Tag archives: Income Tax Act

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

By Carl Deeprose (Toronto) and Alexandra David 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 Carl Deeprose (Toronto) 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

Excess cash, excess tax – what’s on your balance sheet?

By Troy Ungerman (Toronto) on August 23, 2018 Posted in Tax

Canadian federal income tax law provides numerous benefits to companies that engage in an “active business”. Whether a particular endeavour undertaken is an “active business” is, of course, a question of fact and depends on individual circumstances. Some scenarios are clearly those of an “active business”, such as the case of manufacturing and production, retail, … Continue reading

Private equity and Canadian partnerships: tax considerations

By Troy Ungerman (Toronto) on June 7, 2018 Posted in Finance, Real estate

Canada continues to be an attractive market for private equity (“PE“) investors with recent transactions highlighting significant investments into Canadian real estate and energy infrastructure assets. Partnerships (particularly, limited partnerships) continue to be a popular PE vehicle, providing a means of pooling and aggregating investment funds and allowing for income or losses to be “flowed-through” … 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

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

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

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