Tax Alert – Canada
2014 Tax Alerts
Tax Alerts cover significant tax news, developments and changes in legislation that affect Canadian businesses.
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.
OECD releases discussion draft on follow-up work on treaty abuse under BEPS Action 6
No. 59, 21 November 2014
The Organisation for Economic Co-operation and Development (OECD) released a discussion draft, Follow-up work on BEPS Action 6: preventing treaty abuse, under its Action Plan on Base Erosion and Profit Shifting (BEPS).
Finance confirms position on loading for the reinsurance industry
No. 58, 12 November 2014
The Department of Finance has issued a letter clarifying its intentions on the requirement to self-assess GST/HST on reinsurance. The letter is not binding on the Canada Revenue Agency (CRA) or in a court of law, but it could serve as a strong tool of persuasion in any related discussions with the CRA.
Finance tables Extractive Sector Transparency Measures Act
No. 57, 30 October 2014
The federal government tabled the Extractive Sector Transparency Measures Act on 23 October 2014 as part of Bill C-43, Economic Action Plan 2014 Act, No. 2. The Act is introduced for the purpose of implementing Canada’s international commitments in the fight against corruption.
Insurance swaps and offshore banking arrangements: Bill C-43 (2014)
No. 56, 28 October 2014
On 23 October 2014, the federal government tabled Bill C-43, which includes certain tax measures announced in the 2014 federal budget and earlier with respect to insurance swaps and offshore banking arrangements.
BC tables LNG income tax legislation
No. 55, 22 October 2014
On 21 October 2014, the BC government tabled draft proposals for the new liquefied natural gas (LNG) income tax legislation, as well as for a related natural gas corporate income tax credit. The proposals include a number of substantial changes to the LNG tax regime described in the 2014 provincial budget.
Finance amends TLRE rules for commercial investment fund industry
No. 54, 21 October 2014
On 20 October 2014, the Department of Finance tabled a notice of ways and means motion that includes relief from the application of the loss restriction event rules for certain trusts in the commercial investment funds industry.
Finance tables NWMM for 2014 budget measures and various technical changes
No. 53, 14 October 2014
On 10 October 2014, the Department of Finance tabled a notice of ways and means motion (NWMM) that includes the draft legislative proposals that were released on 29 August 2014 relating to the 2014 federal budget, as well as a number of technical changes to the Income Tax Act and the Income Tax Regulations.
OECD releases highly anticipated 2014 output of BEPS Action Plan
On 16 September 2014, the Organisation for Economic Co-operation and Development (OECD) released a series of deliverables addressing seven of the focus areas in its Action Plan on Base Erosion and Profit Shifting (BEPS). We will be hosting a series of webcasts on these deliverables. Learn more in our recent Tax Alerts:
- OECD releases report under BEPS Action 6 on preventing treaty abuse
No. 52, 25 September 2014
- OECD releases report under BEPS Action 2 on hybrid mismatch arrangements
No. 51, 25 September 2014
- OECD releases report under BEPS Action 13 on transfer pricing documentation and country-by-country reporting
No. 50, 23 September 2014
- OECD issues updated guidance on transfer pricing aspects of intangibles
No. 49, 22 September 2014
- OECD releases interim report under BEPS Action 5 on countering harmful tax practices
No. 48, 22 September 2014
- OECD issues report on the tax challenges of the digital economy under Action 1
No. 47, 22 September 2014
- OECD releases report under BEPS Action 15 on feasibility of developing multilateral instrument to amend bilateral tax treaties
No. 46, 19 September 2014
- OECD releases highly anticipated 2014 output of BEPS Action Plan
No. 45, 19 September 2014
Finance releases draft financial services tax measures
No. 44, 2 September 2014
On 29 August 2014, the Department of Finance released certain legislative proposals affecting financial services organizations stemming from the February 2014 budget and earlier. Interested parties are invited to provide their comments by 28 September 2014.
Finance releases draft international tax measures
No. 43, 2 September 2014
On 29 August 2014, the federal government released for consultation revised legislative proposals to implement measures announced in Economic Action Plan 2014, as well as certain other measures. Several of the measures have implications in the context of international taxation. Interested parties are invited to provide their comments by 28 September 2014.
Finance releases draft legislation for 2014 budget measures and various technical changes
No. 42, 2 September 2014
On 29 August 2014, the Department of Finance released a package of draft legislative proposals and explanatory notes relating to a number of measures announced in the 2014 federal budget, plus a number of technical changes to the Income Tax Act and Regulations. Interested parties are invited to provide comments on the proposals by 28 September 2014.
New protocol concluded to Canada–UK tax treaty
No. 41, 24 July 2014
On 21 July 2014, the Canadian and UK governments signed a protocol to amend their bilateral tax treaty.
Highlights from the CRA’s 2013-14 APA Program Report
No. 40, 14 July 2014
On 14 July 2014, the Canada Revenue Agency released its Advance Pricing Arrangement (APA) Program Report for the fiscal year ending 31 March 2014. Learn more in our latest Tax Alert.
Ontario budget 2014–15
No. 39, 14 July 2014
Ontario Finance Minister Charles Sousa tabled the province’s post-election fiscal 2014–15 budget on 14 July 2014.
Revised Form T1135: CRA announces permanent relief for 2014 and later years
No. 38, 10 July 2014
On 8 July 2014, the Canada Revenue Agency (CRA) released a revised Form T1135, Foreign Income Verification Statement, for Canadians required to report specified foreign property with a total cost of over $100,000 for 2014 and later taxation years. Among the changes included in the new version, further summarized below, the CRA essentially adopts on a permanent basis a streamlined reporting method similar to the transitional reporting method introduced for 2013, and eliminates the T3/T5 reporting exception.
Decision released in Marzen Aluminum transfer pricing case
No. 37, 19 June 2014
On 10 June 2014, the Tax Court of Canada released its judgment in Marzen Artistic Aluminum Ltd. v The Queen. The case has several important implications for transfer pricing in Canada and adds to the growing body of Canadian transfer pricing jurisprudence.
CRA MAP report reflects continued improvement of timelines and high volume of Canada-initiated cases
No. 36, 12 June 2014
On 9 June 2014, the Canada Revenue Agency (CRA) released its Mutual Agreement Procedure (MAP) Program Report for the fiscal year ending 31 March 2014.
CRA issues revised memorandum on contemporaneous documentation
No. 35, 5 June 2014
On 28 March 2014, the Canada Revenue Agency (CRA) issued a revised Transfer Pricing Memorandum, Requests for Contemporaneous Documentation, replacing the previous memorandum on this topic it issued in 2004 and clarifying several issues.
Quebec budget 2014-15
No. 34, 4 June 2014
Quebec Minister of Finance Carlos J. Leitão tabled the new government’s fiscal 2014-15 budget on 4 June 2014.
Nunavut budget 2014-15
No. 33, 26 May 2014
Finance Minister Keith Peterson tabled Nunvaut’s fiscal 2014–15 budget on 26 May 2014.
Ontario budget 2014-15
No. 32, 1 May 2014
Finance Minister Charles Sousa tabled Ontario's fiscal 2014–15 budget on 1 May 2014.
Lehigh Cement: FCA interprets 95(6)(b) as a status manipulation rule
No. 31, 25 April 2014
On 23 April 2014, the Federal Court of Appeal (FCA) released its much-anticipated decision and reasons in The Queen v Lehigh Cement Limited et al. The decision upheld the Tax Court of Canada’s decision, which had allowed the taxpayers’ appeals, but for very different reasons.
Finance releases draft legislation for sales tax technical amendments
No. 30, 16 April 2014
On 8 April 2014, the Department of Finance released for public comment draft legislative proposals and explanatory notes relating to technical changes to the Excise Tax Act and related regulations.
Prince Edward Island budget 2014-15
No. 29, 9 April 2014
Finance Minister Wesley J. Sheridan tabled Prince Edward Island’s fiscal 2014-15 budget on 8 April 2014
The Organisation for Economic Cooperation and Development (OECD) has released Discussion Drafts in connection with Action 1, Tax challenges of the digital economy, and Action 2, Hybrid mismatch arrangements, under its Action Plan on Base Erosion and Profit Shifting (BEPS).
Nova Scotia budget 2014–15
No. 26, 4 April 2014
Finance Minister Diana Whalen tabled Nova Scotia’s fiscal 2014-15 budget on 3 April 2014.
OECD hosts second webcast update on BEPS project
No. 25, 3 April 2014
On 2 April 2014, the Organisation for Economic Cooperation and Development (OECD) hosted its second webcast on its Action Plan on Base Erosion and Profit Shifting. The discussion focused on progress and deliverables related to the Actions that have a September 2014 delivery date.
Newfoundland and Labrador budget 2014–15
No. 24, 28 March 2014
Finance Minister Charlene Johnson tabled Newfoundland and Labrador’s fiscal 2014-15 budget on 27 March 2014.
Nonresident trust rules – relieving elections
No. 23, 27 March 2014
Amendments to the nonresident trust rules, which had been in proposal form for many years, were finally enacted on 26 June 2013. A nonresident trust to which these rules apply will be deemed to be resident in Canada for certain purposes and taxed on its worldwide income and gains. Certain relieving elections are available, the filing deadlines for which are either 31 March 2014 or 25 June 2014.
Yukon budget 2014–15
No. 22, 26 March 2014
Finance Minister Darrell Pasloski tabled Yukon’s fiscal 2014–15 budget on 25 March 2014.
Saskatchewan budget 2014–15
No. 21, 20 March 2014
Finance Minister Ken Krawetz tabled Saskatchewan’s fiscal 2014–15 budget on 19 March 2014 in Regina.
Manitoba and Alberta budgets 2014–15
Nos. 19 and 20, 7 March 2014
GST/HST election for closely related persons
No. 18, 5 March 2014
The 2014 federal budget proposes a number of changes to the “nil consideration” election that is currently available to relieve the GST/HST that would otherwise apply to certain transactions between members of a closely related group. Subject to one exception noted in this alert, these changes will take effect for elections made on or after 1 January 2015 and will apply to supplies made between parties to such an election on or after that date.
Revised Form T1135: CRA announces new transitional relief for 2013
No. 17, 27 February 2014
On 26 February 2014, the Canada Revenue Agency (CRA) announced new transitional relief for Canadians who must comply with more detailed Form T1135 information reporting requirements for foreign property with a cost of over $100,000. The transitional relief, which applies only for the 2013 taxation year, is intended to assist taxpayers in transitioning to the more onerous reporting requirements, and responds to concerns raised by taxpayers and various stakeholders.
Related party R&D/design costs dutiable in Canada: Skechers USA Canada Inc. v The President of the CBSA
No. 16, 26 February 2014
In one of the most important customs cases in years, the Canadian International Trade Tribunal has just confirmed an aggressive interpretation by the Canada Border Services Agency (CBSA) concerning additions to the transaction value for inter-company payments outside of the invoice amount or transfer price relating to design and development costs allocated to the importer.
Federal budget introduces new international tax measures
No. 15, 24 February 2014
The federal budget tabled on 11 February 2014 includes a number of measures targeting specific elements of Canada’s international tax system including insurance, offshore regulated banks, back-to-back loans and immigration trusts. The budget also announces new public consultations on a broader range of international tax issues, and confirms the government’s intention to proceed with certain previously announced reforms.
OECD releases standard on automatic exchange of financial account information
No. 14, 21 February 2014
On 13 February 2014, the Organisation for Economic Cooperation and Development (OECD) released a model Competent Authority Agreement and Common Reporting Standard (CRS) designed to create a global standard for the automatic exchange of financial account information. The CRS represents another global compliance burden for financial institutions and increases the risks and costs of serving globally mobile wealthy customers.
Quebec budget 2014-15
No. 13, 20 February 2014
Minister of Finance and the Economy Nicolas Marceau tabled Quebec's fiscal 2014-15 budget on 20 February 2014.
British Columbia budget 2014-15
No. 12, 18 February 2014
Finance Minister Michael de Jong tabled British Columbia's fiscal 2014-15 budget on 18 February 2014.
Invoices of accommodation: important Tax Court of Canada decision in Salaison Lévesque Inc.
No. 11, 13 February 2014
On 4 February 2014, the Tax Court of Canada rendered a key decision in Salaison Lévesque Inc. on whether the Quebec Revenue Agency was correct in refusing the taxpayer's claim for input tax credits in respect of GST paid to certain placement agencies that had not remitted the GST to the tax authorities. Learn more in our latest Tax Alert.
Federal budget 2014–15
No. 10, 11 February 2014
Read our analysis of the 2014 federal budget, tabled on 11 February in the House of Commons by Finance Minister Jim Flaherty.
Canada and the US sign intergovernmental agreement to implement FATCA
No. 09, 10 February 2014
On 5 February 2014, Canadian Finance Minister Jim Flaherty announced that Canada has signed an intergovernmental agreement (IGA) with the US regarding the enhanced exchange of tax information in connection with the Foreign Account Tax Compliance Act (FATCA). The Department of Finance also released legislative proposals to implement the IGA under Canadian law, related explanatory notes and a selection of FAQs with responses.
Northwest Territories budget 2013–14
No. 08, 7 February 2014
Finance Minister Michael Miltenberger tabled the Northwest Territories’ fiscal 2014–15 budget on 6 February 2014.
New Brunswick budget 2014–15
No. 07, 5 February 2014
Finance Minister Blaine Higgs tabled New Brunswick's fiscal 2014–15 budget on 4 February 2014.
OECD releases draft country-by-country reporting template for comment
No. 06, 31 January 2014
On 30 January 2014, the Organisation for Economic Cooperation and Development (OECD) released the much anticipated draft of its proposed template for country-by-country reporting to tax authorities in its Discussion Draft on Transfer Pricing Documentation and CbC Reporting.
Many employers are not properly reporting employee taxable benefits
No. 05, 27 January 2014
Many employees are facing thousands of dollars in back income taxes and interest charges after the Canada Revenue Agency (CRA) found that certain taxable benefits were not properly reported as employment income on the employees’ personal income tax returns. Their employers are also facing penalties and interest for failure to withhold and remit income taxes and the reporting of taxable benefits in their employees’ T-4s.
GST/HST exemption for patient and visitor hospital parking
No. 04, 27 January 2014
On 24 January 2014, the Department of Finance announced that supplies of hospital parking will generally be exempt, whether they are made by the hospital itself, by an affiliated charity such as a foundation or by another public service body. Parking supplied by a charity or other public service body in any other circumstances will generally be taxable.
Details released on Canada’s new Offshore Tax Informant Program
No. 03, 16 January 2014
On 15 January 2014, the CRA released details of its Offshore Tax Informant Program (OTIP). First announced in the 2013 federal budget, the program is intended to allow the CRA to make financial rewards to individuals who provide information related to major international tax non-compliance that leads to the collection of Canadian taxes owing.
CETA’s impact on the mining and energy products sector
No. 02, 9 January 2014
The Comprehensive Economic and Trade Agreement (CETA), agreed to in principle by the executive branches of Canada and the EU in October 2013, will offer new trade and supply chain opportunities for importers, exporters and investors in the mining and energy products sector.
TCC dismisses appeal on transfer pricing reassessment of 2003 factoring transactions
No. 01, 7 January 2014
On 28 December 2013, the Tax Court of Canada (TCC) made public its 13 December judgment in McKesson Canada Corporation v The Queen.