Tag archives: tax

Digital Taxation – Novel Considerations in M&A Transactions

By Alexandra David on November 24, 2020 Posted in M&A, Tax

Digital taxes have become a subject of significant debate in recent years. Following allegations that tech giants have paid very little tax anywhere in the world, some countries have moved to impose new taxes on profits derived from digital services provided by multinational enterprises on a jurisdiction-specific basis. For instance, France recently adopted a digital … Continue reading

Shareholder Loans: The Interplay of 80.4, 15(2) and 20(1)(j) of the Income Tax Act

By Alexandra David and nrfdigitalteam on November 5, 2020 Posted in Tax

Subject to certain exceptions, where a shareholder (other than a corporation resident in Canada) of a corporation is indebted to the corporation (a “Shareholder Loan”), the shareholder is deemed by subsection 80.4(2) to receive an interest benefit to the extent that the notional interest on the Shareholder Loan, calculated at the prescribed rate, exceeds the … Continue reading

Non-resident employees: withhold on worldwide income?

By nrfdigitalteam on May 9, 2019 Posted in Employment and labour, Tax

ITA regulation 102 requires employers to withhold tax on remuneration paid to non-resident employees who are employed in Canada. This requirement can be avoided by seeking a treaty-based waiver (regulation 102 waiver) or certification as a qualifying non-resident employer. However, often there is not sufficient time to do this before the employment is to begin, or there … Continue reading

ILP, SLFI, HST – tax acronyms every fund should know

By Troy Ungerman (Toronto) on April 30, 2019 Posted in Tax

When we structure private equity funds, whether through a mutual fund trust, limited partnership or certain other entities, considerable time is spent on the income tax issues. We examine the deductibility of the management fees. We consider strategies for delivering the carried interest to employees in a tax-efficient way. We take steps to keep the … Continue reading

The deemed dividend dilemma: structuring your cross-border credit support

By Russell Dufault (Toronto) on May 10, 2018 Posted in Corporate finance

We frequently act as Canadian counsel to lenders and borrowers in cross-border transactions where credit support is provided to a US parent company by one or more of its Canadian subsidiaries. In structuring the deal, a considerable amount of time can be spent determining the extent to which the collateral of the Canadian subsidiaries should … Continue reading

Investor confidence, disruption risk and US tax reform will continue to spur M&A activity

By Troy Ungerman (Toronto) on February 22, 2018 Posted in M&A, Tax

JP Morgan recently released its 2018 Global M&A Outlook report, predicting that 1) investor confidence from solid GDP growth, 2) disruption risk from technological change, and 3) opportunities from the passing of the US tax reform will drive significant M&A activity in the year ahead. Investor confidence In 2017, nine out of ten equity sectors … Continue reading

Why have a document retention policy?

By Troy Ungerman (Toronto) on February 8, 2018 Posted in M&A, Uncategorized

The current digital age has made it easier for companies to retain an enormous volume of documents – significantly more than a company could have afforded to keep before the advent of electronic record-keeping. In response, companies have sought to upgrade their IT systems to digitize their paper records and to allow for increased storage. … Continue reading

Taxation of cryptocurrency: unchartered territory and treacherous waters

By Troy Ungerman (Toronto) on February 6, 2018 Posted in M&A, Tax

With the recent market uproar for blockchain technology and cryptocurrency, the tax question is becoming more and more pertinent. Whether one is trading in cryptocurrency, issuing it in an effort to raise capital, hanging onto it as a long term investment, mining it or using it to access software apps, numerous questions arise. Answering these … Continue reading

Incoming legislation implements common reporting standards

By Troy Ungerman (Toronto) on May 11, 2017 Posted in M&A, Tax

On July 1, amendments to the Income Tax Act (Canada) implementing international common reporting standards (CRS) will come into force. The CRS regime is intended to facilitate the exchange of taxpayer information between governments. Financial institutions will be required to report financial information about individuals and entities not resident in Canada[1] to the Canada Revenue … Continue reading

Supreme Court of Canada clarifies law of rectification

By Troy Ungerman (Toronto) on February 15, 2017 Posted in Tax

Deals often come together very quickly. In all that rush, it’s easy for the parties to forget to think about all of the long term implications of the deal. Perhaps the parties simply didn’t realize that the deal would have certain consequences that frustrated their original intentions. Maybe the parties intended to avoid particular tax … Continue reading

Canada’s first post-BEPS tax treaty: implementing the new treaty shopping proposals

By Troy Ungerman (Toronto) on November 15, 2016 Posted in M&A, Tax

Last November, we told you about the new treaty shopping rules proposed by the Organisation for Economic Co-operation and Development (OECD) as part of the final report on Action 6 of the Action Plan on Base Erosion and Profit Shifting (BEPS Action Plan). The main proposal in Action 6 was the amendment of the OECD … Continue reading

Tax considerations for earn-outs and reverse earn-outs

By Troy Ungerman (Toronto) on September 15, 2016 Posted in M&A, Tax

As we have previously noted, earn-outs are becoming an increasingly common part of M&A deals, and there are a number of key commercial questions to consider when negotiating them. But there are also tax consequences that must be considered when structuring earn-outs. Earn-outs link a portion of total purchase price to the performance of the … Continue reading

Incoming tax changes may spawn a surge in private company asset sales

By Troy Ungerman (Toronto) on August 18, 2016 Posted in M&A, Tax

With fall around the corner and looming tax changes, certain private companies – Canadian-controlled Private Corporations (generally, private corporations that are controlled by Canadian residents, referred to herein as CCPCs) – may begin to feel pressure to quickly start and/or complete asset sale transactions. On March 22, 2016, the federal Finance Minister released the 2016 … Continue reading

Getting the best (asset) deal: tax efficient purchase price allocations

By Troy Ungerman (Toronto) on April 26, 2016 Posted in Corporate finance, Tax

The number one consideration for anyone buying or selling a business is price. But getting the best price is not just about the total cash value. How the purchase price is allocated across the various assets included in the deal has significant implications for the future tax liabilities of both purchasers and sellers. This article … Continue reading

Update: 2016 Federal Budget – Liberals drop tax proposal for employee stock options

By Troy Ungerman (Toronto) on March 24, 2016 Posted in Corporate finance, Tax

Tuesday marked the release of the new Liberal government’s first budget. The budget, entitled “Growing the Middle Class”, did not contain the anticipated changes to the tax treatment of employee stock options discussed last week on Deal Law Wire. The proposed changes were first announced in the Liberal party’s election platform and would have capped … Continue reading

Will the 2016 Federal Budget contain anticipated changes to employee stock options?

By Troy Ungerman (Toronto) on March 16, 2016 Posted in Employment and labour, Tax

There has been much speculation about the tax measures to be included in the new federal government’s first budget that will be presented next week, on March 22. Of particular interest to the start-up and technology communities is whether the budget will introduce changes to the tax treatment of employee stock options. The Liberal party’s … Continue reading

Avoiding tax traps: don’t forget about non-competition agreements

By Troy Ungerman (Toronto) on February 11, 2016 Posted in Corporate finance, Tax

Non-competition agreements can be a valuable tool for purchasers who want to protect their investments in new businesses. However, non-competition agreements can have unintended and unexpected tax consequences, particularly to sellers who grant non-competition agreements to purchasers. The Income Tax Act (Canada) (the Act) contains specific provisions regarding the taxation of “restrictive covenants”, a broadly … Continue reading

OECD report proposes new treaty shopping rules

By Troy Ungerman (Toronto) on November 10, 2015 Posted in Corporate finance, Tax

In February we wrote about a discussion draft of Action 6 of the Action Plan on Base Erosion (BEPS Action Plan) developed by the Organisation for Economic Co-Operation and Development (OECD) at the request of the G20. In October, the OECD published its final report on Action 6 of the BEPS Action Plan. Action 6 … Continue reading

New reporting obligation for transactions affecting tax basis of securities

By guestauthor on April 20, 2012 Posted in Tax

As a result of new US reporting rules that came into effect on January 1, 2011, Canadian public and private issuers may be subject to a significant information reporting obligation when undertaking one of a wide range of transactions. The new rules are intended to increase compliance in reporting capital gains and losses for US … Continue reading