The general anti-avoidance rule (GAAR) is a last-resort legislative measure designed to counter abusive tax planning.

Its purpose is to eliminate the benefits of tax planning schemes that comply with the wording of the law but constitute a violation in the application of its measures.

Briefly put, three conditions must be met in order for the GAAR to apply:

1. The transaction or series of transactions must give rise to a tax benefit (such as a reduction, an avoidance or a deferral of income tax or an increase in a tax refund). 
2. The transaction must constitute an avoidance transaction, in that it would be unreasonable to consider its main purpose to be anything other than obtaining a tax benefit. 
3. The transaction must be abusive, in that it defeats or frustrates the object, spirit or purpose of the relevant provisions of the law. 

Penalties with respect to the GAAR could be imposed.