The Resource Canada's problematic proposed new loan rules

Canada's problematic proposed new loan rules

Label
Canada's problematic proposed new loan rules
Title
Canada's problematic proposed new loan rules
Creator
Subject
Language
eng
Summary
Canada's 2014 federal budget included some alarming international tax initiatives. While the most disturbing is a radical proposal to override all of Canada's tax treaties under an extremely broad domestic anti-treaty-shopping rule, another proposed change is creating problems in the financing sector. Proposed new "back-to-back loan" rules that treat the provision of security for another person's debt as the equivalent of a loan to that person are already producing unfortunate (and unintended) consequences under Canadas interest withholding tax and thin capitalization rules. The result is that beginning in 2015, many Canadian borrowers will find that interest on debt they have incurred (even to a Canadian creditor) bears non-resident interest withholding tax and is subject to restrictions on interest deductibility, if a non-resident has provided security for the debt (directly or indirectly). These proposed rules go far beyond actual back-to-back loans, and Canada's Department of Finance is aware that they need to be scaled back significantly. The proposed back-to-back loan rules are in fact two separate amendments to the existing interest withholding tax and thin capitalization rules. This article dicusses the proposals
Citation source
In: Tax notes international. - Falls Church. - Vol. 74 (2014),
http://library.link/vocab/creatorName
Suarez, S
Geographic coverage
North America
Language note
English
http://library.link/vocab/subjectName
  • back-to-back loan
  • thin capitalization
  • interest
  • withholding tax
  • treaty shopping
Label
Canada's problematic proposed new loan rules
Instantiates
Publication
Label
Canada's problematic proposed new loan rules
Publication

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