Consider each of the following independent fact situations.
(1) Adam Aref has contributed the maximum amount to an RRSP on the first business day of each year in respect of the previous year and shortly thereafter has withdrawn the funds.
(2) Bill Sheridan loaned his wife $1,000,000 five years ago through a non-interest bearing promissory note. His wife invested the funds in GICs and earned $80,000 of interest income which was properly attributed to him, except for any compound interest. Bill gave his wife another cash amount to cover the income tax on the compound interest.
(3) Wells Ltd. is owned 100% by Mrs. Hogart. Stieb Ltd. is owned by Mrs. Hogart's husband and minor children. Wells Ltd. made an interest-free loan out of its taxable surplus to Stieb Ltd. such that the corporate attribution rule does not apply. Stieb Ltd. used the proceeds of the loan to earn property income.
(4) Traub has $200,000 of investments and a mortgage on his personal home for a similar amount. Traub sold the investments, paid off the mortgage, and re-borrowed to acquire the investments.
(5) Andy made a loan to his adult child's corporation, Vancouver Hockey Puck Ltd., in order to avoid attribution, since the corporation used the funds to earn property income
REQUIRED
Discuss whether the general anti-avoidance rule (GAAR) applies to the above situations.