Ottawa is attempting to beef up its much-maligned “general anti-avoidance rule” by clarifying its legal application to taxpayer affairs.

The Canada Revenue Agency uses GAAR to derail abusive or artificial tax avoidance schemes. But the courts have been reluctant to apply GAAR to taxpayers and have usually viewed Canada Revenue’s use of GAAR as highly subjective.

In response, Ottawa wants to broaden the application of GAAR. The 2004 budget says GAAR will apply to “misuse or abuse” of income tax regulations, application rules, legislative amendments and tax treaties, on top of misuse or abuse of the Income Tax Act itself.