Corporate Tax Rates And Legislation - Status For Accounting Purposes (September 30, 2012)


Article by Liam Fitzgerald

This quarterly update discusses developments related to the accounting for income taxes. It includes:

Legislative changes—July 1, 2012, to September 30, 2012 Federal and provincial/territorial bills—tabled or received royal assent in 2012; or tabled before 2012, but did not receive royal assent before 2012 Corporate income tax rates1—accounting status (January 1, 2009, to September 30, 2012) Background—determining the accounting status of income tax changes (see the Appendix on page 6) Legislative changes—July 1 to September 30, 2012

Legislative developments from July 1 to September 30, 2012, that affect income taxes are outlined below.

August 14, 2012 draft legislative proposals

On August 14, 2012, the Department of Finance released draft legislative proposals to implement 2012 federal budget proposals. Comments were due by September 13, 2012. Key legislative proposals:

revise the scientific research and experimental development (SR&ED) investment tax credit and expenditure rules; confirm the tax treatment on secondary transfer pricing adjustments with foreign affiliates; strengthen the thin capitalization rules; introduce rules to curtail a variety of transactions, referred to as foreign affiliate dumping transactions; and ensure that partnerships cannot be used to circumvent the intended application of sections 88 and 100 of the Income Tax Act. The August 14, 2012 legislative proposals also include amendments to the shareholder loan rules that permit Canadian corporations to make loans to foreign parent companies or related non-resident companies without incurring the deemed dividend withholding tax, on an elective basis.

Status: As of September 30, 2012, the August 14, 2012 proposals had not been tabled in the House of Commons. For more on the August 14, 2012 draft legislation, see our:

Developments "Legislative proposals confirm SR&ED changes" at; and Tax memos at August 14, 2012 legislative proposals released as consultation draft"; August 14, 2012 legislative proposals: Important international tax changes"; August 14, 2012 legislative proposals: Alert for mining companies"; and 2012 Federal budget: Continued tightening." Specified investment flow-through (SIFT), real estate investment trust (REIT) and publicly traded corporation draft legislative proposals

On July 25, 2012, the Department of Finance released draft legislative proposals that implement...

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