by Gabrielle M.R. Richards of McCarthy Tétrault LLP

Canada’s 2013 federal budget (Budget 2013) released on March 21, 2013 introduces a number of measures to strengthen the ability of the Canada Revenue Agency (CRA) to address international aggressive tax avoidance and to combat international tax evasion so as to maintain and protect Canada’s tax base. These measures reflect the trend in other countries such as the United Kingdom, where the March 20, 2013 budget announced significant new measures on tax avoidance and tax evasion (including “name and shame”) to increase tax compliance. These measures arrive at a time of increased social activism, media attention and political interest in one’s “fair share” of taxes being paid internationally. Further, revising deficits and falling tax revenues may be a reason for the recent focus by tax administrations on tax abuse. The Forum on Tax Administration (FTA), which actively shares information among G20, OECD and non-OECD countries, has identified compliance with tax laws as a key challenge facing tax administrations in the 21st century.

Coincidentally, on April 4, 2013 the International Consortium of Investigative Journalists (ICIJ) released information gathered from an investigation into the world of offshore money, which investigation revealed a global tax evasion web of named individuals and groups, including 450 Canadians.

The CRA quickly responded to the media coverage of the ICIJ release and

by Gloria Geddes of Gowling Lafleur Henderson LLP

This article discusses certain Canadian income tax implications to a resident of a foreign country who is transferred to work in Canada on either a temporary or permanent basis. The article begins with a discussion of the importance and impact of status as a resident or non-resident of Canada for Canadian tax purposes. This is followed by a review of the Canadian tax treatment of reimbursements of and allowances for relocation costs that are paid by the employer to ensure that the employee and his family are not financially disadvantaged by the transfer. Finally, there is a discussion of some tax planning that may be contemplated both before and after the transfer to Canada.

Withholding rules can be burdensome for non-resident employers and employees

by Adrienne Woodyard of Davis LLP

Many people hear the term “business travel” and think of the usual perils — jet lag, roaming charges, lost luggage. Potentially more costly are the tax risks that businesses incur when they send their employees into or out of Canada on temporary work assignments.

Non-resident employers will incur Canadian tax-withholding obligations on salary paid to their employees that is attributable to work performed in Canada. It doesn’t matter whether the employees are

In December 2012, the Tax Executives Institute, Inc. (TEI) raised a number of important income tax administration issues in its annual meetings with the Canada Revenue Agency. The agenda for those meetings (which also included the Department of Finance) is here.

We reprint here one agenda item covering activities by CRA’s Large Case File Managers (“LCFM”) for its relevance to our readers:

by the Osler, Hoskin & Harcourt LLP Tax Group

Canadian tax amendments proposed on August 14, 2012 (the Proposals) could adversely affect common acquisition structures for acquiring Canadian corporations with foreign subsidiaries. Investments in foreign subsidiaries by existing, foreign-controlled Canadian corporations are also affected. This summary provides a brief overview of the Proposals and common examples of where they could potentially apply.

by Timothy Fitzsimmons of Fraser Milner Casgrain LLP

In Hine v. The Queen (2012 TCC 295), a decision released last week, the Tax Court of Canada considered whether a taxpayer was “grossly negligent” in relying on his accountant (who happened to be his wife) to prepare his tax return, and whether the taxpayer’s written offer to settle (asking the Crown to concede entirely) should be considered when making a cost award.

The decision in Hine is helpful in determining (a) whether the taxpayer was grossly negligent in relying entirely on his tax preparer, and (b) whether a settlement offer may be ignored by the Tax Court in awarding costs.

by Marc Weisman of Torkin Manes LLP

As part of my tax and business law practice, I regularly act as counsel to foreign companies establishing operations in Canada.  So, I take careful note of Canada Revenue Agency (the “CRA”) Technical Interpretations that apply to international tax situations.

In Technical Interpretation 2010-0387151E5 dated February 10, 2011, the CRA dealt with the following situation:

• a non-resident of Canada is resident in a country that does not have a tax treaty with Canada;
• the non-resident owns shares in a Canadian resident company (“Canco”) whose only asset is real estate in Canada;
• the shares of the Canco are taxable Canadian property;
• Canco redeems its shares held by the non-resident for fair market value; and
• the non-resident and Canco deal with each other at arm’s length.

At issue was whether Canco’s redemption of the non-resident’s shares is subject to two withholdings: under subsections 212(2) and 116(5) of theIncome Tax Act (Canada) (the “ITA”).