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ARTICLE · 19 FEBRUARY 2014

Highlights Of Canada’s 2014 Federal Budget

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The federal budget tabled on February 11, 2014 contains a number of proposed amendments to Canada’s Income Tax Act intended to close perceived loopholes and increase government revenues.

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The federal budget tabled on February 11, 2014 (Budget 2014) contains a number of proposed amendments to Canada's Income Tax Act (the "Tax Act") that are primarily intended to close perceived loopholes and increase government revenues. This bulletin focuses on (i) international tax measures affecting businesses, (ii) eligible capital property, (iii) resources taxation, and (iv) other proposed tax measures.

International Tax Measures Affecting Businesses

Captive Insurance

The Tax Act contains a set of rules within the foreign affiliate regime which are intended to protect the Canadian tax base from erosion through the use of foreign affiliates in low-tax jurisdictions to earn certain types of Canadian-source income as part of the affiliate's active business. Generally, where the rules apply, the relevant income forms part of the affiliate's foreign accrual property income (FAPI) which is taxed in Canada on an accrual basis in the hands of the Canadian taxpayer (of

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