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Ottawa, November 27, 2012
Archived - Harper Government Releases Draft Legislative Proposals Concerning Income Tax Rules Applicable to Canadian Banks With Foreign Affiliates
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The Honourable Jim Flaherty, Minister of Finance, today released for consultation a package of draft legislative proposals relating to the Income Tax Act and Income Tax Regulations concerning the taxation of Canadian-based banks with foreign affiliates.
The package includes the revisions to the so-called “base erosion” rules in the Income Tax Act’s foreign accrual property income regime that were announced in Economic Action Plan 2012. Consistent with the announcement, the legislative proposals being released today are intended to alleviate the tax cost to Canadian-based banks of using excess liquidity of their foreign affiliates in their Canadian operations. The proposals also include amendments to ensure that certain securities transactions undertaken in the course of a bank’s business of facilitating trades for arm’s length customers are not inappropriately caught by the base erosion rules.
These measures are generally proposed to be effective for taxation years that begin after October 31, 2012. Explanatory notes are included with the draft legislative proposals.
Interested parties may submit comments until December 27, 2012. The Government will then proceed with legislation at an early opportunity to implement the amendments, taking into account comments received.
For further information, media may contact:
Office of the Minister of Finance
Department of Finance