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.

New funding to support mining and oil and gas exploration in Canada
No. 17, 5 March 2015

On 1 March 2015, the federal government announced the extension of the Mineral Exploration Tax Credit and the new tax treatment of costs for environmental studies and community consultations related to obtaining an exploration permit.

Intra-group services and section 247 of the Income Tax Act
No. 16, 4 March 2015

Recently, the Canada Revenue Agency released new transfer pricing memorandum TPM-15, which clarifies the CRA's policy on several audit and tax issues commonly encountered during the audit of intra-group services. The content of this TPM expands on the guidance discussed in Part 6 of Information Circular IC87-2R.

Investment plan managers: QST compliance requirements
No. 15, 3 March 2015

Following the further QST harmonization on 1 January 2013, some investment plan managers that are not resident in Quebec and not QST registrants wrongly reported a QST "tax adjustment transfer amount" in the GST/HST returns filed with the Canada Revenue Agency. Affected non-registered managers are required to correct the mistake by filing Form VD-406.2, Transfer of a tax adjustment by an investment plan manager not registered for QST purposes.

Cross-currency swap was a hedge
No. 14, 2 March 2015

On 19 February 2015, the Tax Court of Canada (TCC) released its decision in George Weston Limited v. The Queen, 2015 TCC 42. The case challenges the Canada Revenue Agency's (CRA) prior administrative positions regarding the characterization of foreign exchange gains and losses on forward contracts.

CRA targeting TFSAs for audit
No. 13, 27 February 2015

There have been numerous reports recently of the Canada Revenue Agency (CRA) targeting the earnings in tax-free savings accounts (TFSAs).

Nunavut budget 2015-16
No. 12, 25 February 2015

Finance Minister Keith Peterson tabled Nunavut's fiscal 2015-16 budget on 25 February 2015.

Role of multiple-year data in transfer pricing analyses
No. 11, 23 February 2015

Recently, the Canada Revenue Agency (CRA) released new transfer pricing memorandum TPM-16, which reaffirms the CRA's existing positions and provides guidance on the use of multiple-year data in determining an arm's-length price.

Increased CCA for LNG Facilities
No. 10, 20 February 2015

On 19 February 2015, the Department of Finance announced a proposal to increase the capital cost allowance (CCA) rates for property acquired for use in liquefied natural gas (LNG) facilities in Canada.

British Columbia budget 2015-16
No. 09, 18 February 2015

Finance Minister Michael de Jong tabled British Columbia's fiscal 2015-16 budget on 17 February 2015.

First steps toward implementation of OECD/G20 efforts against tax avoidance by multinationals
No. 08, 9 February 2015

On 6 February 2015, the OECD released a trio of papers that address three of the focus areas in its Action Plan on Base Erosion and Profit Shifting (BEPS). It will present these developments during the G20 Finance Ministers' Meeting on 9-10 February 2015.

New filing obligations now in force for GST/HST election for closely related persons
No. 07, 9 February 2015

In January 2015, the CRA released new election form RC4616 to replace form GST25 for GST/HST election for closely related persons.

Northwest Territories budget 2015-16
No. 06, 5 February 2015

Northwest Territories Finance Minister Michael Miltenberger tabled the territory's fiscal 2015-16 budget on 5 February 2015.

New funding to support mining in British Columbia
No. 05, 3 February 2015

On 26 January 2015, British Columbia Premier Christy Clark announced extensions extensions to funding initiatives to support the province's mining sector  - the BC mining flow-through share tax credit and the new mine allowance for qualifying capital costs.

Dramatic change in customs policy on transfer pricing downward adjustments
No. 04, 23 January 2015

The Canada Border Services Agency has removed a longstanding barrier to filing import duty refund claims pursuant to downward transfer pricing adjustments based on post-import amended declared values. This is a dramatic change in policy and very good news for importers of dutiable goods purchased in related-party transactions.

Invoices of accommodation: Important Federal Court of Appeal decision in Salaison Lévesque Inc.
No. 03, 20 January 2015

On 17 December 2014, the Federal Court of Appeal upheld the Tax Court of Canada's decision in the case of Salaison Lévesque Inc., which allowed the taxpayer's appeal for input tax credits that had been disallowed by Revenu Québec in respect of the goods and services tax paid to certain placement agencies that had not remitted the GST collected to the tax authorities.

OECD releases public discussion draft on international VAT-GST guidelines
No. 02, 13 January 2015

Recently, the Organisation for Economic Co-operation and Development (OECD) released a discussion draft in connection with the international value-added tax (VAT)/goods and services tax (GST) guidelines. Comments on the discussion draft are to be submitted by 20 February 2015.

OECD releases five new BEPS discussion drafts
No. 01, 6 January 2015

In December 2014, the Organisation for Economic Cooperation and Development (OECD) released five discussion drafts on income tax topics it will focus on in 2015 as part of its base erosion and profit shifting (BEPS) project. It provided a short period for the submission of comments and announced plans for public consultations.

Ontario surtax relief for mutual fund trusts
No. 63, 15 December 2014

On December 11, 2014 the Ontario Ministry of Finance issued a comfort letter in respect of the application of subsection 105(3) of the Taxation Act, 2007 (the Act) to mutual fund trusts (MFTs). The comfort letter was issued as a response to an inequality that arises between the capital gains refund mechanism (CGRM) and the amount of surtax payable by a trust.

Quebec releases amendments to its mining tax regime
No. 62, 15 December 2014

On 4 December 2014, Bill 13 received first reading in the Quebec National Assembly and is substantively enacted for IFRS financial reporting purposes as of that date. The legislation contains amendments to the province's Mining Tax Act.

Quebec R&D tax credit assistance further restricted
No. 61, 10 December 2014

On 2 December 2014, Quebec Finance Minister Carlos Leitão gave an update on Quebec's economic and financial situation and announced several reductions in tax expenditures, including decreases to Quebec's R&D tax credit assistance.

Quebec 2014 fall economic update
No. 60, 6 December 2014

On 2 December 2014, Quebec Finance Minister Carlos Leitão gave an update on the province's economic and financial situation. The update contains several tax measures affecting individuals and corporations.