Before 30 September, review income splitting prescribed rate loans

Transcription

1 September 2013 Before 30 September, review income splitting prescribed rate loans Teresa Gombita, Maureen De Lisser and Bob Neale, Toronto As of 1 October 2013, the ability to create new 1% prescribed rate loans for income splitting will come to an end. The prescribed rate has been 1% since April 2009; it will be increasing to 2% for loans entered into in the 1 October to 31 December 2013 period. If you re considering any prescribed rate loan strategies, consult your EY tax advisor before 30 September to determine the most effective plan for your personal situation. The current low interest rates present a window of tax-planning opportunity for anyone interested in income splitting with their lower-income spouse or partner and/or children or grandchildren. In this issue Updated corporate and personal income tax rates 3 for Getting transfer pricing right is key to success in a globalized environment International Estate and Inheritance Tax Guide 2013 Unanimous shareholders agreement saves CCPC status Publications and articles Building a better working world means understanding your tax situation and how the ever-changing global tax landscape affects you. TaxMatters@EY is a monthly Canadian bulletin that summarizes recent tax news, case developments, publications and more. For more information, please contact your EY advisor.

2 Under the Income Tax Act, the income arising from an investment funded by a loan made to a spouse or partner, minor children and/or grandchildren, or to a trust for minor children and/or grandchildren, is generally taxable to the lender. There are exceptions to these income attribution rules if certain conditions are met. The income attribution rules do not apply when the loan s interest rate is not less than the lesser of: The prescribed rate of interest at the time the loan is made; and The rate that would be charged in similar circumstances to an arm s-length party. The prescribed rate is determined quarterly based on the Government of Canada borrowing rate and applies for the subsequent three-month period. The rate for the period 1 July 2013 to 30 September 2013 is 1% per annum. Effective 1 October 2013, the rate will be 2% per annum. If you make a loan before 30 September 2013 to any of the lower-income family members noted above with an interest rate of 1% per annum, and the funds can be reinvested at higher rates of return, the difference will be taxable to your family members rather than you, which should result in an overall tax saving. To realize this result, the interest charged on the loan must be paid within 30 days of the end of each calendar year. Failure to meet this payment requirement will result in all income earned on the investment of the loan proceeds being taxable to you. If cash is not readily available, but you have a portfolio of securities, you can sell them to other family members for consideration comprising a 1% loan equal to the fair market value of the portfolio. You will have to report the disposition of all the assets sold on your 2013 personal income tax return, so it s important to consider the immediate tax cost of such a strategy. Any capital losses realized will be denied under the superficial loss rules, as your spouse or partner would acquire identical securities within 30 days. For purposes of this planning, the term of the loan can be payable on demand. The interest rate will remain at 1% for as long as the loan is outstanding. Ideally, you should have a separate bank or broker account from your family member to preserve the identity and source of the investments and the resulting income.

3 Updated corporate and personal income tax rates for 2013 Aneela Rojo and Lucie Champagne, Toronto We ve updated our popular corporate and personal income tax rate cards to reflect budget proposals and news releases up to 30 June The updated rate cards include the following: Combined federal provincial corporate rates for smallbusiness rate income, manufacturing and processing income, and general rate income Provincial corporate rates for small business rate income, manufacturing and processing income and general rate income Corporate rates for investment income earned by Canadian-controlled private corporations and other corporations Personal tax rates and credits, by province and territory, for all income levels The updated corporate and personal income tax rate cards include the following budget proposals: British Columbia s increase the general corporate income tax rate from 10% to 11%, effective 1 April 2013 New Brunswick s increase to the general corporate income tax rate from 10% to 12% and its increase to the personal income tax rates for each income bracket, effective 1 July 2013 Prince Edward Island s increase in the small business rate from 1% to 4.5%, effective 1 April 2013 Prince Edward Island s increase in the non-eligible dividend tax credit rate from 1% to 2.9%, effective 1 January 2013 Personal tax calculators Frequently referred to by financial planning columnists, our 2013 personal tax calculator has also been updated as at 30 June This tool lets you compare the combined federal and provincial 2013 personal income tax bill in each province and territory. And our 2013 RRSP savings calculator permits you to calculate the tax saving from your contribution. You ll find these useful resources and several others including our latest perspectives, thought leadership, Tax Alerts, Managing Your Personal Taxes A Canadian Perspective, up-to-date 2013 budget information, past issues of Tax Matters@EY and much more at ey.com/ca/tax. 3 TaxMatters@EY September 2013

4 Getting transfer pricing right is key to success in a globalized environment John Oatway, Toronto As tax controversies continue to make news around the world, 76% of Canadian companies have identified risk management as their highest transfer pricing priority. This is according to EY s 2013 Global Transfer Pricing Survey, appropriately titled Navigating the choppy waters of international tax. That figure beats out the global trend, which shows 66% of companies across the board identified risk management as their highest transfer pricing priority, up 32% from In fact, 100% of Canadian respondents said they had their transfer pricing policy examined by tax authorities, compared to 82% globally. Three key factors are behind this increased focus on risk management: Enforcement Tax authorities are stepping up their enforcement after voicing concern that transfer pricing rules give companies excessive latitude. According to our survey, examinations by revenue authorities have expanded in scope and complexity, while adjustments resulting in penalties are on the rise. Documentation requirements are also being strengthened, and there has been a significant increase in unresolved reviews and audits compared with previous years. Compliance activities Tax authorities in some rapid-growth markets have upped their compliance activities. Transfer pricing policies in markets like India and China that were never reviewed before are now under the microscope. Likely as a result of this scrutiny, our survey found over half of Canadian respondents (52%) are now monitoring financial results quarterly to ensure compliance with transfer pricing policies. While this figure is better than the global finding of 38%, companies here cannot stand still. The growing assertiveness by rapid-growth markets is giving rise to more occurrences of double taxation. In fact, 71% of our Canadian survey respondents reported they had experienced double taxation as a result of an adjustment. Public scrutiny Contributing to the rising importance of transfer pricing risk management is the amount of attention paid to transfer pricing by stakeholders who are not tax professionals. Transfer pricing has become a big topic in the media and among antipoverty and social justice organizations. Despite the fact that many of the protests and rhetoric display a lack of knowledge of how transfer pricing works, the coverage has created a new public perception, and companies that are now facing reputational risks have to reconcile legally compliant tax positions. Considering how the public has come to perceive transfer pricing is only making complying with an increase in a global regulatory framework more complex. As a result, companies need to carefully reassess their transfer pricing priorities. Understanding intercompany transactions, for example, goes beyond having a checklist of technical requirements. Companies need to understand these intercompany transactions so they can explain them to tax authorities. Meanwhile, they need to make sure they have the people and systems in place to undertake frequent reviews and adjustments to transfer prices to eliminate uncertainty of outcomes. To better manage their transfer pricing risk, our survey results suggest companies will have to make a number of changes to the way they plan, implement, document and focus on controversy and resolve disputes. From making sure transfer pricing practices take into account indirect tax implications, to developing high standard documentation in a wide range of countries, to being prepared to rely on new channels of resolution such as advance pricing agreements and arbitration, companies are, in many ways, sailing in uncharted waters. While it s encouraging that Canadian companies are paying attention to transfer pricing risk management, transfer pricing rules are vast and always evolving. Proactively getting the right processes in place to monitor compliance is the only way to avoid costly double taxation and controversy that can take a company off course. For more information, please visit: Navigating the choppy waters of international tax and read our Tax Alert, 2013 Global Transfer Pricing Survey: the shift toward risk management. 4 TaxMatters@EY September 2013

5 International Estate and Inheritance Tax Guide 2013 Teresa Gombita, Toronto EY s International Estate and Inheritance Tax Guide summarizes the estate tax planning systems and describes wealth transfer planning considerations in 36 jurisdictions around the world, including Canada, the US, the UK, Australia, France, Germany, Italy, China and the Netherlands. The guide is designed to enable internationally positioned individuals to quickly identify the estate and inheritance tax rules, practices and approaches in their and their family members country of residence, as well as the rules where their assets might be located. Knowing these various approaches can help you with your estate and inheritance tax planning, investment planning and tax compliance and reporting needs. The guide provides at-a-glance information as well as details on the types of estate planning in each jurisdiction. It includes sections on the following: The types of tax and who is liable Tax rates Various exemptions and relief Payment dates and filing procedures Valuation issues Trusts and foundations Succession, including statutory and forced heirship Matrimonial regimes Intestacy rules and estate tax treaty partners View the complete International Estate and Inheritance Tax Guide Unanimous shareholders agreement saves CCPC status The Queen v PricewaterhouseCoopers Inc., agissant ès qualité de syndic à la faillite de Bioartificial Gel Technologies (Bagtech) Inc., 2013 CAF 164 Jennifer Smith, Ottawa, and Al-Nawaz Nanji, Toronto The Federal Court of Appeal (FCA) has upheld a Tax Court of Canada (TCC) decision that the terms of a unanimous shareholders agreement (USA) that restricted the ability of nonresident shareholders to elect directors was effective in preserving Canadian-controlled private corporation (CCPC) status even though nonresident shareholders collectively held more than 50% of the corporation s voting shares, determining de jure control. Facts The lengthy style of cause in this case is due to the fact that the taxpayer, Bioartificial Gel Technologies (Bagtech) Inc., was a bankrupt corporation and PricewaterhouseCoopers Inc. was its trustee in bankruptcy. At the relevant time, Bagtech operated in the dermopharmaceutical industry, developing different types of dressings designed to accelerate skin healing. It conducted scientific research and experimental development (SR&ED) activities and claimed the refundable investment tax credit of 35% of qualified SR&ED expenditures. No single nonresident held a majority of the taxpayer s shares, but cumulatively nonresidents held 62.52% and 70.42% of its outstanding voting shares in the 2004 and 2005 years, respectively. However, the USA the taxpayer and its shareholders entered into pursuant to the Canada Business Corporations Act (CBCA) gave Canadian residents the right to elect four members of the seven-person board of directors. The Minister reassessed the taxpayer with respect to its 2004 and 2005 taxation years on the basis that it was not a CCPC and was therefore only entitled to the basic nonrefundable SR&ED investment tax credit of 20%. The Minister claimed that the application of the hypothetical shareholder rule in paragraph 125(7)(b) of the Income Tax Act, which aggregates the shareholdings of nonresidents and public corporations for the purposes of determining control, prevented the taxpayer from being a CCPC. Tax Court of Canada decision TCC Justice Paul Bédard first reviewed the CCPC definition in subsection 125(7), which reads as follows: Canadian-controlled private corporation means a private corporation that is a Canadian corporation other than: (a) a corporation controlled, directly or indirectly in any manner whatever, by one or more nonresident persons, by one or more public corporations (other than a prescribed venture capital corporation), by one or more corporations described in paragraph (c), or by any combination of them, (b) a corporation that would, if each share of the capital stock of a corporation that is owned by a nonresident person, by a public corporation (other than a prescribed venture capital corporation), or by a corporation described in paragraph (c) were owned by a particular person, be controlled by the particular person, (c) a corporation a class of the shares of the capital stock of which is listed on a designated stock exchange... He cited the approach set out in the Sedona Networks case (2007 FCA 169), which carried out a two-step analysis in applying paragraph 125(7)(b). First, determine the nonresident persons and public corporations, and 5 TaxMatters@EY September 2013

6 assume that their shareholdings belong to a particular person. Once this allocation is made, determine whether the corporation would be controlled by this person. If so, the corporation is not a CCPC. Meaning of control Justice Bédard next considered the meaning of the word controlled in paragraph (b) of the CCPC definition. He referred to the leading cases of Buckerfields ([1965] 1 R.C.É. 299) and Duha Printers ([1998] 1 S.C.R. 795) to reconfirm that control or controlled for the purposes of the Income Tax Act means de jure control the control that resides in the ownership of shares that carry the voting rights to elect the majority of directors. The de facto control concept only comes into play when the relevant provision of the Income Tax Act uses the phrase controlled, directly or indirectly in any manner whatever (see subsection 256(5.1)). Paragraph 125(7) (a) uses this term, but paragraph 125(7)(b) uses only the word controlled. Justice Bédard emphasized that the jurisprudence dealing with de jure control is not restricted to a very formalistic and narrow interpretation of rights attaching to shares. Rather, the courts will look to whether the majority shareholder enjoys effective control over the company s affairs and fortunes. Unanimous shareholders agreement Duha is the leading Canadian case on de jure control. In that case, Supreme Court of Canada held that, in general, external agreements should not be considered in determining de jure control. However, a USA that is a corporate law hybrid, part contractual and part constitutional in nature, is one of the corporation s constating documents, which also include the articles of incorporation and the corporation s by-laws. As such, it is relevant in determining whether the majority shareholder(s) exercise effective control over the corporation. Justice Bédard noted that the mere fact that a corporation s shareholders have entered into a USA does not automatically mean there will be an impact on de jure control. The court must examine to what extent the terms of the USA would restrict the ability of the majority shareholder to elect members of the board or would impair substantially the power of directors to manage the corporation. Under most corporate statutes, including the CBCA, a USA is an agreement that restricts, in whole or in part, the directors powers to manage the business and the affairs of the corporation. A valid USA binds those who become shareholders after it is signed. Justice Bédard recognized the differing views on whether a valid USA may only include clauses restricting the powers of directors to manage. After reviewing the jurisprudence and various articles written on the subject, including Robert Couzin s 2005 article Reflections on Corporate Control (2005 CTJ 2 p.305), he concluded that provisions in a USA such as the restrictions on the shareholders rights to elect directors would not invalidate a USA. Further, there is no requirement to sever such clauses from a USA, as had been the approach taken in at least one case. Justice Bédard agreed with comments made by Mr. Couzin to the effect that the greater the restrictions a USA places on the directors power to manage the business, the less relevance should be accorded the ownership of the shares that carry the right to elect them. However, in the Bagtech case, these restrictions were considered to be relatively minor limitations on the directors power. The Crown did not take issue with the principle that a USA is one of a corporation s constating documents. However, it argued that the USA should not be taken into account in determining whether the hypothetical shareholder established in paragraph 125(7)(b) controls the corporation. The basis of this argument appeared to be that the hypothetical shareholder could not be bound by the USA, since it could not be a signatory. To hold otherwise would defeat the purpose of the paragraph 125(7)(b) deeming rule, which purports to deny CCPC status where the aggregate shareholdings of nonresidents exceed 50%, even if such nonresidents do not act in concert to exercise control. 6 TaxMatters@EY September 2013

7 Justice Bédard rejected the Crown s argument on the basis that insofar as a legal fiction such as the deeming rule in paragraph 125(7)(b) transforms reality, its scope should be limited to what is clearly expressed, and otherwise it should not change reality (see La Survivance v The Queen, 2006 FCA 129, at para. 55). Therefore, the paragraph 125(7) (b) hypothetical shareholder should be deemed to have the same rights as the nonresident shareholders and would be considered to be bound by the USA. In the end, Justice Bédard allowed the taxpayer s appeal on the basis that the USA prevented the nonresidents from controlling Bagtech under paragraph 125(7)(b). The Minister appealed the decision to the FCA. Federal Court of Appeal decision The Crown s primary argument was that the trial judge interpreted too literally the Supreme Court s comments in Duha dealing with USAs. In the Crown s view, the Supreme Court s goal was to establish general principles applicable to all of Canada, but it is still necessary in applying these principles to consider the applicable provincial or federal corporate statute. Section 146 of the CBCA provides that a USA must include clauses that restrict in whole or in part the powers of the directors to manage the business and the affairs of the company. It does not contemplate clauses restricting the power of the majority shareholder to appoint the board. Therefore, the Crown reasoned, the agreement should be severed, with only the clauses that restricted the powers of the directors to manage being considered to be part of the USA. The FCA disagreed with this restrictive interpretation. It was not prepared to add wording to the Supreme Court s decision in Duha that was not there, in particular, since Duha involved the Manitoba corporate statute, which was similar to the CBCA. Further, a consideration of the Supreme Court s reasoning shows that its decision was not based on a finding that the relevant clauses were not properly part of the USA, but rather that the clauses were not effective to deprive the majority shareholder of the right to appoint the board. The Crown also argued in the alternative that the TCC failed to take into account the impact of amendments to the CBCA since Duha was decided, in particular section 145.1, which confirms the validity of shareholder voting agreements and deals with them separately from USAs, which are dealt with in section 146. In support of this interpretation, the Crown cited a consultation document published by Industry Canada in April 1996 and comments from Industry Canada on the 2001 amendments to the CBCA. Further, the Crown also argued that it was illogical that a restriction on the right of the majority shareholder to appoint directors will not be relevant to the analysis of de jure control if it is contained in a simple voting agreement, but it will be if it is included in a USA. The FCA was not persuaded and noted that in The Queen v Craig (2012 SCC 43), the Supreme Court reiterated that it alone has the power to change its decisions. In any event, the FCA did not find the Crown s arguments to be persuasive for the following reasons: The Industry Canada documents did not support the Crown s alternative argument in the manner suggested by the Crown. It is not unusual in tax law that a different result is achieved by adopting one legal form rather than another. The FCA endorsed the SCC decision as pragmatic and flexible. The special character of the USA and the fact that it is included in the minute books of the corporation, held at the company s headquarters, and can be accessed by any representative of a shareholder or a creditor confirms its status as a public document. This creates certainty and clarity for taxpayers. Conclusion The Crown s appeal was dismissed with costs. Both the FCA decision and the TCC decision provide welcome clarification with respect to the role a USA plays in determining de jure control and are important considerations in planning for CCPC status. The Crown has 60 days from the date of the judgment (21 June 2013) excluding the month of July to seek leave to appeal to the Supreme Court. 7 TaxMatters@EY September 2013

8 Publications and articles Tax Alerts Canada 12 July 2013 technical amendments: foreign affiliates and other measures 2013 Issue No. 31 On 12 July 2013, the Department of Finance released draft legislation containing a range of proposed amendments to the federal Income Tax Act and Regulations applicable mainly in relation to investments in foreign affiliates.. Character conversion transactions transitional measures 2013 Issue No. 32 On 11 July 2013, the Department of Finance released revised transitional measures applicable to the character conversion rules that were proposed as part of the 2013 federal budget. OECD releases BEPS Action Plan 2013 Issue No. 33 On 19 July 2013, the OECD released its Base Erosion and Profit Shifting (BEPS) Action Plan, which lays out its 15 specific focus areas of international tax law and practice for the next phase of its BEPS project. More details on OECD BEPS Action Plan 2013 Issue No. 34 More details on the OECD s BEPS Action Plan. Teletech decision exposes potential pitfalls in obtaining double tax relief 2013 Issue No. 35 The Federal Court of Canada decision in the TeleTech case exposes a number of potential pitfalls for Canadian companies seeking to resolve double taxation arising from transfer pricing on transactions with non-arm slength parties Global Transfer Pricing Survey: the shift toward risk management 2013 Issue No. 36 Transfer pricing remains the number-one tax issue facing multinational companies, but their focus has shifted towards risk management. That s the primary observation from EY s 2013 Global Transfer Pricing Survey. Changes to the large business simplified method and clarification for its application to expenses incurred before 1 January Issue No. 37 The Agence du revenu du Québec announced changes to the large business simplified method for calculating input tax refunds in respect of expense reimbursements, and clarified the application of the method to expenses incurred before 1 January OECD issues Revised Discussion Draft on the Transfer Pricing Aspects of Iintangibles 2013 Issue No. 38 On 30 July 2013, the OECD issued a revised discussion draft on the transfer pricing aspects of intangibles. The document updates the initial discussion draft issued on 6 June 2012 and has been amended in the light of comments received during the public consultation process held in November The OECD invites public comments on the white paper on transfer pricing documentation 2013 Issue No. 39 As part of its project on transfer pricing simplification, the OECD released a white paper on transfer pricing documentation on 30 July The document is intended to initiate an international discussion of ways in which compliance with transfer pricing documentation requirements can be made simpler and more straightforward. Urgent action may be required on upstream loan rules 2013 Issue No. 40 On 26 June 2013, Bill C-48, Technical Tax Amendments Act, 2012, received Royal Assent. Due to the effective dates of the upstream loan rules contained in this legislation, urgent action may be required by some taxpayers to avoid significant adverse tax implications, or to file amended tax returns. CRA MAP report reflects improved timelines and continued high volume of CRA Canada-initiated cases 2013 Issue No. 41 On 8 August 2013, the CRA released its Mutual Agreement Procedure (MAP) Program Report for the fiscal year ending 31 March The report provides an overview of the operations of the MAP program. 8 TaxMatters@EY September 2013

9 Government proposes changes to foreign affiliate dumping rules 2013 Issue No. 42 On 16 August 2013, the federal government proposed draft legislation to introduce a number of revisions to the foreign affiliate dumping rules that were enacted on 14 December These revisions reflect certain lingering concerns that were raised during consultations on the various versions of the proposals before and even after enactment. Finance launches consultation on measures to prevent treaty shopping 2013 Issue No. 43 On 12 August 2013, the Department of Finance released a consultation paper titled Treaty shopping the problem and possible solutions. The paper s release follows the recently issued OECD Action Plan on Base Erosion and Profit Shifting. Publications and articles Exceptional magazine, July December 2013 The concept of entrepreneurship is usually associated with launching and building a business, but as you will see from this edition of Exceptional, some of the most entrepreneurial business leaders have never started a company. Global Tax Policy and Controversy Quarterly Briefing, July 2013 This global publication studies themes and issues related to the continually changing tax policy and tax enforcement landscape. Without question, a key event since our last edition was the OECD s report addressing base erosion and profit shifting (BEPS). In addition to the BEPS project, our publication also provides updates from the European Commission and a range of other jurisdictions experiencing tax developments. Tax transparency: seizing the initiative The public is calling for a clearer picture of organizations tax policies and the amount of tax they pay. The recent debate around fair tax has raised expectations of the level of tax information multinationals provide. However, many organizations we have spoken to are concerned that increased transparency will not deliver greater understanding but will instead create a potentially significant administrative burden and result in divulgence of commercially sensitive information global oil and gas tax guide EY s annual guide provides information about oil and gas tax regimes in 74 countries. The guide can help businesses implement local tax legislation, which varies greatly from general corporate tax regimes. It reports that development of unconventional oil and gas shale oil and gas, in particular is economically possible under current oil prices and many countries are working on altering their fiscal framework to provide incentives for such projects. Websites Business immigration alerts and updates For the latest information on Canadian and US business immigration issues from Egan LLP, a business immigration law firm allied with EY in Canada, visit EganLLP.com. Focus on private business Because we believe in the power of private mid-market companies, we invest in people, knowledge and services to help you address the unique challenges and opportunities you face in the private mid-market space. Online tax calculators and rates Frequently referred to by financial planning columnists, this popular feature on ey.com lets you compare the combined federal and provincial 2012 and 2013 personal tax bills in each province and territory. The site also includes an RRSP savings calculator and personal tax rates and credits for all income levels. Our corporate tax-planning tools include federal and provincial tax rates for small-business rate income, manufacturing and processing rate income, general rate income and investment income. Tax counsel and litigation For news and thought leadership from Couzin Taylor LLP, a tax law boutique allied with EY in Canada, visit CouzinTaylor.com. CA Store Complete Guide to GST/HST, 2013 (21st) Edition Editors: Jean-Hugues Chabot, Dalton Albrecht, Sania Ilahi, David Douglas Robertson Learn more Canada s leading guide on GST includes HST commentary and legislation, as well as a GST QST comparison. Written by EY indirect tax professionals, the guide is consolidated to 15 July Available September To subscribe to TaxMatters@EY and other alerts, visit ey.com/ca/ alerts. For more information on EY s tax services, visit us at ey.com/ca/tax. For questions or comments about this newsletter, Tax.Matters@ca.ey.com. And follow us on 9 TaxMatters@EY September 2013

10 EY Assurance Tax Transactions Advisory About EY EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities. EY refers to the global organization and may refer to one or more of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com.. About EY Tax Services Our tax professionals across Canada provide you with deep technical knowledge, both global and local, combined with practical, commercial and industry experience. We offer a range of tax-saving services backed by in-depth industry knowledge. Our talented people, consistent methodologies and unwavering commitment to quality service help you build the strong compliance and reporting foundations and sustainable tax strategies that help your business achieve its potential. It s how we make a difference. For more information, please visit ey.com/ca. About Couzin Taylor Couzin Taylor LLP is a national firm of Canadian tax lawyers, allied with Ernst & Young LLP, specializing in tax litigation and tax counsel services. For more information, visit CouzinTaylor.com Ernst & Young LLP. All Rights Reserved. A member firm of Ernst & Young Global Limited This publication contains information in summary form, current as of the date of publication, and is intended for general guidance only. It should not be regarded as comprehensive or a substitute for professional advice. Before taking any particular course of action, contact Ernst & Young or another professional advisor to discuss these matters in the context of your particular circumstances. We accept no responsibility for any loss or damage occasioned by your reliance on information contained in this publication. ey.com ED TaxMatters@EY September 2013