Impermissible avoidance arrangement focuses on tax benefit, commercial substance, and misuse of law in arrangement analysis.

An impermissible avoidance arrangement arises where the main purpose of an arrangement is to obtain a tax benefit and it creates non-arm's length rights or obligations, results in misuse or abuse of the Act, lacks commercial substance, is carried out through non-bona fide means, or uses asset or transaction locations lacking substantial commercial purpose. Where a step or part of an arrangement has tax benefit as its main purpose, the arrangement is presumed to be for that purpose unless proved otherwise. Tax benefit includes reduction, avoidance or deferral of tax, increased refunds, reduced income, and increased losses.

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