Canada’s Department of Finance has released proposed international tax legislation, including measures to implement the government’s 2014 budget, but said it decided to postpone action on anti-treaty shopping legislation.
The proposals, released on August 29, include amendments to Canada’s foreign affiliate dumping rules, which came into force in 2012, and changes to the foreign affiliate rule definition of “non-qualifying country.”
Tax measures implementing 2014 budget proposals include new limits on the exception for “investment business” in the foreign accrual property income regime, a tightening of foreign accrual property income rules to address offshore insurance swaps and ensure income derived from insurance of Canadian risks is taxed appropriately, and provisions dealing with back-to-back loan arrangements involving an intermediary.
The government said that following consultations on anti-treaty shopping, it decided to wait for the OECD/G-20 to act in its base erosion profit shifting (BEPS) plan before it advances the budget proposal in this area. Action 6 of the BEPS action plan concerns prevention of treaty abuse.
Release, Legislative Proposals Relating to Income Tax and Sales Tax (282 KB), Explanatory Notes Relating to the Income Tax Act, Excise Tax Act and Related Legislation (1.1 MB)
More analysis: KPMG
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