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Canada To Implement 2014 Budget Tax Provisions

Wednesday, October 15, 2014

The Canadian Government has tabled a detailed Notice of Ways and Means Motion to implement tax provisions contained in its 2014 Budget, along with a number of previously unannounced measures.

Finance Minister Joe Oliver said: "Canada's Economic Action Plan builds on our Government's record of keeping taxes low for families and businesses. Our Government's plan for jobs and growth is creating opportunities right across the country. It is keeping Canada on track to return to balanced budgets in 2015 so that we can continue to lower taxes and promote long-term prosperity for Canadians."

The Motion proposes the implementation of Budget measures relating to international, business, and personal taxation. It also includes a number of new income tax and sales tax measures.

The Motion includes plans for better circumscribing an existing exception from the "investment business" definition in the foreign accrual property income regime, by introducing additional conditions for the application of the exception. It adjusts Canada's foreign accrual property income rules to address offshore insurance swap transactions and ensure that income derived directly or indirectly from the insurance of Canadian risks is taxed appropriately.

The Motion also adds a specific anti-avoidance rule in respect of withholding tax on interest payments and modifies an existing anti-avoidance rule in the thin capitalization rules. Both measures are designed to address back-to-back loan arrangements involving an intermediary.

The Motion amends the foreign affiliate dumping rules, to ensure that the rules apply in appropriate circumstances and, where applicable, provide appropriate results. It alters the definition of "non-qualifying country" in the foreign affiliate rules. The new definition will exclude those countries or jurisdictions for which the Convention on Mutual Administrative Assistance in Tax Matters is in force and effect, and aims to avoid unintended tax consequences with respect to the British Virgin Islands, which now has a comprehensive tax information exchange agreement with Canada.

The foreign affiliates rules will also better accommodate the use of partnerships.

The remaining tax measures included in the Motion will:

  • Revise the base erosion rules, to more appropriately apply to certain securities transactions and funding arrangements involving foreign affiliates of Canadian banks;
  • Eliminate graduated rate taxation for trusts and certain estates, with an exception for cases involving testamentary trusts whose beneficiaries include individuals eligible for the Disability Tax Credit;
  • Ensure the appropriate taxation of taxpayers that invest in certain Australian trusts;
  • Include in the definition of "split income" income from a business or property that is paid or allocated to a minor child from a partnership or trust, where a person related to the child is engaged in the activities of the partnership or trust to earn that income;
  • Expand the eligibility for the accelerated capital cost allowance for clean energy generation and energy conservation equipment under Class 43.2 to include water-current equipment and a broader range of equipment used to gasify eligible waste;
  • Subject Pooled Registered Pension Plans to similar goods and services tax/harmonized sales tax treatment as Registered Pension Plans;
  • Permit income contributed to an amateur athlete trust to qualify as earned income for Registered Retirement Savings Plan contribution limit purposes, with a three-year retroactive application;
  • Extend the intergenerational rollover and lifetime capital gains exemption to farming and fishing businesses;
  • Extend the tax deferral provision with respect to breeding animals, to include bees and horses over 12 months of age;
  • Allow greater flexibility in the income tax rules for recognizing charitable donations made by will or on death;
  • Modernize the rules applying to international shipping corporations;
  • Double the Children's Fitness Tax Credit to CAD1,000 (USD893) and make it refundable;
  • Improve the operation of the Canadian Film or Video Production Tax Credit, and
  • Extend the existing credit for interest paid on Government-sponsored student loans to interest paid on a Canadian Apprentice Loan.

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The Report

Offshore Trusts Guide: Introduction

The History of Offshore Trusts
Development of Professional Competence in the Jurisdictions
What Future for the Trust?
The New Age of Transparency
The Swiss Association of Trust Companies
The Society of Trusts and Estates Practitioners

Offshore Trusts Guide: Jurisdictions


Bahamas: Legal Framework and Formation Rules and Fees
Bahamas: 2006 Private Trust Companies Legislation


Barbados: Legal Framework and Formation Rules and Fees
Barbados: Supervisory and Licensing Regime and Fees


Bermuda: Legal Framework and Formation Rules and Fees
Bermuda: Supervisory and Licensing Regime and Fees

British Virgin Islands

British Virgin Islands: Legal Framework and Formation Rules and Fees
British Virgin Islands: Special Trusts Act 2003
British Virgin Islands: The Trustee Act 2003
British Virgin Islands: :Supervisory and Licensing Regime and Fees
British Virgin Islands: New Laws on Private Trust Companies
British Virgin Islands: New Private Trust Company Regulations

Cayman Islands

Cayman Islands: Legal Framework and Formation Rules and Fees
Cayman Islands: Supervisory and Licensing Regime and Fees

Cook Islands

Cook Islands: Legal Framework and Formation Rules and Fees
Cook Islands: Supervisory and Licensing Regime and Fees


Cyprus: Legal Framework and Formation Rules and Fees
Cyprus: Supervision, Licensing and Tax


Gibraltar: Legal Framework and Formation Rules and Fees
Gibraltar: Legislation, Regulation and Supervision


Guernsey: Legal Framework and Formation Rules and Fees
Guernsey: Trusts Law 2007

Isle of Man

Isle of Man: Legal Framework and Formation Rules and Fees
Isle of Man: Supervisory and Licensing Regime
Isle of Man: Uses Clients and Tax Treatment


Jersey: Legal Framework and Formation Rules and Fees
Jersey: Supervisory and Licensing Regime
Jersey: Trusts Amendment Act 2006
Jersey: Foundations


Liechtenstein: Legal Framework and Formation Rules and Fees
Liechtenstein: Regulation Supervision and Transparency
Liechtenstein: Characteristics of Liechtenstein Trusts
Liechtenstein: Foundations


Madeira: Legal Framework and Formation Rules and Fees


Malta: Legal Framework and Formation Rules and Fees
Malta: The Trust and Trustees Act 2004


Mauritius: Legal Framework and Formation Rules and Fees
Mauritius: Characteristics of the 2001 Trusts Act
Mauritius: Additional Provisions of the 2001 Trusts Act
Mauritius: Tax Treatment


Monaco: Legal Framework and Formation Rules and Fees


Nevis: Legal Framework and Formation Rules and Fees


Panama: Legal Framework and Formation Rules and Fees
Panama: Requirements for Acting as Trust Company in Panama


Seychelles: Legal Framework and Formation Rules and Fees

Turks & Caicos

Turks & Caicos: Legal Framework and Formation Rules and Fees
Turks & Caicos: The Voidable Dispositions Ordinance


Vanuatu Legal Framework and Formation Rules and Fees

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