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ARTICLE · 14 APRIL 2023

Canada Clarifies And Expands Proposal For Equity Buyback Tax

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In November 2022, we wrote about the federal government's proposal in the 2022 Fall Economic Statement to tax share buybacks by public corporations in our blog, Canada Proposes New...

CanadaTax
Jared Mackey
Jared Mackey
Spencer Brown (Articling Stucent)
Spencer Brown (Articling Stucent)
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In November 2022, we wrote about the federal government's proposal in the 2022 Fall Economic Statement to tax share buybacks by public corporations in our blog, Canada Proposes New Tax On Share Buybacks. At the time, few details were available on the proposed tax.

The 2023 Canadian Federal Budget, released March 28, 2023, provides particulars on the proposed new two percent tax on share buybacks and expands the proposal to apply to repurchases of equity by certain trusts and partnerships. The proposed tax, which would be implemented through new sections 183.3 and 183.4 of the Income Tax Act, would apply to any "covered entity", which generally includes an entity whose equity is listed on a designated stock exchange and that is:

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