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Highlights
FEATURE ARTICLE
GAAR, Anti-avoidance and Abuse of Tax Treaties:
Part I
Leela Hemmings
International tax planners and their
clients will be watching with interest as the Canadian courts consider the appeal by
the Crown of the recent decision in
MIL and as Prevost Car makes its way onto the court calendar. As Leela Hemmings explains, these cases raise
issues of treaty interpretation not addressed before by Canadian courts. While
the MIL decision is welcome, its pronouncements on abuse of treaties and
the concept of treaty shopping leave much uncertainty yet to be
resolved.
FINANCE UPDATE
New Dividend Proposals Attempt to Level the Playing
Field
Mitchell Sherman, Jarrett Freeman
The new
proposals, though conceptually sound, are extremely complex, introducing new
concepts such as eligible dividends, low rate income pools and general rate
income pools and providing two distinct regimes which will apply to
Canadian-controlled private corporations and non-Canadian-controlled private
corporations separately. They also, by their complexity, create substantial
administrative burdens for payer corporations which are currently under
consideration.
CRA UPDATE
The Canada Revenue Agency Takes a New Approach to Safe
Income Calculation
Craig Burley
The Canada Revenue Agency's
administrative relief in allowing taxpayers to calculate safe income under its
historical rules will be available to a dividend recipient only until January 1,
2007.
CURRENT CASES
True Economic Purpose, Gone But Not Forgotten
Leslie Morgan
The Lipson case is reviewed.
Despite the fact that the Crown abandoned its argument on "true economic
purpose" and relied solely on GAAR, the Court appeared to rely on this test to
reach its conclusion. The case was appealed on May 19, 2006.
U.K. RECENT DEVELOPMENTS
Foreign Businesses Investing in the United Kingdom: Good,
Bad or Ugly?
Stephen M. Edge, Sara Luder
A case is
made by the author for the U.K.'s continued status as a competitive holding
company regime or an advantageous location for branch trading operations of a
foreign investor.
U.S. RECENT DEVELOPMENTS
U.S. Court Examines Concepts of Economic Substance and
Business Purpose
Willard B. Taylor
The United States Federal Circuit decision in
Coltec is of significance in any analysis of "economic substance." The
Court's holding that lack of economic substance would be sufficient to disregard
a transaction, together with its pronouncements that an overall business purpose
for a series will not save a transaction within the series from which the tax
benefit is derived, are significant.
EU RECENT DEVELOPMENTS
Substance in the Context of Residence and Recognition
of Entities as Beneficial Holders
Carola van den Bruinhorst
While residency and beneficial ownership issues are also in the forefront in
Europe, to date courts have not looked favourably on governments seeking to
challenge residency in the context of international planning or to advance
arguments of abuse. New legislative proposals are being advanced by some
jurisdictions to address these issues.
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Board
Elinore J. Richardson
Editor-in-Chief
Borden Ladner Gervais LLP
Toronto
Hugh Berwick
Alcan Inc.
Montreal
Monica Biringer
Osler, Hoskin & Harcourt LLP
Toronto
Stephen W. Bowman
Bennett Jones LLP
Toronto
Peter J. Connors
Orrick Herrington & Sutcliffe LLP
New York
R. Ian Crosbie
Davies Ward Phillips & Vineberg LLP
Toronto
Stephen M. Edge
Slaughter and May
London
David W. Glicksman
Wilson & Partners LLP
Toronto
Mitchell Sherman
Goodmans LLP
Toronto
Paul K. Tamaki
Blake, Cassels & Graydon LLP
Toronto
Willard B. Taylor
Sullivan & Cromwell LLP
New York
Stephanie A. Wong
Borden Ladner Gervais LLP
Toronto |