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Highlights
FEATURE ARTICLE
The Fifth Protocol to the Canada-U.S. Income Tax
Convention
Monica Biringer, Elinore J. Richardson
New domestic non-resident
withholding tax rules enacted on December 15, 2007 and provisions in the Fifth
Protocol to the Canada-U.S. Income Tax Convention, when ratified by the United
States, will have a significant effect on the structuring of debt financing and
on investment holding patterns across the Canada-U.S. border. The new domestic
non-resident withholding tax rules eliminate withholding tax on most interest
paid by Canadian borrowers to arm's length lenders regardless of their
jurisdiction of residence. Along with these changes, however, the Protocol will
have far-reaching application to hybrid fiscally transparent entities used in
cross-border tax planning.
FINANCE UPDATE
Retreat But No Surrender
K.A. Siobhan Monaghan
Finance Update: Starting in
2012, Canadian corporations with specified interest expense will have interest
deductions reduced by the amount of aggregate double dip income in the corporate
group. These changes will significantly impact cross-border inter-affiliate
lending structures.
FINANCE UPDATE
Specified Investment Flow-Throughs: Now Law
Paul K. Tamaki
The legislation which enacted the SIFT
rules last June left a number of issues on the table, some of which have
recently been addressed in proposals issued by the Minister of Finance. However,
there still remains the issue of how income trusts will be able to convert back
to corporations without tax consequences to investors.
CRA UPDATE
Financing Foreign Affiliates: What's Good and
What's Not
Bruce Sinclair, Elinore J. Richardson
CRA
Update: Technical News No. 36, which provides a number of examples of
situations in which the government views paragraph 95(6)(b) as applying
or not in the context of corporate planning involving the acquisition or
disposition of shares of a foreign affiliate is examined.
CURRENT CASES
"Daylight Robbery:" When Is a Loan, a Loan?
Marisa Wyse, Mitchell Sherman
Current
Cases: The Tax Court has suggested in a recent decision that a daylight
borrowing transaction may not be recognized as a true loan if the bank advancing
the funds does not intend to lend money, does not relinquish control of the
money and the conduct of the parties is such that steps normally put in place to
support a loan do not occur.
CURRENT CASES
MIL (Investments) S.A.: Second Round to the Taxpayer
R. Ian Crosbie
The Federal Court of Appeal in
MIL affirms the GAAR is not an appropriate tool for the attack of choice
of jurisdiction for a holding company by a non-resident to invest in Canada.
U.S. RECENT DEVELOPMENTS
U.S. Treasury Reports on Earnings Stripping, Transfer
Pricing and U.S. Income Tax Treaties
Willard B. Taylor
U.S. Recent Developments: A study by the U.S. Treasury
reports that foreign controlled domestic corporations historically are less
profitable than domestic controlled corporations but there is no conclusive
evidence that reduced profits are attributable to excessive interest expense.
U.K. RECENT DEVELOPMENTS
U.K. Proposes Changes to Its Regime for Taxing
Multinationals
Stephen M. Edge, Graham Earles
U.K. Recent Developments: A recent U.K. consultation
document contains proposals which, if enacted, will modify both the system for
taxing foreign dividends and the current CFC regime.
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Board
Elinore J. Richardson
Editor-in-Chief
Borden Ladner Gervais LLP
Toronto
Hugh Berwick
Alcan Inc.
Montreal
Monica Biringer
Osler, Hoskin & Harcourt LLP
Toronto
Stephen W. Bowman
Bennett Jones LLP
Toronto
Carola van den Bruinhorst
Loyens & Kieff
Amsterdam
Peter J. Connors
Orrick Herrington & Sutcliffe LLP
New York
R. Ian Crosbie
Davies Ward Phillips & Vineberg LLP
Toronto
Stephen M. Edge
Slaughter and May
London
David W. Glicksman
Wilson & Partners LLP
Toronto
Kevin B. Kelly
Stikeman Elliott LLP
Toronto
Mitchell Sherman
Goodmans LLP
Toronto
Paul K. Tamaki
Blake, Cassels & Graydon LLP
Toronto
Willard B. Taylor
Sullivan & Cromwell LLP
New York |