Canada - Tax provisions in 2014 federal budget; BEPS consultation 

February 11:  Canada’s Finance Minister today delivered the government’s 2014 federal budget.

The budget is focused on job creation, innovation, and infrastructure, and includes a number of tax measures aimed at “closing tax loopholes” in line with the government’s continued focus on tax fairness measures and tax transparency.

Tax measures are focused on all areas of taxation including proposals concerning:

  • Immigrant trusts and tax rates on testamentary trusts
  • Business and rental income of trusts and partnerships
  • Taxation of certain financial institutions operating offshore
  • Tax transparency and treaty shopping
  • Thin capitalization rules
  • Charities and non-profit organizations
  • Farming
  • Targeted goods and services (GST) measures
  • Tobacco and certain other excise tax measures

Read a February 2014 report [PDF 100 KB] prepared by the KPMG member firm in Canada: 2014 Federal Budget Highlights

BEPS consultation

As part of Canada’s response to the OECD’s BEPS Action Plan, the budget is requesting comments from stakeholders on a number of broad questions intended to provide the government with a framework for Canada’s own BEPS action plan:

  • What are the effects of international tax planning by multinational enterprises on other participants in the Canadian economy?
  • Which of the international corporate income tax and sales tax issues identified in the BEPS Action Plan would need to be considered the highest priorities for examination and potential action by the government?
  • Are there other corporate income tax or sales tax issues related to improving international tax integrity that would be of concern to the government?
  • What considerations would guide the government in determining the appropriate approach to take in responding to the issues identified—either in general or with respect to particular issues?
  • Would concerns about maintaining Canada’s competitive tax system be alleviated by coordinated multilateral implementation of base protection measures?
  • What actions would the government need take for effective collection of sales tax on e-commerce sales to residents of Canada by foreign-based vendors?

The consultation period for responses to these questions ends in early June 2014.

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