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  • Service: Tax, International Tax
  • Type: Regulatory update
  • Date: 3/7/2014

Canada - Base erosion rules for banks with foreign affiliates 

March 7:  Canada’ Department of Finance released draft legislation on the taxation of Canadian banks with foreign affiliates in late February 2014.

The draft legislation includes revisions to the base erosion rules in the foreign accrual property income regime. The revisions are generally intended to alleviate the tax cost to Canadian banks of using the excess liquidity of their foreign affiliates in their Canadian operations.


It is also intended that the amendments do not catch certain securities transactions undertaken in the course of a bank's business that facilitate trades for arm's length customers by the base erosion rules.


Read a March 2014 report prepared by the KPMG member firm in Canada: New Draft Legislation for Base Erosion Rules for Canadian Banks




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