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  • Professional firms

    We are concerned about arrangements involving individual professional practitioners who redirect their income from a business or activity that includes their professional services to an associated entity where it has the effect of significantly reducing their tax liability.

    Arrangements that attract our attention include those that lack commercial rationale or have high-risk features.

    Arrangements that lack commercial rationale:

    • seem more complex than necessary to achieve the relevant commercial objective
    • appear to serve no real purpose other than to gain a tax advantage
    • have a tax result that appears to be at odds with its commercial or economic result
    • result in little or no risk in circumstances where significant risks would normally be expected
    • operate on non-commercial terms or in a non-arm's length manner
    • present a gap between the substance of what is being achieved and the legal form it takes.

    Arrangements with high-risk features:

    • have financing arrangements relating to non-arm's length transactions
    • exploit the difference between accounting standards and tax law
    • are materially different in principle from Everett and Galland
    • involve multiple classes of shares and units held by non-equity holders

    See also

    Last modified: 09 May 2022QC 69455