An Act to amend the Income Tax Act (economic substance)
Bill C-298 was a Conservative Private Member's Bill amending the Income Tax Act (R.S.C. 1985, c. 1, 5th Supp.) to introduce an economic-substance requirement for certain federal tax-avoidance arrangements. Brought after the 2022 Office of the Parliamentary Budget Officer report estimated approximately $25 billion in annual federal tax revenue lost to corporate-tax avoidance (the so-called tax gap). The bill paralleled the EU Anti-Tax-Avoidance Directive 2016/1164 economic-substance requirements and the OECD Pillar 1 and Pillar 2 international tax framework. The 2024 federal budget included parts of the proposal in the federal General Anti-Avoidance Rule (GAAR) modernization. Did not pass second reading.
Status
Quick learn
Would add an 'economic substance' test to tax law so a deal whose only real purpose is avoiding tax can be denied the tax benefit. Brought after estimates of about $25 billion a year lost to corporate tax avoidance. A Conservative private member's bill; parts were later folded into the government's anti-avoidance rules.
Issues this bill touches
- Tax & Fiscal Policy
Adds an 'economic substance' test to deny tax benefits to transactions with no purpose other than tax savings.
Legislative history
- First reading
First reading in the House of Commons.
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Official source
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