Adverse Canada-U.S. Tax Treaty Hybrid Entity Rules Coming into Effect January 1, 2010
|
|
- Neil Lamb
- 5 years ago
- Views:
Transcription
1 Update page 1 Adverse Canada-U.S. Tax Treaty Hybrid Entity Rules Coming into Effect January 1, 2010 New rules in the Canada-United States Income Tax Convention (Treaty) will deny treaty benefits for many cross-border payments derived through, or paid by, certain hybrid entities on or after January 1, Recent guidance from the Canada Revenue Agency (CRA) together with prior guidance from the U.S. Treasury provide important assistance in interpreting these rules. However, each cross-border arrangement that includes a hybrid entity must be carefully reviewed to determine whether the new rules apply. In many cases, the adverse consequences of these rules may be avoided through a timely reorganization, although the optimal reorganization steps will depend on the particular facts and circumstances. overview of hybrid entity rules The new rules apply to certain income, profit or gains derived through, or paid by, a hybrid entity, beginning January 1, A hybrid entity is an entity (such as certain partnerships, Canadian unlimited liability companies, or U.S. limited liability companies) that is treated as fiscally transparent in one of Canada or the United States, but not in the other country. The new rules will prevent Treaty benefits from applying to many common investment structures. For example, the new rules may apply to certain hybrid entities that carry on business through a branch in the other country, realize gains on the sale of certain property, or that pay dividends, interest and royalties. Where applicable, the new rules will, among other things, increase to 25% the Canadian withholding tax rate on dividends, interest or royalties paid by a Canadian unlimited liability company to a U.S. resident (that otherwise qualifies for benefits under the Treaty). By comparison, absent the application of the new rules, the Canadian withholding tax rate would be 5% or 15% on dividends (depending on whether the holder owns at least 10% of the voting shares of the company paying the dividends), 0% on interest, and 0% or 10% on royalties (depending on the nature of the royalty payment). These rules could also result in similar payments by a U.S. hybrid partnership to a Canadian resident being subject to 30% U.S. withholding tax, rather than the reduced Treaty rates. While in some cases the higher
2 page 2 withholding tax may be offset by foreign tax credits available to the recipient, in many cases it will result in increased tax costs. As a result, cross-border arrangements involving hybrid entities must be carefully considered to determine whether (and which) steps should be taken to ensure that Treaty benefits continue to apply. technical aspects of the hybrid entity rules in article IV(7) Article IV(7)(a) applies to payments to, or amounts derived by, a resident of Canada or the United States (Recipient) through a hybrid entity that is treated as not fiscally transparent by the residence country but that is treated as fiscally transparent by the other country. This type of hybrid entity would include a partnership formed in Canada (or other non-u.s. jurisdiction) with U.S.-resident partners, where the partners have elected to treat the partnership as a corporation for U.S. tax purposes. Article IV(7)(b) applies to payments to, or amounts derived by, a resident of Canada or the United States from a hybrid entity that is treated as fiscally transparent by the residence country but that is treated as not fiscally transparent by the other country. This type of hybrid entity would include a Canadian unlimited liability company that is treated as fiscally transparent for U.S. tax purposes. Treaty benefits will be denied under Article IV(7) where the tax treatment of the amount in question under the tax laws of the residence country is not the same as it would be if the amount had been derived directly by the Recipient, in the case of Article IV(7)(a), and, if the hybrid entity were not fiscally transparent under the laws of the residence country, in the case of Article IV(7)(b) (Same Treatment Test). The U.S. Treasury provided guidance for interpreting and applying the Same Treatment Test in a technical explanation released on July 10, 2008 (the Technical Explanation ). Also on that date, the Canadian Department of Finance issued a press release indicating that Canada agreed with the technical explanation. (Details of that guidance are set out in our Osler Update of July 11, 2008.) Despite this guidance, many significant questions regarding how the Same Treatment Test would be applied to common scenarios remained unanswered. recent cra guidance On Novemeber 24, 2009, at the Canadian Tax Foundation annual conference and in a technical interpretation released the next day (Technical Interpretation), the CRA provided important guidance on the technical aspects of Article IV(7) and its applicability in various scenarios. The CRA also provided some guidance on the circumstances in which, in its view, the general anti-avoidance rule (GAAR) could apply to deny Treaty benefits that would otherwise be available. In the Technical Interpretation, the CRA stated that an amount of Canadian-source income, profits or gains will be considered to receive the same U.S. tax treatment if each of (i) the timing of the recognition/inclusion of the amount, (ii) the character of the amount, and (iii) the quantum of the amount are the same. Although the U.S. Treasury
3 page 3 Technical Explanation also referred to the source of the income as being relevant in applying the Same Treatment Test, the CRA took the position that a difference in the geographic source of a payment would not be relevant for purposes of the Same Treatment Test, provided the geographic source did not affect the U.S. tax treatment of the income in question (e.g., the source of the income item does not modify the timing of recognition/inclusion, quantum or character of the amount for U.S. tax purposes). For instance, although the source (as determined for U.S. tax purposes) of a particular income item may affect the computation of the U.S. recipient s foreign tax credit limitation and thereby produce, in a broad sense, a U.S. tax difference, the CRA to ok the position that this type of difference was not sufficient to engage Article IV(7)(b), presumably because it had no impact on the timing, quantum or character of the underlying income item itself. examples of situations where article IV(7)(a) or (b) will not apply The CRA indicated that Article IV(7)(a) and (b) would not apply to deny Treaty benefits in the following situations, subject to the potential application of GAAR in a particular circumstance: Increase and Reduction of Paid-up Capital (PUC) by a Hybrid ULC A Canadian unlimited liability company that is fiscally transparent for U.S. tax purposes and regarded as a corporation for Canadian tax purposes (Hybrid ULC) has a U.S. resident shareholder. Rather than paying a dividend to which Article IV(7)(b) would apply, Hybrid ULC (i) increases its PUC, resulting in a deemed dividend for Canadian tax purposes, and (ii) later pays a distribution to its shareholder as a return of capital. The PUC increase creates a deemed dividend from a Canadian tax perspective, but is ignored from a U.S. tax perspective (regardless of the treatment of Hybrid ULC for U.S. tax purposes). The CRA stated that Article IV(7)(b) would not apply to deny the reduced rate of withholding tax applicable to the deemed dividend under the Treaty since the deemed dividend satisfies the Same Treatment Test. No Canadian withholding tax applies on the subsequent return of capital distribution under Canadian domestic tax law. The CRA also indicated that GAAR should not apply to this arrangement in plain vanilla situations. Luxembourg Intermediary A Luxembourg société à responsabilité limitée (SARL) is inserted between a U.S. shareholder and its Hybrid ULC subsidiary. The SARL is considered to be a resident of Luxembourg for Canadian tax purposes, but is disregarded for U.S. tax purposes. Although Article IV(7)(b) would otherwise have denied benefits under the Treaty, the CRA indicated that the Canada-Luxembourg tax treaty should apply to provide reduced withholding tax rates provided that the SARL is the beneficial owner of any dividends paid by Hybrid ULC. (See our Osler Update of March 2, 2009 for further information on the meaning of beneficial ownership for tax treaty purposes.)
4 page 4 Interest Payments by Hybrid ULC to U.S. Grandparent All of the shares of a Hybrid ULC are owned by a U.S. subsidiary (USSub) of a U.S. corporation (USco). Hybrid ULC has a debt owing to USco. USco and USSub file a consolidated tax return for U.S. federal income tax purposes. In that consolidated tax return, interest included in the income of USco is offset by the interest expense deduction of USSub since, for U.S. tax purposes, USco would be considered to have made a loan to USSub. If Hybrid ULC were not fiscally transparent for U.S. tax purposes, there would have been no offsetting interest expense deduction available to the USco consolidated group. The CRA nevertheless indicated that the Same Treatment Test would be satisfied in this circumstance because only the item of income, being the interest, and not the corresponding expense item, is relevant for purposes of the analysis in Article IV(7)(b). Since USco would be considered to have received interest income whether or not Hybrid ULC is fiscally transparent for U.S. tax purposes, the Same Treatment Test is satisfied and Article IV(7)(b) does not apply. Hybrid ULC with More than One Shareholder USco and USSub each own shares of a Hybrid ULC. Hybrid ULC has a debt owing to USco. Hybrid ULC is treated as a partnership, rather than a disregarded entity, for U.S. tax purposes since it has more than one shareholder. For U.S. tax purposes interest paid by Hybrid ULC is considered to be paid to USco, which is the same treatment that would apply if Hybrid ULC were regarded as a corporation (despite the fact that where Hybrid ULC is treated as a partnership, USco would be entitled to reduce its interest income by its share of Hybrid ULC s interest expense). The CRA indicated that Article IV(7)(b) would not apply to interest payments made by Hybrid ULC to USco, since the Same Treatment Test would be satisfied. Sale of Shares of Hybrid ULC USco sells shares of Hybrid ULC to an arm s length purchaser. For Canadian tax purposes USco realizes a capital gain on the sale of shares. For U.S. tax purposes USco is considered to have sold the assets of Hybrid ULC. If Hybrid ULC had been regarded as a corporation for U.S. tax purposes USco would have been considered to have sold the shares of Hybrid ULC, rather than its assets, which could result in a difference in the character and quantum of the income or gains derived by USco. However, the CRA indicated that Article IV(7)(b) would not apply on the basis that the sale proceeds were received from an arm s length purchaser, rather than from the Hybrid ULC. As a result, USco would be eligible for an exemption for Canadian capital gains tax under the Treaty. The CRA noted, however, that if Hybrid ULC redeemed, acquired or cancelled its shares from USco Article IV(7)(b) could apply to both deemed dividends or gains arising on the disposition of the shares (since USco would be considered to have received such amounts from Hybrid ULC). The CRA also noted that Article IV(7)(b) could apply to any deemed dividend that could arise under Canadian domestic law on the transfer of shares of Hybrid ULC by USco to another Canadian ULC wholly-owned by USco.
5 page 5 Royalty Paid to a Third Party A Hybrid ULC is wholly-owned by USco. Hybrid ULC is granted a right to use a patented manufacturing process by a third party that is resident in the United States and eligible for benefits under the Treaty ( IP Holder ). Hybrid ULC pays license fees to IP Holder. For U.S. tax purposes, IP Holder would be considered to have received the license fees from USco, rather than Hybrid ULC. The CRA confirmed that the Same Treatment Test would be met in this situation since the quantum, character and timing of the payment received by IP Holder is the same whether or not Hybrid ULC is fiscally transparent for U.S. tax purposes. The only difference is the identity of the payor for U.S. tax purposes, which is not sufficient to cause the Same Treatment Test to not be met. As a result, IP Holder would be entitled to the reduced rate of withholding tax on royalties under the Treaty. examples of situations where article IV(7)(a) or (b) will apply In contrast to the examples summarized above, the CRA indicated that Article IV(7)(a) or (b) would apply to deny Treaty benefits in the following situations: Hybrid Partnership with Canadian Source Income A U.S. corporation (USco) and its wholly-owned U.S. subsidiary (USSub) are members of a Canadian partnership that is fiscally transparent for Canadian tax purposes, and regarded as a corporation for U.S. tax purposes (Hybrid Partnership). Hybrid Partnership holds shares and debt of a Canadian corporation (Canco), and owns a patent that is licensed to Canco. Hybrid Partnership also directly carries on business activities in Canada but does not have a permanent establishment in Canada. o o Income Earned by Hybrid Partnership: For U.S. tax purposes dividends, interest and royalties paid by Canco to Hybrid Partnership, or income earned by Hybrid Partnership from its Canadian business activities, would be treated as income of a Canadian corporation (i.e., Hybrid Partnership), which is different than what the treatment would be if Hybrid Partnership had been treated as fiscally transparent for U.S. tax purposes. The CRA considers Article IV(7)(a) to apply on the basis that the Same Treatment Test would not be satisfied. As a result, the dividends, interest and royalty payments would be subject to Canadian withholding tax at a rate of 25% and business income earned by Hybrid Partnership would be taxable in Canada, since the permanent establishment exemption in the Treaty would not apply. Gain on Sale of Shares of Canco: For U.S. tax purposes, a gain realized on the sale of the shares of Canco would be considered to have been realized by Hybrid Partnership, rather than by USco and USSub. In contrast, if Hybrid Partnership were fiscally transparent for U.S. tax purposes, each of USco and USSub would have been required to include its allocable share of the gain in income. As a result, the CRA considers the Same Treatment Test to not be satisfied in this scenario and would apply Article IV(7)(a). The result is that USCo and USSub would not be entitled to a Treaty exemption in respect of any taxable capital gain realized on the disposition of the Canco shares.
6 page 6 o The CRA is of the view that the result in both these cases would not change if USCo and USSub were required to include the income or gains earned by Hybrid Partnership in income on an accrual basis under the U.S. anti-deferral rules (i.e., the U.S. subpart F or passive foreign investment company rules). ULC with One Shareholder USco owns all of the outstanding shares of a Hybrid ULC. USco makes an interest bearing loan to Hybrid ULC. For U.S. tax purposes, interest paid by Hybrid ULC to USco is disregarded. If Hybrid ULC had instead been regarded as a corporation for U.S. tax purposes, USco would have been required to include the interest in its income on a current basis. As a result, the Same Treatment Test is not met. Accordingly, Article IV(7)(b) will apply to deny USco the benefit of the Treaty and Canadian withholding tax at a rate of 25% will apply to the interest payments made by Hybrid ULC to USCo. Back to Back Dividends USco holds shares of Hybrid ULC which holds shares of a Canadian corporation (Canco). On the same day, Hybrid ULC pays a dividend to USco in an amount equal to the dividend it receives from Canco. From a U.S. tax perspective, USco is considered to have received a dividend from Canco. If Hybrid ULC had been regarded as a corporation for U.S. tax purposes, USco would have been considered to have received a dividend from Hybrid ULC, rather than Canco. Although a dividend from Canco would be similar to a dividend from Hybrid ULC, the CRA notes that the U.S. tax treatment is different. As the Same Treatment Test is not satisfied, Article IV(7)(b) applies to the dividend paid by Hybrid ULC to USco. cross-border arrangements need to be reviewed Given the impending effectiveness of the Treaty changes discussed above, cross-border arrangements should be reviewed to determine whether restructuring transactions should be implemented. There are a number of Canadian and U.S tax considerations to be taken into account in making such a determination. The Osler cross-border tax team is uniquely qualified in such matters and would be pleased to help with your deliberations. If you require any assistance, or have any other questions relating to the Treaty, please contact any member of our National Tax Department. U.S. Tax (IRS Circular 230): Any U.S. tax or other legal advice in this update is not intended and is not written to be used, and it cannot be used, by any person to avoid penalties under U.S. federal, state or local tax law, or promote, market or recommend to any person any transaction or matter addressed herein. This Osler Update is available in the Publications & News section of osler.com. This memorandum is a general overview of the subject matter and cannot be regarded as legal advice. Subscribe to a full range of updates at osler.com. You can unsubscribe at any time at osler.com or counsel@osler.com osler.com Toronto Montréal Calgary Ottawa New York
The U.S. Canada Tax Treaty Protocol:
The U.S. Canada Tax Treaty Protocol: Impacts and Planning Opportunities Todd Miller Partner Federated Press: Cross-Border Personal Tax Planning May 21-22, 2013 The Canada US Tax Treaty Protocol: Impacts
More informationThe U.S. Canada Tax Treaty Protocol: Impacts and Planning Opportunities
The U.S. Canada Tax Treaty Protocol: Impacts and Planning Opportunities Todd Miller, Partner McMillan LLP Michael Domanski, Partner Honigman Miller Schwartz and Cohn LLP Federated Press: Tax Planning for
More informationThe Canada U.S. Tax Treaty Protocol: Impact and Planning Opportunities
The Canada U.S. Tax Treaty Protocol: Impact and Planning Opportunities Todd A. Miller, Partner McMillan LLP Michael Domanski, Partner Honigman Miller Schwartz and Cohn LLP Presented at: Federated Press:
More informationCanada s federal budget affects back-to-back arrangements
Canada s 2016-17 federal budget affects back-to-back arrangements On 22 March 2016, Canada s Minister of Finance introduced the first budget of the new Liberal government. The budget contains limited measures
More informationTAX LAW BULLETIN U.S. SENATE RATIFIES FIFTH PROTOCOL. TRANSPARENT ENTITIES BEWARE! By Elinore Richardson and Stephanie Wong, Borden Ladner Gervais LLP
OCTOBER 2008 U.S. SENATE RATIFIES FIFTH PROTOCOL TO TREATY WITH CANADA: FISCALLY TRANSPARENT ENTITIES BEWARE! By Elinore Richardson and Stephanie Wong, Borden Ladner Gervais LLP TAX LAW BULLETIN www.blgcanada.com
More informationTechnical News. Income Tax. No. 44 April 14, Valuation of Special Voting Shares
Income Tax Technical News No. 44 April 14, 2011 This version is only available electronically. In This Issue Valuation of Special Voting Shares Key Employee Tax-Free Savings Account Corporate-Held Life
More informationUS-Canada Tax Strategies for US Entities Expanding to Canada
US-Canada Tax Strategies for US Entities Expanding to Canada Allinial Global Summit Conference Charleston, SC November 17, 2015 Bill Macaulay, CPA, CA Expanding Business into Canada Overview Key issues
More informationTechnical News. No. 36 July 27, Income Tax. Paragraph 95(6)(b) Principal Purpose
Income Tax Technical News No. 36 July 27, 2007 This version is only available electronically. In This Issue Paragraph 95(6)(b) The Income Tax Technical News is produced by the Legislative Policy and Regulatory
More informationDraft and Recently-enacted Amendments Impact Canadian Outbound Investment Tax Rules
Update page 1 Draft and Recently-enacted Amendments Impact Canadian Outbound Investment Tax Rules On December 18, 2009, the Canadian Department of Finance (Finance) released a package of proposed foreign
More informationRecent Developments in Corporate Taxation. Greg Bell, KPMG Chris Jerome, EY 7 June Ottawa
Recent Developments in Corporate Taxation Greg Bell, KPMG Chris Jerome, EY 7 June 2017 - Ottawa 2017 Agenda Budget overview Business income tax measures Personal income tax measures 2016 CTF Annual Conference
More informationCanada: Taxation Law Overview
Canada: Taxation Law Overview Stikeman Elliott LLP Taxation Law Overview Income Tax... 2 General... 2 Taxation of Canadian Residents (Basic Principles)... 2 Taxation of Non-Residents of Canada (Basic Principles)...
More informationBudget 2016: New Rules Targeting Back-To-Back Arrangements
Tax Bulletin March 2016 Budget 2016: New Rules Targeting Back-To-Back Arrangements Budget 2016 proposes a series of new rules targeting the perceived use of back-to-back structures to (i) reduce Canadian
More informationJanuary 8, Dear Mr. Ernewein: Fifth Protocol
The Joint Committee on Taxation of The Canadian Bar Association and The Canadian Institute of Chartered Accountants The Canadian Institute of Chartered Accountants 277 Wellington St. W., Toronto Ontario,
More informationSUMMARY OF INTERNATIONAL TAX LAW DEVELOPMENTS
SUMMARY OF INTERNATIONAL TAX LAW DEVELOPMENTS SIMPSON THACHER & BARTLETT LLP FEBRUARY 12, 1998 In the past year there have been many developments affecting the United States taxation of international transactions.
More informationCritical Securities and Tax Considerations for Inside Counsel in Canadian Cross-Border Mergers
Critical Securities and Tax Considerations for Inside Counsel in Canadian Cross-Border Mergers Inside Counsel - Business Insights for Law Department Leaders Jeffrey Roy Partner, Cassels Brock & Blackwell
More informationLUXEMBOURG GLOBAL GUIDE TO M&A TAX: 2018 EDITION
LUXEMBOURG 1 LUXEMBOURG INTERNATIONAL DEVELOPMENTS 1. WHAT ARE RECENT TAX DEVELOPMENTS IN YOUR COUNTRY WHICH ARE RELEVANT FOR M&A DEALS AND PRIVATE EQUITY? Corporate income tax ( CIT ) rate The CIT rate
More informationDeclaration of eligibility for benefits (reduced tax) under a tax treaty for a hybrid entity
Declaration of eligibility for benefits (reduced tax) under a tax treaty for a hybrid entity Protected B when completed NR303 Use this form if you are a hybrid entity that is: Subject to tax under Part
More informationUS Citizens as Shareholders of Canadian Companies Impact on Reorganizations and Other Canadian Tax Consequences
68 th Annual Tax Conference (2016) Calgary, AB INTERNATIONAL TAXATION Disclaimer: This material is for educational purposes only and is not intended to be advice on any particular matter. No one should
More informationDoing Business in Canada: Key Canadian Tax Considerations
Doing Business in Canada: Key Canadian Tax Considerations Foreign enterprises have long been attracted to investment opportunities in Canada. Canada has led the G7 in growth in total inbound investment
More informationThe Foreign Affiliate System. Robert Raizenne June 2, 2011
The Foreign Affiliate System Robert Raizenne June 2, 2011 3453191 The Legislative Scheme Subdivision (i) of Division B of Part I Section 90 Dividend received inclusion Sections 91 and 92 FAPI rules Section
More informationINBOUND INVESTMENT - CROSS-BORDER ISSUES
INBOUND INVESTMENT - CROSS-BORDER ISSUES Taxation of Non-Residents Property Income Christopher Steeves, Fasken Martineau DuMoulin LLP Intercompany Pricing Rules Blake Murray, Osler, Hoskin & Harcourt LLP
More informationPurchase and Sale of a Business Share Sales. Douglas A. Cannon
Purchase and Sale of a Business Share Sales Douglas A. Cannon Planning the Transaction Individuals are generally subject to a combined Ontario/federal tax rate of 26.57% on eligible dividends and at a
More informationIssue One Americas Region and PKF NAN February Chairman s Note
Issue One Americas Region and PKF NAN February 2009 Chairman s Note Welcome to the first edition of the PKF International Tax Alert, a publication designed to summarise key tax changes from around the
More informationSection 894. Income Affected by Treaty
46876, 46877) under section 894 of the Code relating to eligibility for benefits under income tax treaties for payments to entities. A notice of proposed rulemaking (REG 104893 97, 1997 2 C.B. 646) cross-referencing
More informationCanada Releases Foreign Affiliate Dumping Amendments
Volume 71, Number 10 September 2, 2013 Canada Releases Foreign Affiliate Dumping Amendments by Steve Suarez Reprinted from Tax Notes Int l, September 2, 2013, p. 864 Reprinted from Tax Notes Int l, September
More informationBEPS ACTION 2: NEUTRALISE THE EFFECTS OF HYBRID MISMATCH ARRANGEMENTS
Public Discussion Draft BEPS ACTION 2: NEUTRALISE THE EFFECTS OF HYBRID MISMATCH ARRANGEMENTS (Treaty Issues) 19 March 2014 2 May 2014 Comments on this note should be sent electronically (in Word format)
More informationForms of Business Organization in Canada
There are several different vehicles available for conducting a business in, each with its own advantages and disadvantages. A foreign entity looking to carry on business in should consider key factors,
More informationSECTION 86 ROLLOVERS, AMALGAMATIONS, SECTION 88 WIND-UPS
SECTION 86 ROLLOVERS, AMALGAMATIONS, SECTION 88 WIND-UPS This issue of the Legal Business Report provides current information to the clients of Alpert Law Firm on various types of corporate reorganisations.
More informationCROSS-BORDER INCOME TAX ISSUES IN OUTBOUND ESTATE PLANNING. Jenny Coates Law, PLLC, International Tax Lawyer
CROSS-BORDER INCOME TAX ISSUES IN OUTBOUND ESTATE PLANNING Jenny Coates Law, PLLC, International Tax Lawyer jenny@jennycoateslaw.com Increased Tax Complexity Whether between the US and Canada or the US
More informationTAX UPDATE. By Marc G. Darmo and Gwendolyn G. Watson. The Advisory Panel on Canada s System of International Taxation released its Final Report:
March 2009 TAX UPDATE A report on cross-border developments in Canadian tax law Final Report of the Advisory Panel on Canada s System of International Taxation By Marc G. Darmo and Gwendolyn G. Watson
More informationTAX UPDATE. A report on cross-border developments in Canadian tax law. Relief for Non-Residents of Canada on Canadian Property Dispositions
April 2010 TAX UPDATE A report on cross-border developments in Canadian tax law Relief for Non-Residents of Canada on Canadian Property Dispositions By Gabrielle M. R. Richards Budget 2010 proposes significant
More informationBEPS Targets Commonly Used Canada-U.S. Hybrid Structures
BEPS Targets Commonly Used Canada-U.S. Hybrid Structures Abraham Leitner aleitner@dwpv.com Reprinted from Tax Notes Int l Tax Analysts (2015) www.dwpv.com Volume 77, Number 6 February 9, 2015 BEPS Targets
More informationPart XIII Tax & Traps. Malya Amghar Laura Gheorghiu
Part XIII Tax & Traps 2018 Malya Amghar Laura Gheorghiu Agenda 1. Scope of Part XIII 2. Income subject to Part XIII 3. Back-to-back loans, royalties and dividends 4. Compliance 2 Part XIII Tax 212(1) Every
More informationCanada-US Tax Treaty: New Developments in the Taxation of the Energy Industry
Page 1 ASSOCIATION OF CORPORATE COUNSEL TITLE: in the Taxation of the Energy Industry DATE: PRESENTED BY: ACC Energy Committee SPONSORED BY: Fraser Milner Casgrain, LLP FACULTY: MODERATOR: Anne Calverley,
More information2007 Update to Doing Business in China via the Cayman Islands
2007 Update to Doing Business in China via the Cayman Islands by fred greguras and bart bassett Many companies doing business in China are using a structure which includes a company formed under the laws
More informationAnti Avoidance Rules and Treaty Shopping (including Limitation of Benefits) CA Sanjay Tolia. December 2014
Anti Avoidance Rules and Treaty Shopping (including Limitation of Benefits) CA Sanjay Tolia Agenda Treaty shopping - Concept Key anti-avoidance measures in tax treaties Limitation on Benefits Beneficial
More informationUnderstanding the Basic Building Blocks of the Canadian Foreign Affiliate Rules
Understanding the Basic Building Blocks of the Canadian Foreign Affiliate Rules Michael Friedman, McMillan LLP (Toronto) Andrew Stirling, McMillan LLP (Toronto) 25 th Foreign Affiliates Course Federated
More informationMODULE 2.10 UNITED STATES OPTION
THE ADVANCED DIPLOMA IN INTERNATIONAL TAXATION June 2018 MODULE 2.10 UNITED STATES OPTION ADVANCED INTERNATIONAL TAXATION (JURISDICTION) TIME ALLOWED 3¼ HOURS This exam paper has three parts: Part A, Part
More informationTable of Contents. Part I La Brienza Winery: Tax Trouble in Wine Country. Chapter 1 Introduction: The Vital Role of Tax in Global Management
Table of Contents Part I La Brienza Winery: Tax Trouble in Wine Country Chapter 1 Introduction: The Vital Role of Tax in Global Management La Brienza Winery, Present Day...3 The Two Objectives of International
More informationPresented to: NRF Canadian Tax Clients. New U.S. tax legislation Impact on Selected Cross-Border Transactions
January 11, 2018 Presented to: NRF Canadian Tax Clients New U.S. tax legislation Impact on Selected Cross-Border Transactions Adrienne Oliver Tel: (416) 216-1854 email: adrienne.oliver@nortonrosefulbright.com
More information3.2. EU Interest-Royalty Directive Background and force
3.2. EU Interest-Royalty Directive 3.2.1. Background and force Force The Council Directive (2003/49/EC) on a Common System of Taxation Applicable to Interest and Royalty Payments Made between Associated
More informationUpdate. Amend and Extends Emerge as New Trend in U.S. Loan Markets
Update Amend and Extends Emerge as New Trend in U.S. Loan Markets A current and anticipated future lack of refinancing sources for maturing loans, coupled with the recent surge in secondary loan market
More informationBuckwold and Kitunen, Canadian Income Taxation, Ed. 1. Tax planning and tax avoidance mean the same thing. Is this statement true? Explain.
Buckwold and Kitunen, Canadian Income Taxation, 2014-2015 Ed. CHAPTER 2 FUNDAMENTALS OF TAX PLANNING Review Questions 1. Tax planning and tax avoidance mean the same thing. Is this statement true? Explain.
More informationForms of Business Organizations in Canada
Forms of Business Organizations in Canada There are several different forms of business organizations available for conducting business in Canada, each with its own advantages and disadvantages. In selecting
More informationCertain Canadian Federal Income Tax Considerations
The following summary is intended to provide information that may be of assistance to a beneficial owner of a Trust Unit or a Maple Leaf Share, as the case may be, who disposes, or is deemed to have disposed,
More informationPrinciples of International Tax Planning
Overview and Learning Objectives This course is aimed at analysing the fundamentals of international tax planning in a structured and consistent manner, deepening the knowledge of tax planning techniques
More informationMANAGING INTERNATIONAL TAX ISSUES
MANAGING INTERNATIONAL TAX ISSUES Starting A Business Retirement Strategies Operating A Business Marriage Investing Tax Smart Estate Planning Ending A Business Off to School Divorce And Separation Travel
More informationTaxation of cross-border mergers and acquisitions
Taxation of cross-border mergers and acquisitions Sweden kpmg.com/tax KPMG International Taxation of cross-border mergers and acquisitions a Sweden Introduction The Swedish tax environment for mergers
More informationInternational Tax Primer Andrew D. Oppenheimer, Esq. October 31, 2017
International Tax Primer Andrew D. Oppenheimer, Esq. October 31, 2017 Agenda International tax concepts Taxation of foreign earnings Sourcing of income and expenses Foreign tax credits Subpart F income
More informationTax Planning International Review
Tax Planning International Review Source: Tax Planning International Review: News Archive > 2018 > 04/30/2018 > Articles > Anti abuse legislation: The Importance of Substance in a Private Equity Fund Context
More informationCourse-Level Assessment Project: Computation of Taxes Payable and Providing Tax Planning Advice to a Corporate Client
Course Description This course builds on concepts learned in introductory financial accounting and microeconomics and in the study of the fundamentals of the Canadian Income Tax System with respect to
More informationtaxnotes U.S. Tax Reform: The End of the LLC? international by Elan Harper and Azam Rajan Reprinted from Tax Notes Interna onal, July 30, 2018, p.
taxnotes U.S. Tax Reform: The End of the LLC? by Elan Harper and Azam Rajan Reprinted from Tax Notes Interna onal, July 30, 2018, p. 465 international Volume 91, Number 5 July 30, 2018 U.S. Tax Reform:
More informationLuxembourg Country Profile
Luxembourg Country Profile EU Tax Centre June 2018 Key tax factors for efficient cross-border business and investment involving Luxembourg EU Member State Yes Double Tax Treaties With: Albania (a) Andorra
More informationEMPLOYEE STOCK OPTIONS
TAX LETTER May 2015 EMPLOYEE STOCK OPTIONS FOREIGN EXCHANGE GAINS AND LOSSES CAREGIVER AND INFIRM DEPENDENT CREDITS MAKING TAX INSTALMENTS EARNED INCOME FOR RRSP PURPOSES AROUND THE COURTS EMPLOYEE STOCK
More informationIreland Country Profile
Ireland Country Profile EU Tax Centre June 2018 Key tax factors for efficient cross-border business and investment involving Ireland EU Member State Yes Double Tax Treaties With: Albania Armenia Australia
More informationPartnerships and the Foreign Affiliate Regime
Partnerships and the Foreign Affiliate Regime John J. Tobin and Tony R. Vacca Presented at the Federated Press, Foreign Affiliates Conference, November 16, 2000 INTRODUCTION A Canadian corporation that
More informationSPECIAL CONCERNS FOR CROSS-BORDER TAX PLANNING. Jenny Coates Law, PLLC Seattle Tax Group - Sept. 17, 2012
SPECIAL CONCERNS FOR CROSS-BORDER TAX PLANNING 1 Jenny Coates Law, PLLC www.jennycoateslaw.com; Seattle Tax Group - Sept. 17, 2012 Increased Tax Complexity Whether between the US and Canada or the US and
More informationStudy on Structures of Aggressive Tax Planning and Indicators
Study on Structures of Aggressive Tax Planning and Indicators Platform for Tax Good Governance 15 March 2016 Gaëtan Nicodème Context Fair and efficient corporate tax system: priority of the Commission
More informationCross Border Joint Ventures Canadian/US
67 th Annual Tax Conference 67e Conférence fiscale annuelle 2015 OUTLINE I. A. Choice of entity B. Formation transaction C. Foreign tax credit utilization D. Income allocations E. Outside basis F. Transfer
More informationTable of Contents. General Information INCOME TAX INFORMATION CIRCULAR
INCOME TAX INFORMATION CIRCULAR NO.: IC72-17R6 DATE: September 29, 2011 SUBJECT: Procedures concerning the disposition of taxable Canadian property by non-residents of Canada Section 116 This version is
More informationKPMG report: Initial impressions, proposed regulations implementing anti-hybrid provisions of new tax law
KPMG report: Initial impressions, proposed regulations implementing anti-hybrid provisions of new tax law December 21, 2018 kpmg.com 1 The U.S. Treasury Department and IRS on December 20, 2018, released
More informationSession Report: US Model Treaty 2015 Proposals
Session Report: US Model Treaty 2015 Proposals By Christie Galinski Session: The New Model Treaty and Treasury Explanation: What Is Proposed and What Is Needed September 18, 2015: 2015 Joint Fall Meeting:
More informationThe credit will apply in respect of expenditures made on or after January 1, 2016.
April 21, 2015 Federal Budget STEP Canada Summary 1. PERSONAL INCOME TAX PROPOSALS Tax-Free Savings Account Increased Contribution Limit Budget 2015 proposes to increase the annual contribution limit for
More informationChina s SAT publishes new rules on beneficial owners
World Tax Advisor Connecting you globally. 23 February 2018 China s SAT publishes new rules on beneficial owners On 3 February 2018, China s State Administration of Taxation (SAT) published new rules (Bulletin
More informationTaxation of cross-border mergers and acquisitions
Taxation of cross-border mergers and acquisitions Canada kpmg.com/tax KPMG International Taxation of cross-border mergers and acquisitions a Canada Introduction Although not defined by statute, the phrase
More informationNew United States-Japan Tax Treaty Enters Into Force: New Withholding Rates Take Effect on July 1, 2004
New United States-Japan Tax Treaty Enters Into Force: New Withholding Rates Take Effect on July 1, 2004 4/2/2004 Client Alert On March 30, 2004, the Governments of the United States and Japan exchanged
More informationU.S. Tax Legislation Corporate and International Provisions. Corporate Law Provisions
U.S. Tax Legislation Corporate and International Provisions On December 20, 2017, Congress enacted comprehensive tax legislation (the Act ). This memorandum highlights some of the important provisions
More informationCanadian Tax Alert. US tax reform impact on M&A and the private equity industry. Contacts:
Canadian Tax Alert US tax reform impact on M&A and the private equity industry January 24, 2018 President Trump made history on December 22, 2017 when he signed into law the most significant US tax reform
More informationAHLA. A. The Globalization of Health Care Opportunities and Potential Pitfalls. Michael Domanski Honigman Miller Schwartz and Cohn LLP Detroit, MI
AHLA A. The Globalization of Health Care Opportunities and Potential Pitfalls Michael Domanski Honigman Miller Schwartz and Cohn LLP Detroit, MI Timothy A. A. Stiles KPMG LLP New York, NY Tax Issues for
More informationRecent Developments in Corporate Taxation Post-Mortem Tax Planning A Case Study
Recent Developments in Corporate Taxation Post-Mortem Tax Planning A Case Study 2017 Pamela Cross, Borden Ladner Gervais, LLP David Mason, Deloitte June 7, 2017, OTTAWA Agenda - Post Mortem Planning 1.
More informationTaxation of Employee Stock Options
A common incentive program provided by Canadian employers is a stock option plan. These programs grant employees (including directors) the right to acquire a set number of shares of the employer (or parent)
More informationProposed Anti-Hybrid Regulations under Sections 267A, 245A, and 1503(d)
Proposed Anti-Hybrid Regulations under Sections 267A, 245A, and 1503(d) Friday, January 25, 2019 On December 20, 2018, the Internal Revenue Service (the IRS ) and the Department of the Treasury (the Treasury
More informationTAX CONSEQUENCES FOR U.S. CITIZENS AND OTHER U.S. PERSONS LIVING IN CANADA
TAX CONSEQUENCES FOR U.S. CITIZENS AND OTHER U.S. PERSONS LIVING IN CANADA Over the past few years, there has been increased media attention in Canada with respect to the U.S. income tax filing requirements
More informationIMPORTANT INFORMATION FOR THE LIVE PROGRAM
U.S.-Canadian Dual Taxation Pitfalls: Reporting Issues and Planning Opportunities for U.S. Taxpayers Navigating Tax Treaties to Minimize Tax on Passive Income and Pass-Through Income THURSDAY, APRIL 27,
More informationEligibility for Treaty Benefits Under The Sweden-U.S. Income Tax Treaty
Volume 67, Number 4 July 23, 2012 Eligibility for Treaty Benefits Under The Sweden-U.S. Income Tax Treaty by Jason Connery, Douglas Poms, and Jennifer Blasdel-Marinescu Reprinted from Tax tes Int l, July
More informationWhat Entity Do You Want To Be?
What Entity Do You Want To Be? Presenters: Carla M. Smaston, Plante Moran Chip Chambley, Dixon Hughes Goodman, LLP Agenda I. Choice of Entity for Foreign Operations Overview of U.S. System Tax Classifications
More informationWhen Do the Stop-Loss Rules Apply? Transactions Involving Foreign Affiliates After the 2012 Technical Bill
canadian tax journal / revue fiscale canadienne (2016) 64:3, 561-600 When Do the Stop-Loss Rules Apply? Transactions Involving Foreign Affiliates After the 2012 Technical Bill Jim Samuel* PRÉCIS Le projet
More informationLEGAL ALERT LUXEMBOURG UPCOMING TAX CHANGES NOVEMBER
LEGAL ALERT LUXEMBOURG UPCOMING TAX CHANGES NOVEMBER - 2017 ã2017 I. INTRODUCTION The major tax changes expected in Luxembourg in the coming months are introduced by five different sets of legislation.
More informationBusiness Income Tax. Small Business Tax Rate
Business Income Tax Small Business Tax Rate The small business deduction currently reduces to 11 per cent the federal corporate income tax rate applying to the first $500,000 per year of qualifying active
More informationEXPOSURE DRAFT TREASURY LAWS AMENDMENT (OECD HYBRID MISMATCH RULES) BILL 2017 EXPLANATORY MEMORANDUM
EXPOSURE DRAFT TREASURY LAWS AMENDMENT (OECD HYBRID MISMATCH RULES) BILL 2017 EXPLANATORY MEMORANDUM Table of contents Glossary... 1 Chapter 1 OECD hybrid mismatch rules... 3 Chapter 2 Other effects of
More informationManaging the Sales of Canadian Businesses A Vendor s Perspective
, Borden Ladner Gervais LLP, Toronto, CPA, CA, TEP, Cadesky Tax, Toronto 67 th Annual Tax Conference 67e Conférence fiscale annuelle 2015 Our Current Tax and Business Environment Low corporate tax rates
More informationIssue Three PKF North America / Americas Region December 2009
Issue Three PKF North America / Americas Region December 2009 Welcome to the third Edition (December 2009) of PKF International Tax Alert, a publication designed to summarise key tax changes around the
More informationTax Update. Employees vs. Independent Contractors and Cross-Border Employment Issues. L. David Fox, Partner
Tax Update Employees vs. Independent Contractors and Cross-Border Employment Issues L. David Fox, Partner Employee vs. Independent Contractor Why Relevant? Due diligence (e.g., purchase agreements) Tax/payroll
More informationAGNICO-EAGLE MINES LIMITED DIVIDEND REINVESTMENT
AGNICO-EAGLE MINES LIMITED DIVIDEND REINVESTMENT AND SHARE PURCHASE PLAN Introduction This dividend reinvestment plan (the "Plan") is being offered to the registered or beneficial holders (the "Shareholders")
More informationHARPER S FIRST MAJORITY GOVERNMENT BUDGET TAX CHANGES INCLUDE TARGETED MEASURES TO CLOSE PERCEIVED LOOPHOLES
HARPER S FIRST MAJORITY GOVERNMENT BUDGET TAX CHANGES INCLUDE TARGETED MEASURES TO CLOSE PERCEIVED LOOPHOLES Taxnet Pro March 2012 Prepared by the McCarthy Tétrault Tax Group and published by Carswell,
More informationSOUTH AFRICA GLOBAL GUIDE TO M&A TAX: 2017 EDITION
SOUTH AFRICA 1 SOUTH AFRICA INTERNATIONAL DEVELOPMENTS 1. WHAT ARE RECENT TAX DEVELOPMENTS IN YOUR COUNTRY WHICH ARE RELEVANT FOR M&A DEALS AND PRIVATE EQUITY? In the 2016 Budget Review, tax avoidance
More informationFDU: U.S. International Corporate Tax
190 Controlled Foreign Corporations 191 CFCs: Introduction Subpart F designed to prevent deferral of portable income Applies to US Shareholders of Controlled Foreign Corporations earning Subpart F income
More informationEXPLANATORY NOTES - FOREIGN AFFILIATE AMENDMENTS
Page 1 EXPLANATORY NOTES - FOREIGN AFFILIATE AMENDMENTS Overview Various provisions of the Income Tax Act (the Act ) and Income Tax Regulations (the Regulations ) that deal with foreign affiliates of taxpayers
More informationTAX NEWSLETTER. April 2016
TAX NEWSLETTER April 2016 PROPOSED AMENDMENTS TO DONATION RULES FOR ESTATES THE DIVIDEND TAX CREDIT TAXATION AND PARTNERSHIPS LOW-INTEREST EMPLOYEE LOANS REPLACEMENT PROPERTY RULES AROUND THE COURTS However,
More informationTaxation of cross-border mergers and acquisitions
Taxation of cross-border mergers and acquisitions The Netherlands kpmg.com/tax KPMG International The Netherlands Introduction The Dutch tax environment for cross-border mergers and acquisitions (M&A)
More informationCANADA GLOBAL GUIDE TO M&A TAX: 2018 EDITION
CANADA 1 CANADA INTERNATIONAL DEVELOPMENTS 1. WHAT ARE RECENT TAX DEVELOPMENTS IN YOUR COUNTRY WHICH ARE RELEVANT FOR M&A DEALS AND PRIVATE EQUITY? Legislative amendments in the past few years now strongly
More informationTax & Estate Planning for Snowbirds
Tax & Estate Planning for Snowbirds Amin Mawani Schulich School of Business York University amawani@schulich.yorku.ca Taxes do influence behaviour Windowless Castles Narrow frontages SIN & gasoline taxes
More informationHybrid and branch mismatch rules
August 2018 A special report from Policy and Strategy, Inland Revenue Hybrid and branch mismatch rules Sections FH 1 to FH 15, EX 44(2), EX 46(6)(e), EX 46 (10)(db), EX 47B, EX 52(14C), EX 53(16C), RF
More informationIFA Conference. Hybrid Instruments Olivier Van Ermengem May 2016, Nice. A and A
IFA Conference. Hybrid Instruments Olivier Van Ermengem May 2016, Nice A31877602 and A31886727 OECD BEPS Report - Action 2 Neutralising the Effects of Hybrid Mismatch Arrangements. Luxembourg General principles
More informationIntroduction to the Taxation of Foreign Investment in U.S. Real Estate
Introduction to the Taxation of Foreign Investment in U.S. Real Estate October 2009 Contents Introduction 1 Taxation of Income from U.S. Real Estate 2 Taxation of U.S. Entities and Individuals 2 Taxation
More informationPresidential Fiscal Year 2011 Revenue Proposals
Presidential Fiscal Year 2011 Revenue Proposals President Releases Fiscal Year 2011 International Taxation Proposals SUMMARY On February 1, 2010, the Obama Administration (the Administration ) released
More informationTax Court of Canada Shaves Benefits of Hybrid Entity Financing Structure
Volume 65, Number 6 February 6, 2012 Tax Court of Canada Shaves Benefits of Hybrid Entity Financing Structure by Nathan Boidman and Michael Kandev Reprinted from Tax Notes Int l, February 6, 2012, p. 455
More informationTAX ELECTION INSTRUCTIONS
TAX ELECTION INSTRUCTIONS Capitalized terms not defined in these instructions have the meaning assigned to them in the offer dated November 16, 2009 (the "Offer") made by Toromont Industries Ltd. ("Toromont")
More informationDECLARATION OF ELIGIBILITY FOR BENEFITS UNDER A TAX TREATY FOR A PARTNERSHIP WITH NON-RESIDENT PARTNERS
DECLARATION OF ELIGIBILITY FOR BENEFITS UNDER A TAX TREATY FOR A PARTNERSHIP WITH NON-RESIDENT PARTNERS Use this form if you are a that is: Subject to tax under Part XIII of the Income Tax Act The payer
More informationNo Need for Section 116 Clearance Certificate for Capital Distributions From An Estate to a U.S. Beneficiary
No Need for Section 116 Clearance Certificate for Capital Distributions From An Estate to a U.S. Beneficiary Thursday, October 27, 2016 Application to the Estates Context Often, an estate will both hold
More information