Financing Across Borders: The Impact Of The Final Section 385 Regulations

The recent finalization of Section 385 regulations by the IRS and Treasury Department marks a profound change in the manner that basic U.S./Canadian cross-border tax planning will be conducted.  While these rules won't always directly impact cross-border financings by Canadian companies of their U.S. subsidiaries, U.S. investments or U.S. acquisitions, they will almost always be a key part of the tax planning related to these activities.  Because most of these new rules apply with an effective date reaching back to April 5, 2016, it is imperative that Canadian companies with U.S. activities assess their potential impact and develop a strategy for managing their exposure to these rules.