It is a fundamental principle of Anglo-Canadian law that a taxpayer is entitled to arrange his or her affairs to minimize tax. The frequently decision is the judgment of the House of Lords in the Inland Revenue Commissioners v. His Grace the Duke of Westminster [1936] A.C. 1 (U.K. H.L.), which was the origin of the principle by the same name.
The Westminster principle is fundamental in Anglo-Canadian tax law and has been since the House of Lords decision. Over time, however, tax law balances the interest of the state in revenue collection and the private interests of taxpayers. As we have moved from the free market era of the mid-war years of the 20th century towards a more regulatory state, tax law has enacted statutory changes that circumscribe tax planning, such as, the general anti-avoidance rule (GAAR) in section 245, which limits the principle where tax plans are “abusive” of the Income Tax Act [ITA].
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