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An introduction is presented in which the editor discusses various reports within the issue on topics including Tax Treaty Practice in Canada; resiliency of the corporate taxation; and the cash-flow taxation.

As part of action 6 of the base erosion and profit shifting (BEPS) initiatives, the Organisation for Economic Co-operation and Development (OECD) is considering alternatives to address "improper uses" of tax treaties, including treaty shopping. In September 2014, the OECD released a report in which it proposed to revise the model convention to include a limitation-on-benefits provision and a new general anti-abuse rule in response to treatyshopping concerns. Before BEPS, Canada started its own treaty-shopping consultation, and, in the 2014 federal budget, Canada proposed to adopt a domestic anti-treatyshopping rule. However, in August 2014, Canada announced that instead of proceeding with this domestic solution, it would wait for further work by the OECD as part of the BEPS initiatives. Consequently, it is expected that Canada will reconsider the domestic antitreaty-shopping rule in light of the OECD final BEPS recommendations, which are expected in September 2015, and that these recommendations may play a greater role in the direction that Canada may ultimately take. Because the various treaty-shopping initiatives are ongoing, this topic is divided into two articles. In this article, the author discusses the treaty-shopping proposals in the September 2014 OECD report and the 2014 federal budget, and provides some comments on the direction that Canada may ultimately take to counter treaty shopping. The final treaty-shopping recommendations made by the OECD and ensuing developments in the Canadian context will be discussed in a subsequent article. [ABSTRACT FROM AUTHOR]

Most Canadian corporations and their shareholders choose an appropriate capital structure on the basis of a number of factors, including tax. Shareholders of a taxable corporation often prefer external and internal intragroup debt. Assuming that the capital structure of a corporation includes internal debt rather than equity, the authors consider the circumstances under which Canada's transfer-pricing recharacterization rules might permit the recharacterization of interest when the corporation is otherwise compliant with Canada's thin capitalization rules. The authors address the history of paragraphs 247 (2)) and (d) of the Income Tax Act, the applicable interpretive approach, the views of the Canada Revenue Agency (CRA), and the potential interaction between the thin capitalization rules and the recharacterization rules. As a result of an appropriately purposive interpretation of the thin capitalization rules and the relieving nature of Canada's tax treaties, the types of situations that the CRA would find most concerning are more appropriately dealt with by means of the general anti-avoidance rule than by recharacterizing a taxpayer's debt as equity. The recharacterization rules require an analysis of whether the transaction or series giving rise to the taxpayer's debt can reasonably be considered not to have been entered into primarily for bona fide purposes, other than to obtain the interest deduction. The analysis of the relevant factors in a non-arm's-length context is by no means straightforward. Some caution is called for before recharacterizing the taxpayer's debt as equity under Canada's transfer-pricing rules, and the CRA has exercised such caution in the past. There are a number of cases before the Tax Court that raise the application of paragraphs 247(2)(b) and (d),and it will be interesting to see how the court addresses these rules. [ABSTRACT FROM AUTHOR]

The article reviews articles such as "Intellectual Property Law Solutions to Tax Avoidance" by Andrew Blair-Stanek that appeared in periodical "UCLA Law Review," "An Antigua Gambling Model for the International Tax Regime" by Adam H. Rosenzweig and an article focused on income tax treaty policy.

The article focuses on approaches adopted by Australian government to address the problem of treaty shopping including a two-pronged approach. Topics discussed include limitation-on-benefits (LOB) provisions adopted by the government to support tax treaties, influence of Australia's tax treaties approach in governing incentives for treaty shopping and case Commissioner of Taxation v. Lamesa Holdings BV based on treaty-shopping issue. It mentions a report on international taxation arrangements.

The article focuses on judicial approaches adopted by Great Britain and European Union (EU) to address treaty shopping. Topics discussed include proposals made by Great Britain government regarding the introduction of domestic legislation intended to deny treaty benefits, general anti-avoidance rule (GAAR) enacted in Great Britain to address tax treaties and tax legislative measures adopted by EU. It mentions the limitation-on-benefits (LOB) provisions of tax treaties.

The article focuses on the development of the U.S limitation-on-benefits (LOB) provision to regulate the use of tax treaties. Topics discussed include tax treaties developed by the Organization for Economic Co-operation and Development (OECD) as part of its base erosion and profit shifting (BEPS) project, and assessment of the publicly traded company by the U.S Treasury Department. Other topics include treaty shopping and treaty benefits.

The article focuses on Canadian tax treaties and proposals announced by Canadian Department of Finance related to anti-treaty-shopping rule or legislation in the 2014 federal budget. Topics discussed include Canadian international tax policy, proposals regarding anti-treaty- shopping legislation that plans to amend the Canada Income Tax Conventions Interpretation Act (ITCIA), and the Organization for Economic Co-operation and Development's (OECD) treaty shopping project.

The article discusses the Tax Court of Canada case McKesson Canada Corp. v. The Queen, which dealt with a significant transfer-pricing dispute. Topics discussed include the transfer-pricing adjustment under section 247 of the Income Tax Act and the interpretation of article 9 of the Canada-Luxembourg tax treaty, examination of the terms and conditions of the receivables sales agreement (RSA) and the Supreme Court of Canada case Canada v. GlaxoSmithKline Inc.

The US tax rules are extraordinarily complex, and they include many unwelcome surprises. One such surprise arises when an alien discovers that he or she has unwittingly become a US resident. An alien's unexpected status as a US tax resident may give rise to substantial tax liabilities and, worse yet, exposure to life-altering penalties. This article discusses the US residence trap and its application to Canadian snowbirds. [ABSTRACT FROM AUTHOR]

The article discusses the decision of the Tax Court of Canada in case Black v. The Queen dealing with the interaction between domestic tax law and tax treaties. Topics discussed include the Subsection 250(5) of the Income Tax Act that gives effect to the tiebreaker rules for domestic purposes, a 2002 Canadian income tax return filed by the applicant Conrad Black, the Vienna Convention on the Law of Treaties and the Supreme Court of Canada decision in Crown Forest Industries v. Canada.

Copyright of Canadian Tax Journal / Revue Fiscale Canadienne is the property of Canadian Tax Foundation and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Copyright of Canadian Tax Journal / Revue Fiscale Canadienne is the property of Canadian Tax Foundation and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

The article presents information on the special issue on the United Nations (UN) model 2011, which is United Nations Model Double Taxation Convention Between Developed and Developing Countries. It mentions that UN model incorporates many provisions of the Organization for Economic Co-operation and Development (OECD) model 2010 and discusses the features of the UN model. It also mentions that this special issue provides valuable information which assists international tax community.

The term "beneficial owner" is used, but not defined, in Canada's tax treaties. The limited Canadian jurisprudence regarding the interpretation of this term in a tax treaty context has taken a clear legal-form-based approach. Recent efforts by the Canada Revenue Agency (CRA) and the Organization for Economic Co-operation and Development (OECD) appear to be designed to undermine this approach and use the beneficial ownership concept as an anti-avoidance tool. In this article, the authors first canvass the history of the beneficial ownership concept in tax treaties and then discuss the recent CRA and OECD attempts to broaden the rule. They suggest that if the approach advanced by the CRA and the OECD is accepted, this will create uncertainty for taxpayers, and that any particular anti-avoidance concern would be better addressed through explicit and targeted treaty provisions. [ABSTRACT FROM AUTHOR]

Copyright of Canadian Tax Journal / Revue Fiscale Canadienne is the property of Canadian Tax Foundation and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Copyright of Canadian Tax Journal / Revue Fiscale Canadienne is the property of Canadian Tax Foundation and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

The article focuses on tax treaty court cases in Canada participated by former Chief Justice Donald Bowman between 1965 and 2008. It offers information on the resolution provided by Bowman in the case, Western Electric Company Inc. v. the Ministry of Natural Resources. It also cites several tax treaty cases heard by Bowman, after he was appointed judge of the Tax Court of Canada in 1991, such as the Merritt v. The Queen, Hausmann Estate v. The Queen, and Watts v. The Queen.

A review of the publication "Draft Contents of the 2010 Update to the OECD Model Tax Convention" from the Organisation for Economic Co-operation and Development is presented.

The article discusses the decision of the Tax Court of Canada on the application of the Canada-U.S. income tax convention. The court has decided on the position of U.S. limited liability corporations (LLCs) in the tax convention. It ruled that TD Securities LLC was entitled to the benefits of the tax treaty because its income was taxed by the U.S.

Copyright of Canadian Tax Journal / Revue Fiscale Canadienne is the property of Canadian Tax Foundation and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

The article discusses a court case in which the Federal Court of Appeal in Canada upheld the ruling of the Tax Court regarding the tax implications of the concept of beneficial owner of dividends. In Prévost Car Inc. versus the Queen, Prévost Car Inc. withheld a tax on the dividends of its shareholder Prévost Holding B.V. to claim a reduction in withholding rate pursuant to the Canada-Netherlands income tax treaty. The federal court considered the model tax treaty of the Organisation for Economic Co-operation and Development (OECD).

Many of the benefits currently available under the tax treaty between Canada and the United States in respect of amounts paid by a Canadian unlimited liability company (ULC) to a US resident will be eliminated by virtue of the fifth protocol to the treaty as of January 1, 2010. The loss of these Canadian tax benefits may significantly influence the continuing viability of ULCs in cross-border US tax planning. Consequently, US shareholders of a Canadian u LC must determine whether the prospect of this additional Canadian tax cost warrants a restructuring of the ULC. The authors of this article explore the historical significance of ULCs and assess the benefits and risks of certain restructuring alternatives from both a Canadian and a US tax perspective. They conclude that there is no single solution that can be applied uniformly by all taxpayers. [ABSTRACT FROM AUTHOR]

In this paper, the author provides a general explanation of the limitation-on-benefits article, examines selected practical problems in its application, highlights areas in which additional guidance is required, identifies potential problems and anomalies that taxpayers may encounter in applying the new rules, and makes certain recommendations. [ABSTRACT FROM AUTHOR]

Copyright of Canadian Tax Journal / Revue Fiscale Canadienne is the property of Canadian Tax Foundation and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

The US model income tax convention is intended in part to be a starting point for us tax treaty negotiations; however, it does not include all provisions to which the United States has agreed in more recent tax treaties, nor have actual negotiations necessarily resulted in treaties or protocols that follow the model in all respects. In this article, the authors compare the Canada-US income tax treaty; as it will be modified by the fifth protocol to the Canada-US income tax treaty, signed in September 2007, with the us model income tax convention, and comment on the differences between the two texts. The authors discuss the implications and significance of the changes brought about by the protocol and the extent to which they conform with the US model convention as well as other recent US tax treaties. [ABSTRACT FROM AUTHOR]

Copyright of Canadian Tax Journal / Revue Fiscale Canadienne is the property of Canadian Tax Foundation and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

The article analyzes the decision of the Tax Court of Canada in the case involving MIL (Investments) SA that was able to avoid Canadian tax through its bilateral tax treaties. The minister assessed MIL for tax on series of transactions with Diamond Fields Resources Ltd. The general anti-avoidance rule was amended in 2005 to add reference to tax treaty provisions. The judge ruled that there was an anti-abuse rule inherent in the treaty.

International, and largely bilateral, income tax treaties perform the significant function of coordinating the interaction of otherwise separate income tax regimes to allocate shared tax bases between nations otherwise able to assert legitimate claims to tax income that is somehow connected to each of them. Inevitably, treaties are compromises between disparate national tax and legal systems and between the tax policy objectives underlying national tax systems. The increasing importance of tax treaties is reflected by, among other things, the importance attached to refining the "permanent establishment" notion and how to attribute profits to a permanent establishment, which are continuing preoccupations of the Organisation for Economic Co-operation and Development and its member nations. There is a rich history underlying the development of modern tax treaties, dating back to the early work sponsored by the League of Nations in the 1920s. Even if some of this work has been eclipsed by modern model income tax conventions and the terms of specific bilateral income tax treaties, it is still important to know the kind of debate that has taken place and the intellectual struggles that have accompanied the adoption of the treaty conventions that play an increasingly important role in allocating international income, particularly where tangible national associations of that income may be difficult to establish. In this article, the authors reflect on the importance of tax treaty history and comment on international developments aimed at making that history accessible. [ABSTRACT FROM AUTHOR]

After reviewing the Canadian and UK jurisprudence endorsing the factual use of foreign commercial law when characterizing foreign business associations, this article considers some of the problems in applying this two-step approach and concludes that conventional tools such as the use of the composite concept of legal personality (or lack of it) yield uncertain results. In fact, one fundamental thesis of the article is that when comparing the attributes of a "hybrid" foreign business association with a Canadian corporation or with a Canadian partnership, it is necessary to break down the concepts of the lack of legal personality and its converse, the existence of legal personality, into their component legal effects. The article also argues that it is difficult to generalize a particular characterization to a type of foreign business association because the attributes of a foreign business association under foreign commercial law are typically derived not only from its governing statutes but also from its organizational documents. In this context, rather than making a series of submissions supporting the conclusion that certain foreign business associations should always be characterized in a particular way, the article proposes a basic framework that is flexible enough to take into account changes made by the members, through the organizational documents, to the default statutory attributes of these foreign business associations. The proposed framework aims to identify and weight characteristics that distinguish a Canadian partnership from a Canadian corporation and develop a spectrum ranging from "clearly partnership" to "clearly corporation" on which a foreign business association that exhibits both partnership and corporate attributes can be placed, so that the end to which the association is closest can be determined. The analysis in the article does not extend to the characterization of other types of hybrid foreign business associations, nor does it deal with the application of tax treaties to hybrid foreign business associations in general. [ABSTRACT FROM AUTHOR]

The concept of earnings and profits is fundamental to the tax treatment of corporate distributions under US tax law. The concept of surplus is a cornerstone of Canada's foreign affiliate regime. In this article, the authors compare and contrast these important tax concepts from the perspective of a Canadian multinational corporation with foreign affiliates resident in the United States. An earlier article examined the relevancy of the concepts, the objectives of the measurements, and related concepts and definitions, and provided general comments on the performance of calculations. This article focuses on the application of the two concepts, and the associated tax implications, within the context of the us entity classification rules, the US tax consolidated return regulations, and certain US reorganization provisions. [ABSTRACT FROM AUTHOR]

Copyright of Canadian Tax Journal / Revue Fiscale Canadienne is the property of Canadian Tax Foundation and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)