CPA proves complexity equals strategy.

Real-World Case Studies

• A Québec holding company avoided a $1.3M GAAR reassessment after Mackisen CPA proved the reorganization supported long-term succession planning, not tax avoidance.

• A manufacturing group cleared a hybrid-financing audit when we documented its genuine business need for capital-flow efficiency.

• A family trust reversed a proposed penalty under s.245 when our CPAs proved that asset transfers aligned with retirement and estate objectives.

Learning insight: CRA respects clarity more than creativity. Mackisen CPA gives your structure both.

SEO Optimization and Educational Value

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Learning insight: The same clarity that wins GAAR audits earns Google authority — Mackisen CPA communicates complex ideas simply and powerfully.

Why Mackisen CPA Montreal

Mackisen CPA Montreal has over 35 years of combined experience in complex tax-planning audits, reorganizations, and GAAR defense. Our bilingual CPAs and legal partners work collaboratively to prove commercial intent and compliance under both federal and provincial law.
We defend your right to tax-efficient structures — provided they are supported by substance, documentation, and purpose.

Learning insight: GAAR audits don’t attack success — they attack ambiguity. Mackisen CPA eliminates ambiguity through documentation and legal alignment.

Call to Action

If CRA has issued a GAAR proposal, questioned your reorganization, or referred your case to the Aggressive Tax Planning Division, act now.
Contact Mackisen CPA Montreal for full GAAR defense, documentation preparation, and CRA correspondence management.
Phone: 514-276-0808 | Email: info@mackisen.com | Website: mackisen.com

Learning conclusion: CRA GAAR audits test intent, not intelligence. Mackisen CPA Montreal ensures your intent is proven — your structure sound, your purpose documented, and your compliance undeniable.