Tax Alert – Canada

Tax Alert – Canada

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Tax Alerts cover significant tax news, developments and changes in legislation that affect Canadian businesses.

OECD releases final reports on BEPS Action Plan
No. 50, 7 October 2015

On 5 October 2015, the Organisation for Economic Co-operation and Development (OECD) released final reports on all 15 focus areas in its Action Plan on Base Erosion and Profit Shifting (BEPS).

Natural Resources Canada releases extractive sector transparency reporting guidance
No. 49, 17 September 2015

Natural Resources Canada has released draft guidance for reporting requirements under the Extractive Sector Transparency Measures Act for specific types of payments made to all levels of government, both domestic and foreign, by businesses engaged in the commercial development of oil, natural gas and minerals. The draft guidance is open for consultation until 22 September 2015.

Newfoundland and Labrador to raise HST by 2%
No. 48, 28 August 2015

In its 2015-16 budget, Newfoundland and Labrador announced a 2% increase in the provincial component of the harmonized sales tax (HST) from 8% to 10%, effective 1 January 2016. The new combined HST in the province will be 15%. The province recently released a notice outlining transitional rules in respect of the rate change.

Highlights from the CRA's 2014-15 APA Program Report
No. 47, 25 August 2015

On 17 August 2015 the Canada Revenue Agency (CRA) released its Advance Pricing Arrangement (APA) Program Report for the fiscal year ending 31 March 2015 (covering the period from 1 April 2014 to 31 March 2015). The report provides an overview of the operations of the APA program, including statistical analyses of APAs completed and in progress. APAs completed in 2014-15 were again at a historic high. Interest in the program remains high, with applications received in 2014-15 returning to the average historic level after experiencing a dip in 2013-14.

CRA MAP report reflects steady production on transfer pricing cases, bubble of pension cases
No. 46, 25 August 2015

On 14 August 2015, the Canada Revenue Agency (CRA) released its Mutual Agreement Procedure (MAP) Program Report for the fiscal year ending 31 March 2015 (covering the period from 1 April 2014 to 31 March 2015). The report provides an overview of the operations of the MAP program, including statistical analyses of cases completed and in progress, covering cases dealing with resolution of double taxation or taxation not in accordance with a bilateral tax treaty.

More clarification on tax withholding obligations for nonresident employers with frequent business travellers to Canada
No. 45, 7 August 2015

On 31 July 2015, the Department of Finance released draft legislative proposals and explanatory notes relating to a number of measures announced in the 2015 federal budget. The measures include relief from the Canadian tax withholding requirements for certain payments by qualifying non-resident employers to qualifying non-resident employees. The 31 July release addresses some unanswered questions in respect of the budget proposal.

Finance releases draft legislation for 2015 budget and resource-related tax measures
No. 44, 31 July 2015

On 31 July 2015, the Department of Finance released draft legislative proposals and explanatory notes relating to a number of measures announced in the 2015 federal budget and a previously announced measure relating to the tax treatment of certain resource-related expenses. Interested parties are invited to comment by 30 September 2015.

Quebec: meet the automobile insurance premium tax remittance deadline
No. 43, 29 June 2015

On 2 December 2014, Finance Quebec announced that the reduced tax rate of 5% on automobile insurance premiums would be abolished effective 1 January 2015. Accordingly, the 9% general tax rate applies to all automobile insurance premiums paid after 31 December 2014.

TCC rejects mark-to-market accounting for option contracts
No. 42, 24 June 2015

Recently, the Tax Court of Canada (TCC) issued its judgement in the tax appeal of Kruger Inc. v. The Queen, 2015 TCC 119. The primary issue was the computation of income under s. 9 of the Income Tax Act and specifically whether "mark-to-market" accounting is an acceptable method of computing profit for tax purposes trading foreign currency option contracts.

Measure to support the BC mining sector comes into force
No. 41, 24 June 2015

On 22 May 2015, the BC Government extended the period for the new mine allowance for qualifying capital costs through to 31 December 2019. It was previously set to expire in 2015.

CRA requests tax working papers
No. 40, 22 June 2015

The Federal Court of Canada recently released its decision in Minister of National Revenue v BP Canada Energy Company with respect to whether the Minister of National Revenue is entitled to compel a taxpayer to produce tax accrual working papers.

Prince Edward Island budget 2015-16
No. 39, 19 June 2015

Finance Minister Allen Roach tabled Prince Edward Island's fiscal 2015-16 budget on 19 June 2015.

Alberta increases corporate and personal income tax rates
No. 38, 18 June 2015

Alberta Finance Minister Joe Ceci tabled Bill 2, An Act to Restore Fairness to Public Revenue. The bill will give effect to a 2% corporate income tax rate increase and a new system of progressive personal income taxes.

CRA changes policy for approval of customized forms
No. 37, 16 June 2015

Companies that prepare customized versions of various federal annual tax information forms will no longer be required to submit sample versions to the CRA for approval.

Recaptured input tax credits to be phased out in Ontario
No. 36, 16 June 2015

The Canada Revenue Agency recently released GST/HST Info Sheet GI-171, Phasing out of Recaptured Input Tax Credits in Ontario. The info sheet explains the process under which the current requirement for certain large businesses to recapture input tax credits will be phased out starting 1 July 2015.

Proposed changes to section 55
No. 35, 8 June 2015

The 2015 federal budget proposes to amend the anti-avoidance rule in subsection 55(2) of the Income Tax Act. The proposed amendments, together with other changes to section 55, represent a significant revision of the provisions in section 55 and their application. The amendments, as currently proposed, may inadvertently affect internal reorganizations, as well as the movement of cash or other assets within Canadian corporate groups.

Extractive Sector Transparency Measures Act now in force
No. 34, 1 June 2015

The Extractive Sector Transparency Act came into force on 1 June 2015. Extractive companies subject to the act will be required to report payments including taxes, royalties, fees and production entitlements of $100,000 or more to all levels of government in Canada and abroad.

Synthetic equity arrangements
No. 33, 4 May 2015

Budget 2015 proposes to modify the dividend rental arrangement rules to deny a deduction for an inter-corporate dividend on a share in respect of which the taxpayer has entered into a "synthetic equity arrangement" with a person not subject to tax in Canada. The provisions will apply to dividends that are paid or become payable after October 2015.

Manitoba budget 2015-16
No. 32, 1 May 2015

Finance Minister Greg Dewar tabled Manitoba's fiscal 2015-16 budget on 30 April 2015.

Newfoundland and Labrador budget 2015-16
No. 31, 1 May 2015

Finance Minister Russ Wiseman tabled Newfoundland and Labrador's fiscal 2015-16 budget on 30 April 2015.

Ontario budget 2015-16
No. 28, 23 April 2015

Finance Minister Charles Sousa tabled Ontario's fiscal 2015-16 budget on 23 April 2015.

Federal budget 2015–16
No. 25, 21 April 2015

Read our complete analysis of the 2015 federal budget. And to hear more in-depth analysis and perspectives on the budget, watch our webcast.

Also available: Video-on-demand viewing of the post-budget breakfast hosted by the Ottawa Chamber of Commerce and the Ottawa Business Journal. Minister of Employment and Social Development Pierre Poilievre, Abacus Data Chairman Bruce Anderson and National Post columnist John Ivison joined EY’s Fred O’Riordan to discuss the budget’s political, economic and tax impacts.

Additional analysis:

Yukon budget 2015-16
No. 23, 2 April 2015

Finance Minister Darrell Pasloski tabled Yukon's fiscal 2015-16 budget on 2 April 2015.

New Brunswick budget 2015-16
No. 22, 1 April 2015

Finance Minister Roger Melanson tabled New Brunswick's fiscal 2015-16 budget on 31 March 2015.

Alberta budget 2015–16
No. 21, 26 March 2015

Finance Minister Robin Campbell tabled Alberta's fiscal 2015-16 budget on 26 March 2015.

Quebec budget 2015–16
No. 20, 26 March 2015

Finance Minister Carlos J. Leitão tabled Quebec's fiscal 2015-16 budget on 26 March 2015.