Canadian Income Tax

On September 8, 2023, Tax Executives Institute, Inc. ("TEI") submitted comments to the Canadian Department of Finance regarding the Department's proposed tax penalty for transactions held subject to Canada's General Anti-Avoidance Rule ("GAAR"). TEI's comments focused on the need for the GAAR penalty to have a true due diligence defense to its imposition and include a significant fault requirement, both are which are necessary to avoid having taxpayers report all their transactions so as not to be subject to the penalty.

On June 7, 2023, TEI submitted comments to the Canada Revenue Agency ("CRA") regarding the draft Reportable Uncertain Tax Treatment ("RUTT") form. Taxpayer must use the RUTT form to report certain items depending on how those items are treated on a taxpayer's relevant financial statements. TEI's comments focused on recommendations to reduce the burden of preparing and filing the RUTT form with CRA, including limiting the information the form requires, filing the form by a single entity within a consolidated group, and clarifying which taxes the RUTT form encompasses.

On August 14 2023, TEI submitted comments to the OECD regarding certain aspects of the OECD's Pillar Two initiative. TEI's comments were provided as a follow up to the Institute's June 6 meeting with representatives from the OECD. The Institute's comments focused on issues arising from disputed tax amounts, administration of the GloBE information return, as well as the various Pillar Two safe harbors. The Institute's comments were led by TEI's EMEA Direct Tax Committee. Benjamin R. Shreck, TEI Tax Counsel, coordinated the preparation of the Institute's comments.

On July 21, 2023, the Institute filed comments with Canadian Department of Finance regarding Information Circular 94-4R2 "International Transfer Pricing: Advance Pricing Arrangements." TEI's comments included concern with the undue compliance burden the Circular proposes to impose on taxpayers, its unreasonable filing deadlines, and the additional requirements for renewing an advanced pricing agreement. TEI's comments were prepared under the aegis of its Canadian Income Tax Committee. Benjamin R. Shreck, TEI Tax Counsel, coordinated the preparation of the Institute's comments.

On May 31, 2023, TEI filed comments with the Canadian Department of Finance regarding a proposal to impose a penalty on taxpayers who violate Canada's general anti-avoidance rule ("GAAR"). TEI commented that a distinct penalty for violations of the GAAR was not necessary given the current structure of the Canadian income tax code. Should the Canadian government implement such a penalty, TEI recommended that the penalty only be imposed in cases where the taxpayer acted with "gross negligence" or a similar level of fault, among other things.

On February 23, 2023, TEI submitted comments to Canadian Finance Minister Chrystia Freeland regarding the proposed Canadian 2% tax on share buybacks. TEI took the view that Canada should not implement a share buyback tax. Should Canada implement such a tax, however, the Institute's recommendations included that the tax be more closely aligned with the U.S. version of the tax with respect to both the tax rate and exclusions from the U.S. tax. TEI's comments were prepared under the aegis of its Canadian Commodity Tax Committee, whose Chair is Steve Saunders.

On February 13, 2023, TEI filed comments with the Canada Revenue Agency regarding Draft Form RC312 - Reportable Transaction and Notifiable Transaction Information Return. TEI's comments primarily concerned the volume of information required by the form, as well as the unclear nature of several provisions in the form. TEI's comments were prepared under the aegis of its Canadian Income Tax Committee, whose Chair is Steve Saunders of Atco. Benjamin R. Shreck, TEI Tax Counsel, coordinated the preparation of the Institute's comments.

On January 31, 2023, TEI filed comments and recommendations with the Canadian Department of Finance regarding proposed excessive interest and financing expense limitation (EIFEL) legislation. The Institute's recommendations included delaying the effective date of the rules, providing transition relief, and not applying the EIFEL rules when computing the foreign accrual property income of controlled foreign affiliates. TEI's comments were prepared under the aegis of its Canadian Income Tax Committee, whose Chair is Steve Saunders. Benjamin R.

On April 5, 2022, TEI submitted written comments to the Department of Finance concerning the government’s newly released draft legislative proposals to amend Canada’s income tax mandatory disclosure rules.  These proposals were initially described in the federal budget documents tabled in Canada’s House of Commons on April 19, 2021 (“Budget 2021”), on which TEI provided preliminary feedback last fall.  Consistent with our earlier submission, the enclosed comments focus intently on the perceived overbreadth of the draft proposals along with the immense compliance and administration

On May 6, 2022, TEI submitted written comments to the Department of Finance concerning the government’s newly released draft legislative proposals to limit the amount of interest and other financing expenses that businesses may deduct for Canadian income tax purposes.  These proposals were initially described in the federal budget documents tabled in Canada’s House of Commons on April 19, 2021 (“Budget 2021”), on which TEI provided preliminary comments last December.  Consistent with our earlier submission, the enclosed comments raise a range of concerns with the draft legislation