Tax Memo: August 14, 2012 - Legislative Proposals Released As Consultation Draft

Memo No. 2012-29

On August 14, 2012, the Department of Finance released for consultation draft legislative proposals that implement measures included in the March 29, 2012 federal budget. Comments on the proposals are due by September 13, 2012.

This Tax memo highlights international tax measures included in the August 14, 2012 legislative proposals. A more detailed Tax memo on these measures will follow shortly. In addition, we will release a Developments that addresses the Scientific Research and Experimental Development (SR&ED) proposals.

The international tax measures include the changes to the thin capitalization rules that, among other things:

• reduce the debt-to-equity ratio from 2-to-1 to 1.5-to-1, for taxation years beginning after 2012;