Published by the Tax Group
McCarthy Tétrault FRANÇAIS VOL.4,
Tax Update (Volume 4, Issue 2)

Minister of Finance (Canada) Releases Revised Budget Proposals
The March 29, 2012 federal budget (Budget 2012) proposed amendments to a number of international tax measures contained in the Income Tax Act (Canada). On August 14, 2012, draft legislation was released, which contained revisions to the foreign affiliate "dumping" rules that were originally introduced in Budget 2012, new rules for certain non-resident shareholder loans, as well as details on the thin capitalization, partnership and "bump" proposals that were in Budget 2012.

FCA Update: Foreign Entity Characterization, Treaty Interpretation and Income Attribution
In the September 12, 2011 issue of Tax Update, we commented on the 2011 decision of the Tax Court of Canada in Sommerer, which dealt with the ability of parties to rectify retroactively a deficient contract, whether certain attribution rules are triggered on a fair market value sale to a trust, the approach to foreign entity characterization and the application of a tax treaty to prevent Canada from taxing a capital gain attributed to a resident of Canada pursuant to the Income Tax Act (Canada).