2014 Federal Budget: Tax Changes

The Minister of Finance delivered the 2014 Canadian federal budget today. In terms of new tax policy measures, Budget 2014 is thin when compared to the last few years, but seeks input from stakeholders on a number of future measures. The principal business and international changes include:

• Passive income rules for foreign subsidiaries. Income that is considered "foreign accrual property income" ("FAPI") of a controlled foreign subsidiary of a Canadian taxpayer is taxed in Canada on a current basis notwithstanding that such income is not distributed to the Canadian taxpayer. Budget 2014 includes two amendments to the FAPI rules: 
  • An existing exception from FAPI for a foreign subsidiary's income from a regulated financial business has been substantially narrowed by, among other things, making the exception only available where the Canadian taxpayer in respect of the foreign subsidiary is a regulated Canadian financial institution or a subsidiary or parent of