On November 26, 2021, the Supreme Court of Canada (“SCC”) rendered its judgment in Canada v. Alta Energy Luxembourg S.A.R.L., 2021 SCC 49. In a 6-to-3 majority decision, the SCC upheld the decision of the Federal Court of Appeal (“FCA”), finding that the general anti-avoidance rule (the “GAAR”) did not apply to an alleged “treaty shopping” arrangement undertaken by the taxpayer.
The facts of the case, as well as the SCC decision itself, have been discussed extensively in numerous other publications and will not be repeated here. The purpose of this article is to comment on how some of the SCC’s statements in the case may affect how the principal purpose test (the “PPT”) in the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (the “MLI”) is interpreted.
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