| The concept of "beneficial ownership" is frequently used in international tax treaties. The concept is applied in situations where taxpayers may be benefiting indirectly from the advantages a particular treaty provides by interposing a corporation in a "tax-favourable jurisdiction" for the purpose of paying less tax than the corporation might pay in other jurisdictions. This corporate behaviour is called "treaty shopping." Recent constructions of the term "beneficial ownership" in legal literature and case law, and by national tax agencies have been contradictory. Thus, there is a need for clarification both in Canada and internationally. The author of the thesis comes to the conclusion that a new definition is not desirable and that a strict interpretation of the current concept is the lesser evil. However, he argues that, if the concept is to be effectively used to tackle the kinds of arrangements it was intended to challenge, the assistance of a substance-over-form component is inevitable. He proposes some ways this component might be developed. |
