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Canada Announces Income Tax Amendments

by Mike Godfrey, Tax-news.com, Washington

19 September 2016


The Canadian Government has published draft legislative proposals to ensure the appropriate application of international tax rules and improve the consistency of certain domestic tax laws.

The proposals will amend the Income Tax Act and related legislation to:

  • Ensure an appropriate income inclusion for stub-year foreign accrual property income on dispositions of foreign affiliate shares;
  • Introduce a new elective rule to provide tax-deferred treatment in respect of dispositions of taxable Canadian property on a foreign merger;
  • Clarify the taxation of dispositions of taxable Canadian property resulting from a "negative adjusted cost base" in a property;
  • Make relieving changes to the "upstream loan" rules;
  • Make relieving changes to the shareholder benefit rules as they apply to foreign corporate reorganizations;
  • Improve the accuracy and consistency of the income tax legislation and regulations;
  • Extend the types of reverse takeover transactions to which the corporate acquisition of control rules apply;
  • Improve the consistency of rules applicable for expenditures in respect of scientific research and experimental development; and
  • Introduce new rules to ensure that the taxable income of federal credit unions will be allocated among the provinces and territories using the same allocation formula as that applicable to the taxable income of banks.

A consultation on the proposals will close on November 15.

TAGS: compliance | tax | tax compliance | revenue guidance | law | legislation | tax planning | Canada | tax breaks | tax reform | regulation

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