Canada’s Foreign Affiliate Rules: A Decade Of Proposals Nearing Completion

On October 24, 2012, the Minister of Finance released a detailed Notice of Ways and Means Motion to implement outstanding technical tax amendments, including significant amendments to Canada's income tax rules applicable to Canadian corporations with foreign affiliates (the Proposals).  The Proposals apply to most distributions from, and reorganizations of, foreign affiliates of Canadian corporations, and contain new rules applicable to certain loans received from foreign subsidiaries that remain outstanding for at least two years, among other significant changes.  In addition to certain important new measures, the Proposals replace numerous proposed amendments that were released at various times over the past decade, and in many cases will have retroactive effect (in some cases with elections available to extend their application to prior years).  It is expected that the current majority Conservative government will enact the Proposals into law later this year.  This