17 April 2012
On 29 March 2012, the Minister of Finance tabled Budget 2012. No tax rate changes were announced, however, changes were announced to a number of provisions as follows:
Thin capitalization rules
Budget 2012 proposes to improve the integrity and fairness of the thin capitalization rules by:
|-||reducing the debt-to-equity ratio from 2:1 to 1.5:1;|
|-||extending the scope of the thin capitalization rules to debts of partnerships of which a Canadian-resident corporation is a member;|
|-||treating disallowed interest expense under the thin capitalization rules as dividends for withholding tax purposes; and|
|-||preventing double taxation in certain circumstances where a Canadian-resident corporation borrows money from its controlled foreign affiliate.|
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