The anti-avoidance rule levying tax penalties

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Question: George and Kelly Lee, a married couple, look for every opportunity to minimize income tax. George's marginal tax rate is 38%, while Kelly's marginal tax rate is 22%. The Lees decided that Kelly will guarantee a loan incurred by George to buy investment certificates. Under the attribution rules, the investment income on the certificates is attributed to Kelly because she guaranteed George's loan. However, transactions such as this are designed to artificially attribute income to the lower-income designated person, which means the rules are being applied to achieve the reverse of their intended purpose. The way that CRA deals with this is by using: The Alternative Minimum Tax rule Regarding this as an indefeasible transaction The Anti-Avoidance rule Levying tax penalties

Reference no: EM133610181

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