2014 Federal Budget – Selected Tax Measures

There is an evident international theme to many of the tax measures included in the 2014 Federal Budget presented by the Minister of Finance on February 11, 2014 (the 2014 Budget). The 2014 Budget includes proposals to address back-to-back loans in the context of the restrictions on the deductibility of interest under the thin capitalization rules as well as with respect to the application of non-resident withholding tax to interest payments. There are also proposals to restrict the availability of certain exceptions to the rules that would currently tax income earned by controlled foreign affiliates of Canadian taxpayers. The Department of Finance has taken the opportunity to float for consultation a domestic tax rule intended to curb treaty shopping. Finally, the government indicates in the 2014 Budget that it intends to look more closely at the Canadian government's role with regard to international tax planning by multinational enterprises. This measure, together