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ARTICLE · 16 AUGUST 2007

Amendments Would Remove Obstacle To Defeasance Transactions

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Proposed amendments to the regulations to the Income Tax Act (Canada) were published on June 23, 2007, which, when enacted, will formally expand the scope of what validly constitutes a ‘‘qualified investment’’ for Canadian tax purposes.

CanadaTax
McMillan LLP
McMillan LLP
Michael Friedman
Michael Friedman
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Reprinted from Tax Notes Int’l, July 9, 2007, p. 130

Proposed amendments to the regulations to the Income Tax Act (Canada) were published on June 23, 2007, which, when enacted, will formally expand the scope of what validly constitutes a ‘‘qualified investment’’ for Canadian tax purposes.

As noted in the ‘‘Regulatory Impact Analysis Statement’’ that accompanied the release of the proposed amendments, the definition of a qualified investment will be ‘‘amended to ensure that a mortgage certificate will not lose its qualified investment status if a mortgage that was registered in connection with the certificate is released in exchange for the provision of other high- quality substitute security.’’ The new, expanded definition of a qualified investment is proposed to apply, with retroactive effect, after 2005.

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