Tax Alert – Canada
Tax Alerts cover significant tax news, developments and changes in legislation that affect Canadian businesses.
- Changes to GST/HST VDP revised
No. 54, 19 December 2017
On 15 December 2017, the Canada Revenue Agency released revisions to the proposed changes to the Voluntary Disclosures Program (VDP) issued on 9 June 2017. The new rules (which take effect on 1 March 2018) will have implications for disclosures involving GST/HST, excise tax, excise duties, softwood lumber product export charges and air traveller security charges and will affect the availability of VDP relief for certain disclosures.
- Changes to income tax VDP revised
No. 53, 19 December 2017
On 15 December 2017, the Canada Revenue Agency released revisions to the proposed changes to the Voluntary Disclosures Program (VDP) issued on 9 June 2017. The new rules (which take effect on 1 March 2018) will have implications for disclosures involving income tax and source deductions and will affect the availability of VDP relief for certain disclosures.
- Revised income splitting measures
No. 52, 18 December 2017
On 13 December 2017, the Department of Finance released draft legislation and explanatory notes to revise the income sprinkling proposals for private companies previously issued on 18 July 2017. On the same day, the Canada Revenue Agency released guidance on the application of the split income rules as well as frequently asked questions on income sprinkling.
- Private company tax reform: personal tax increases
No. 51, 22 November 2017
In the heat of active private company tax reform, both the federal and Ontario governments have proposed to reduce the corporate income tax rate on small-business earnings. While the small-business tax reductions generated significant media attention, a less conspicuous but significant tax change accompanied the corporate small-business tax reductions — personal tax rate increases on ordinary (or non-eligible) dividends.
- CRA 2016 APA report highlights
No. 50, 3 November 2017
On 1 November 2017, the Canada Revenue Agency (CRA) released its Advance Pricing Arrangement (APA) Program Report for the 2016 calendar year. The report provides an overview of the operations of the Canadian APA program, including statistical analyses of APAs completed and in progress.
- Quebec relaxes QST ITR restrictions
No. 49, 30 October 2017
On 25 October 2017, Revenu Québec published Interpretation bulletin 206.1-10, Particulars regarding the phasing out of the ITR restrictions applicable to large businesses that is to begin on January 1, 2018 (the Bulletin). The Bulletin details how An Act Respecting the Québec Sales Tax (AQST) will apply with regard to the phasing out of the input tax refund (ITR) restrictions applicable to large businesses.
- Private company tax reform: where are we now?
No. 48, 25 October 2017
On 2 October 2017, the consultation period ended for the 18 July 2017 draft legislation and consultation paper, both of which proposed to fundamentally overhaul the system of taxation for private companies, as well as for their shareholders and family members.
- FCA finds GAAR does not apply to post-acquisition PUC step-up planning
No. 47, 19 October 2017
On 13 October 2017, the Federal Court of Appeal (FCA) released its decision in Univar Holdco Canada ULC v. The Queen, 2017 FCA 207, allowing the taxpayer’s appeal and concluding that the general anti-avoidance rule (GAAR) in section 245 of the Income Tax Act (the Act) did not apply to the transactions that created cross-border tax attributes equal to the fair market value of a Canadian target company as part of a series of transactions that included its arm’s length acquisition.
- Regulation 102-R waiver updated
No. 46, 3 October 2017
On 28 September 2017, the Canada Revenue Agency (CRA) issued updated Form R102-R, Regulation 102–R Waiver Application, to simplify some of the complexities that existed in the previous version of the waiver form. The updated Form R102-R provides a simpler process to obtain a waiver for employees who were previously qualifying nonresident employees working for a certified nonresident employer.
- Advantage tax on IM fees delayed
No. 45, 2 October 2017
In a newly released technical interpretation dated 15 September 2017, the Canada Revenue Agency (CRA) announced the deferral of the implementation date for applying the advantage tax rules to investment management (IM) fees incurred by registered plans but paid outside of the plan by the annuitant or holder.
- First BEPS Action 14 peer review report
No. 44, 26 September 2017
On 26 September 2017, the Organisation for Economic Co-operation and Development (OECD) released the first batch of peer review reports relating to the implementation of the Base Erosion and Profit Sharing (BEPS) minimum standards on Action 14 on improving tax dispute resolution mechanisms by Belgium, Canada, the Netherlands, Switzerland, the United Kingdom and the United States. In this alert, we look at the Canadian highlights.
- Nova Scotia 2017-18 post-election budget
No. 43, 26 September 2017
On 26 September 2017, Nova Scotia Finance Minister Karen Casey tabled the province’s fiscal 2017–18 post-election budget. The budget contains no new taxes and no tax increases.
- Canada designates Quebec City FTZ point
No. 42, 26 September 2017
On 30 August 2017, the Canadian federal government designated the Quebec City metropolitan area as a Foreign Trade Zone (FTZ) point. The Quebec City FTZ point is the first in the province of Quebec and the ninth in Canada. The decision is part of the federal government's drive to help Canadian businesses integrate into international markets and global value chains.
- CETA takes effect
No. 41, 26 September 2017
After several delays, Canada and the European Union (EU) formally implemented the Comprehensive Economic and Trade Agreement (CETA) on a provisional basis on 21 September 2017. CETA is the most ambitious Canadian trade agreement to date: as of implementation, 98% of Canadian and EU tariff lines are duty free, with another 1% of tariff lines to be staged out over a number of years. Canadian and European businesses will now have increased access to a market spanning approximately 535 million people.
- Canada's Strategic Innovation Fund
No. 40, 14 September 2017
On 5 July 2017, the federal government launched the Strategic Innovation Fund with a budget of $1.26 billion over five years. It is available to organizations of all sizes across all of Canada's industrial and technology sectors. In launching this funding program, the government seeks to accelerate economic growth, strengthen the role of Canadian businesses in regional and global supply chains and attract investment that creates well-paying jobs.
- Finance releases GST/HST draft legislation
No. 39, 13 September 2017
On 8 September 2017, the Department of Finance released for public comment a package of draft GST/HST and excise duty legislative and regulatory proposals and explanatory notes. These proposals consist of new as well as certain previously announced measures. Interested parties are invited to comment by 10 October 2017.
- Québec transparency measures in the mining oil and gas industries now effective
No. 38, 13 September 2017
On 3 August 2017, the Quebec regulation respecting transparency in the mining, oil and gas industries entered into force. The legislation, which was passed on 21 October 2015, requires certain enterprises operating in these industries to declare certain payments made to certain payees. The measures are intended to discourage corruption and to foster the social acceptability of projects. The legislation provides for significant penalties for non-compliance.
- British Columbia budget update 2017-18
No. 37, 11 September 2017
BC Finance Minister Carole James tabled the province’s fiscal 2017-18 budget update on 11 September 2017.
- Draft legislation for 2017 budget
No. 36, 8 September 2017
On 8 September 2017, the Department of Finance released for public comment a package of draft legislative proposals and explanatory notes relating to a number of measures announced in the 2017 federal budget, as well as certain previously announced measures. Interested parties are invited to comment by 10 October 2017.
- Trade compliance verification list update
No. 35, 31 August 2017
On 7 July 2017, the Canada Border Services Agency (CBSA) released its semi-annual list of current trade compliance verification (audit) priorities. This mid-year update identifies that the agency remains focused on tariff classification as a priority audit area, with the introduction of three new tariff classification product categories added to the list of existing priorities.
- Saskatchewan now accepting SCII applications
No. 34, 21 August 2017
Applications are now being accepted for the Saskatchewan Commercial Innovation Incentive (SCII), which was outlined in EY’s Tax Alert 2017 No. 22. This incentive effectively reduces the general corporate income tax rate to 6% on an eligible corporation’s taxable income earned from the commercialization of qualifying intellectual property in Saskatchewan for a period of 10-15 years. It will be delivered in the form of a tax rebate, which will be effective retroactive to 1 January 2017.
- Private company insights: federal tax reform
No. 33, 31 July 2017
On 18 July 2017, federal Finance Minister Bill Morneau introduced draft legislation and a consultation paper (the proposal documents) proposing to fundamentally overhaul the system of taxation for private companies and their shareholders and family members. These proposals are broad based and primarily target closely held Canadian-controlled private corporations, regardless of sector, industry or economic grouping. Many of the proposed measures may not extend to public companies or foreign-controlled private businesses.
- Disputes delay CETA implementation
No. 32, 24 July 2017
While Canada and the European Union have approved the necessary implementing legislation for the provisional application of the Comprehensive Economic and Trade Agreement (CETA or the Agreement), the Agreement is still not in force on a provisional basis for those areas under the EU Commission’s control (e.g., tariffs).
- Ontario seeks input on LTT proposals
No. 31, 20 July 2017
On 14 July 2017, the Ontario Ministry of Finance posted a consultation document on the Regulatory Registry, setting out proposals to facilitate compliance with section 3 of the Land Transfer Tax Act, which imposes provincial land transfer tax (LTT) on unregistered dispositions of beneficial interests in land. The ministry has invited feedback and will consider all comments submitted on or before 28 August 2017 electronically or in writing.
- Alberta “auditing” Insurance Act charges
No. 30, 19 July 2017
The Province of Alberta has taken the unusual step of authorizing its Tax and Revenue Administration to audit insureds for charges payable under section 61 of the provincial Insurance Act. The Insurance Act is a regulatory statute but the TRA appears to be attempting to administer it like a tax statute.
- Finance addresses tax planning with private corporations
No. 29, 18 July 2017
On 18 July 2017, federal Finance Minister Bill Morneau released for consultation a paper and draft legislative proposals addressing tax planning arrangements using private corporations. It is the government’s view that these changes are necessary to close perceived tax loopholes and improve the fairness of the Canadian income tax system. These proposed measures represent the most significant amendment to the taxation of private corporations in Canada since the tax reform in 1972.
- Canada signs the MLI: some further observations
No. 28, 29 June 2017
On 7 June 2017, Canada and 67 other countries became signatories and parties to the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS (the MLI). The MLI contains certain minimum standards that the signatories must accept and a host of optional standards - for instance, with respect to treaty abuse - which the signatories can accept, should they so desire.
- Proposed changes to VDP affecting GST/HST disclosures
No. 27, 21 June 2017
On 9 June 2017, the Canada Revenue Agency (CRA) released highly anticipated proposed changes to the Voluntary Disclosures Program (VDP) that have implications for disclosures involving GST/HST, excise tax, excise duties, softwood lumber product export charges and air traveller security charges. The changes will affect the availability of VDP relief for certain disclosures.
- Proposed changes to income tax VDP
No. 26 21 June 2017
On 9 June 2017, the Canada Revenue Agency released highly anticipated proposed changes to the Voluntary Disclosures Program (VDP) that have implications for disclosures involving income tax and source deductions. The changes will affect the availability of VDP relief for certain disclosures.
- Canada and 67 other jurisdictions sign the MLI
No. 25, 14 June 2017
On 7 June 2017, 68 jurisdictions, including Canada, signed the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS (the MLI).
- FCA affirms release of trapped limited partnership losses in multi-tiered partnerships
No. 24, 5 June 2017
On 19 May 2017, the Federal Court of Appeal (FCA) released its decision in The Queen v. Green et al. (2017 FCA 107), rejecting the Crown’s appeal of the Tax Court of Canada (TCC) decision (2016 TCC 10).
- CRA extends transitional relief for certain US partnerships
No. 23, 18 May 2017
At the 26 April 2017 conference hosted by the International Fiscal Association in Toronto, officials from the Canada Revenue Agency (CRA) clarified transitional measures pertaining to the treatment of limited liability partnerships and limited liability limited partnerships as corporations for Canadian income tax purposes.
- Saskatchewan Commercial Innovation Incentive
No. 22, 10 May 2017
Beginning in the summer of 2017, companies can apply for the Saskatchewan Commercial Innovation Incentive (SCII), outlined in Bill 61: An Act respecting the Saskatchewan Commercial Innovation Incentive, which was first announced in May 2016 and confirmed in the Saskatchewan
2017-18 budgetdelivered on 22 March 2017.
- Yukon budget 2017-18
No. 21, 27 April 2017
Yukon Finance Minister Sandy Silver tabled the territory's fiscal 2017-18 budget on 27 April 2017.
- Nova Scotia budget 2017-18
No. 20, 27 April 2017
Nova Scotia Finance Minister Randy Delorey introduced the province's fiscal 2017-18 budget on 27 April 2017.
- Ontario budget 2017-18
No. 19, 27 April 2017
Ontario Finance Minister Charles Sousa tabled the province's 2017-18 budget on 27 April 2017.
- Ontario proposes new 15% nonresident speculation tax
No. 18, 26 April 2017
In a news release dated 20 April 2017, Ontario announced the introduction of its Fair Housing Plan, a comprehensive package of measures with a stated purpose of helping more people find affordable homes, increasing supply, protecting buyers and renters, and bringing stability to the real estate market.
- Manitoba budget 2017-18
No. 17, 11 April 2017
Manitoba Finance Minister Cameron Friesen tabled the province’s fiscal 2017-18 budget on 11 April 2017.
- Prince Edward Island budget 2017-18
No. 16, 7 April 2017
PEI Finance Minister Allen Roach tabled the province's fiscal 2017-18 budget on 7 April 2017.
- Newfoundland and Labrador budget 2017-18
No. 15, 6 April 2017
Newfoundland and Labrador Finance Minister Cathy Bennett tabled the province’s fiscal 2017-18 budget on 6 April 2017.
- FCA denies CRA request for tax working papers
No. 14, 3 April 2017
On 30 March 2017, the Federal Court of Appeal (FCA) released its decision in BP Canada Energy Company v Minister of National Revenue (2017 FCA 61), overturning a 2015 decision by the Federal Court of Canada.
- Quebec budget 2017-18
No. 13, 28 March 2017
Quebec Finance Minister Carlos J. Leitão tabled the province's fiscal 2017-18 budget on 28 March 2017.
- Federal budget 2017-18 Targeted measures for FSOs
No. 12, 24 March 2017
On 22 March 2017, federal Finance Minister Bill Morneau tabled his second budget. Read on for observations on how the tax measures could impact financial services organizations (FSOs), namely, banks, insurers and asset managers, as well as their clients.
- Saskatchewan budget 2017-18
No. 11, 22 March 2017
Saskatchewan Finance Minister Kevin Doherty tabled the province's fiscal 2017-18 budget on 22 March 2017.
- Private company insights: federal budget 2017-18
No. 10, 22 March 2017
Read our executive summary highlights of Budget 2017 that are relevant to private companies and their shareholders.
- Federal budget 2017-18
No. 09, 22 March 2017
Read our late-breaking Tax Alert on the 2017-18 federal budget. And to hear more in-depth analysis and perspectives on the budget, view our budget evening webcast.
- CRA releases guidance on CbC reporting
No. 08, 20 March 2017
On 2 March 2017, the Canada Revenue Agency (CRA) released Guide RC4651, its guidance on country-by-country (CbC) reporting in Canada, a new filing obligation for multinational enterprise groups with consolidated revenues of €750m or more.
- Alberta budget 2017-18
No. 07, 16 March 2017
Alberta Finance Minister Joe Ceci tabled the province's fiscal 2017-18 budget on 16 March 2017.
- Nunavut budget 2017-18
No. 06, 23 February 2017
Nunavut Finance Minister Keith Peterson tabled the territory's fiscal 2017-18 budget on 22 February 2017.
- British Columbia budget 2017-18
No. 05, 22 February 2017
BC Finance Minister Michael de Jong tabled the province's fiscal 2017-18 budget on 21 February 2017.
- New Brunswick budget 2017-18
No. 04, 8 February 2017
New Brunswick Finance Minister Cathy Rogers introduced the province's fiscal 2017-18 budget on 7 February 2017.
- Northwest Territories budget 2017-18
No. 03, 3 February 2017
Northwest Territories Finance Minister Robert C. McLeod tabled the territory's fiscal 2017-18 budget on 1 February 2017.
- Alberta's Venture Capital Tax Credit
No. 02, 12 January 2017
The Alberta Government has introduced the Alberta Investor Tax Credit (AITC) to stimulate investment in certain industries with strong job-creation potential. The AITC offers a 30% tax credit to investors who provide venture capital to eligible companies during the three-year period in which the AITC program is in force, and is offered on a first come, first served basis. The program will start accepting applications on 16 January 2017.
- New Alberta tax credit to stimulate investment and create jobs
No. 01, 3 January 2017
Effective 1 January 2017, companies can apply for the new Capital Investment Tax Credit (CITC). The two-year credit will provide $70m in investment credits for manufacturing, processing and tourism infrastructure to spur economic diversification and job creation in Alberta.