The Honourable Bill Morneau, Minister of Finance, tabled the
Liberal government's third budget on February 27, 2018 (Budget
2018).
Budget 2018 contains several important changes affecting
Canadian business, but stays the course when it comes to corporate
tax rates. In particular, Budget 2018 does not respond to the
recent U.S. tax reform other than to promise a detailed review to
determine its impact on Canada.
Budget 2018 includes detailed provisions relating to the
taxation of passive investment earned in private corporations,
responding to criticisms with a more modest proposal than
originally outlined. There are changes to the foreign affiliate
system to address the use of tracking interests to satisfy the
employee test or to avoid controlled foreign affiliate status,
an extension of the period in which the income relating to foreign
affiliate transactions may be reassessed, and a much shorter
timeline for filing foreign affiliate information
