Economic Action Plan 2014 – International Tax Planning Under Continued Assault

On Tuesday, February 11, 2014 (Budget Day), the Honourable Jim Flaherty, Minister of Finance, delivered the federal budget (Budget 2014).　

As expected, Budget 2014 does not make any changes to personal or corporate tax rates. However, the theme from last year's budget of closing perceived loopholes continues. We see again the refrain that, although the Government is challenging, or can challenge, certain arrangements, including under the general anti-avoidance rule (GAAR), the time and costs of such challenges — and the unstated possibility that they could be unsuccessful — dictate specific amendments to the Income Tax Act (Canada) (ITA).

Budget 2014 reiterates the Government's commitment to continue to improve the integrity of Canada's international tax rules. Canada and other members of the Organisation for Economic Co-operation and Development (OECD) and the G-20 are engaged in a project to address "base erosion and profit shifting" (BEPS) strategies used by