Section 182 is the substantive equivalent of 1961 s. 99 -- the PRESUMPTION rule for GAAR proceedings. In determining whether tax benefit exists in an arrangement, the AO is to compare ACTUAL tax position with HYPOTHETICAL tax position…
182
ITA 2025 · Section 182
Section 182 — - PRESUMPTION OF TAX BENEFIT
Section 182 is the substantive equivalent of 1961 s. 99 -- the PRESUMPTION rule for GAAR proceedings. In determining whether tax benefit exists in an arrangement, the AO is to compare ACTUAL tax position with HYPOTHETICAL tax position absent the arrangement. The provision creates a rebuttable presumption based on objective comparison. The hypothetical comparator helps quantify 'tax benefit' for purposes of s. 179 main-purpose test.
STATUTORY ARCHITECTURE
Tax benefit determination methodology: (a) Identify ACTUAL tax position of assessee in light of arrangement; (b) Construct HYPOTHETICAL tax position assuming arrangement was not entered (or alternative reasonable arrangement); (c) Compare; tax benefit = difference. If positive (actual tax < hypothetical), tax benefit exists. The presumption shifts evidentiary burden to assessee to demonstrate either (i) no tax benefit, or (ii) main purpose was NOT obtaining tax benefit. Practical implication: assessee documentation must include (a) commercial rationale; (b) alternative-considered analysis; (c) reasonable-businessperson-test demonstration.
CROSS-REFERENCES