Published by the Tax Group
McCarthy Tétrault FRANÇAIS VOL.5,
Tax Update (Volume 5, Issue 2)

Federal Court of Appeal Confirms Narrow Scope of Paragraph 95(6)(b) – Lehigh Cement
The Federal Court of Appeal recently issued its decision in a case that considered the scope of a specific anti-avoidance rule in paragraph 95(6)(b) of the Income Tax Act (Canada) (Tax Act).

Paragraph 95(6)(b) appears in subdivision i of the Tax Act that deals with the tax consequences associated with the ownership of shares in a non-resident corporation and, where paragraph 95(6)(b) applies, a taxpayer can be deemed for purposes of subdivision i to have not acquired or disposed of shares the taxpayer had otherwise acquired or disposed of in the non-resident corporation.


Treaty Shopping Proposals – A Review of 2013 and 2014 Developments
In Budget 2013, the Government announced its intention to consult on possible measures to combat treaty shopping. Eleven months later, in Budget 2014, the Government invited comments on a proposed domestic anti-treaty abuse rule. This article briefly reviews developments arising between the two budgets and provides high level comments in respect of the 2014 proposal. For additional and more detailed comments on Budget 2014, see Economic Action Plan 2014 – International Tax Planning Under Continued Assault.

FATCA — An Update

On February 5, 2014 Canada and the United States signed an Intergovernmental Agreement (IGA) to implement the Foreign Account Tax Compliance Act. The IGA is a Model 1 agreement under which "reporting Canadian financial institutions" report the relevant information regarding US reportable accounts (i.e. accounts that are held by a "specified US person" or a "non- U.S. entity" with one or more "controlling persons" that is a specified US person), to the Canada Revenue Agency, which then provides that information to the Internal Revenue Service. The IGA is reciprocal so that the United States will provide tax information to Canada regarding Canadian individuals and entities with accounts in the United States.