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ARTICLE · 21 SEPTEMBER 2012

The Ontario Foreign Tax Credit Regime After Harmonization

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Tax advisers to Canadian corporations paying foreign taxes will routinely consider the federal foreign tax credit rules and the deduction under subsection 20(12) of the Income Tax Act (Canada) (the "ITA").

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Ken Snider
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Michael Platt
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Tax advisers to Canadian corporations paying foreign taxes will routinely consider the federal foreign tax credit rules and the deduction under subsection 20(12) of the Income Tax Act (Canada) (the "ITA"). The provincial regime in respect of foreign taxes should not be overlooked as it may not produce effects parallel to those under the ITA. This article will review the Ontario foreign tax credit regime under the Taxation Act, 2007 (Ontario) (the "Ontario Tax Act")hand suggest some practical planning considerations.

A. PRIOR TO HARMONIZATION IN ONTARIO

Prior to harmonization, the Corporation Tax Act (Ontario) (the "CIAO") only provided a foreign tax credit in respect of foreign investment income and not foreign business income.

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