Episode 029 – The Supreme Court of Canada’s decision of Deans Knight: Decoding the Tax Implications

TaxBreaks

Join us for a listen as Kenneth Keung, Aasim Hirji and Kim G C Moody have a spirited and wide ranging discussion about the implications of Deans Knight.

On May 26, 2023, the Supreme Court of Canada released its landmark decision in Deans Knight Income Corp. v. Canada cited as 2023 SCC 16.

The case involved whether the application of the general anti-avoidance rule (“GAAR”) applied to deny a loss-utilization plan by the taxpayer. In light of the Tax Court of Canada’s decision (which decided in favor of the taxpayer) and the subsequent reversal of that decision by the Federal Court of Appeal, the tax community was eagerly awaiting the decision. The majority of the Supreme Court found that the GAAR applied to deny the taxpayer’s loss utilization plan. The Court’s reasonings are interesting and will have wide implications to the taxpayer community especially in light of the government’s recent attempts to “modernize” the GAAR and its release of draft proposals.