The General Anti-Avoidance Rule (GAAR) was introduced as part of the 1988 tax reforms to the Income Tax Act by enacting section 245. This provision allows the Canada Revenue Agency to redetermine the tax consequences of a transaction(s) entered into by a taxpayer in an effort to deny the tax benefit(s) otherwise enjoyed by the taxpayer as a result of the impugned transaction(s).
The object of the GAAR is to stop the aggressive tax avoidance transactions. However it has been heavily criticized for creating considerable uncertainty in many tax planning arrangements since its enactment.