Weak-currency borrowings and the general anti-avoidance rule in Canada: from Shell Canada to Canadian Pacific

Reviews the decision of the Tax Court of Canada in Canadian Pacific and challenges its conclusion that Canada's general anti-avoidance rule (GAAR) ought not to have applied. After a brief explanation of the economics of weak-currency borrowings and associated tax advantages absent the application of anti-avoidance rules, the decision of the Supreme Court of Canada in Shell Canada, on which the Tax Court in Canadian Pacific relied, and the decision in Canadian Pacific are examined.