Budget 2012 Legislation - More Revisions To Foreign Affiliate "Dumping" And Shareholders Loan Rules

On October 15, 2012, the Minister of Finance (Canada) tabled a Notice of Ways and Means Motion (NWMM) in the House of Commons to implement certain measures from the March 29, 2012 Federal budget (Budget 2012) that were amended in draft legislation released on August 14, 2012 (August Proposals). Bill C-45 received first reading in the House of Commons, as Bill C-45, on October 18, 2012 (Bill C-45). For a full discussion of Budget 2012 and the August Proposals, see previous updates, Harper's First Majority Government Budget – Tax Changes Include Targeted Measures to Close Perceived Loopholesand Minister of Finance (Canada) Releases Revised Budget Proposals.

Bill C-45 is substantially the same as the August Proposals with respect to the thin capitalization and partnership "bump" proposals, but contains further significant changes to the foreign affiliate (FA) "dumping" and non-resident shareholder loan rules. These changes are generally favourable, reflecting in part