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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 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 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.)

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.

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]

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 proposal made in this paper is a modest one: that high-income countries should further the cause of reducing global inequality by ensuring that in their tax treaties with low-income countries they do not usurp needed revenues by reducing low-income countries' ability to collect tax on income with a source in the low-income country. This argument is made in the specific context of the taxation of royalty payments, which present one of the most extreme examples of high-income countries unfairly confiscating revenues that appropriately belong to their low-income treaty partners. The Organisation for Economic Co-operation and Development (OECD) model tax treaty, which most high-income countries in the world closely follow in negotiating their own tax treaties, provides that to avoid double taxation, source countries (invariably low-income countries) should reduce their rate of withholding tax on royalty payments to zero. Thus low-income countries that enter into tax treaties modelled on the OECD model convention are unable to levy a tax on royalty payments that have a source in their jurisdiction. In many cases, this simply results in a net transfer of revenue from the low-income country's treasury to the treasury of the high-income country. In making the general case for source taxation of royalty payments, the paper examines and compares Canadian and Australian tax treaty policies to see to what extent those countries have followed the OECD model convention in negotiating with low-income countries. [ABSTRACT FROM AUTHOR]

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]

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.

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 reviews articles such as "The Relationship Between China's Tax Treaties and Indirect Transfer Antiavoidance Rules" appeared in periodical "Tax Notes International" and "Taxing Indirect Transfers: Improving an Instrument for Stemming Tax and Legal Base Erosion" in "Virginia Tax Review."

An introduction is presented which discusses articles within the issue on topics including Canadian Tax treaties, various approaches to treaty shopping in Great Britain and European Union, and the limitation-on-benefit approach used by the U.S Treasury Department to address treaty shopping.

The article offers information on the challenges related to treaty shopping, which was focused in Canada's 2013 federal budget by the Department of Finance in Canada. Topics discussed include Canada Revenue Agency (CRA), comparison of inbound and outbound foreign direct investment with trade data, and maintaining balance between general and specific anti-treaty-shopping responses.

This article summarizes the commentary "Finding Silver Linings in the Storm: An Evaluation of Recent Canada-US Crossborder Tax Development," by Arthur I. Cockfield. This commentary views changes to the Canada-U.S. treaty that reduce barriers to cross-border investment, including the elimination of interest withholding tax. It considers the country's continuing effort to engage in tax competition through reductions of the corporate income tax rate while at the same time attempting to eliminate the tax benefit associated with the availability of an unrestricted interest expense deduction in the context of outbound direct investment.