The expression “non-tax purpose” has a broader scope than the expression “business purpose”.  For example, transactions that may reasonably be considered to have been undertaken or arranged primarily for family or investment purposes would be immune from the GAAR under s. 245(3).  Section 245(3) does not purport to protect only transactions that have a real business purpose.

With respect, we cannot agree with this interpretation of s. 245(4). Parliament could not have intended this two-step approach, which on its face raises the impossible question of how one can abuse the Act as a whole without misusing any of its provisions.  We agree with the Tax Court judge, in the present case, at para. 90, that “[i]n effect, the analysis of the misuse of the provisions and the analysis of the abuse having regard to the provisions of the Act read as a whole are inseparable.”   As discussed more fully below, the interpretation of specific provisions of the Act cannot be separated from contextual considerations arising from other provisions.  The various provisions of the Income Tax Act must be interpreted in their contextual framework, so that the Act functions as a coherent whole, with respect to the particular statutory scheme engaged by the transactions.    40                              There is but one principle of interpretation: to determine the intent of the legislator having regard to the text, its context, and other indicators of legislative purpose.  The policy analysis proposed as a second step by the Federal Court of Appeal in OSFC is properly incorporated into a unified, textual, contextual, and purposive approach to interpreting the specific provisions that give rise to the tax benefit.

It seems to me that in considering the purpose of a subset of the entire series of transactions, Justice Paris had in mind the correct test. As this Court said in MacKay v. Canada, 2008 FCA 105 (CanLII) at paragraph 25: The existence of a bona fide non-tax purpose for a series of transactions does not exclude the possibility that the primary purpose of one or more transactions within the series is to obtain a tax benefit.

[21]  The Tax Court found that the object, spirit and purpose of section 84.1 was correctly identified in Descarries v. Canada, 2014 TCC 75 (CanLII), [2014] D.T.C. 1081: an anti-avoidance rule “to prevent taxpayers from performing transactions whose goal is to strip a corporation of its surpluses tax-free through the use of a tax-exempt margin or a capital gain exemption.” (reasons, paragraph 67).