Not long after the Tax Court released Evans v. The Queen, 2005 TCC 684, it released Archambault, J.’s decision in Desmarais v. The Queen, 2006 TCC 44, which came to a different conclusion about whether GAAR could apply to surplus strips.
Roger Taylor, a respected tax litigator, wrote an interesting article recently in the Federated Press’s Tax Litigation, in which he seems to prefer the approach to GAAR in Desmarais. See Volume XIII, No. 4 (2006). Taylor points out that the Court in Evans did not consider whether the transactions in question skirted or attempted to skirt a specific anti-avoidance rule. A consideration of that same question in Desmarais led the Court to conclude that the GAAR should apply to the impugned transactions because they represented an abuse of the Act read as a whole.
