adhere to the framework established by the December 2018
proposed regulations (the 2018 proposed regulations) but contain a
new clarification addressing interest-free loans (IFLs) that will
have a major impact on how Canadian businesses finance their U.S.
subsidiaries and their cost of capital for financing U.S.
operations.
Canadian companies that have been awaiting final guidance in
this area have, in many cases, been in the difficult position of
trying to assess how the proposed rules would impact current and
future financing arrangements — leading some to be stuck in
an awkward financing "holding pattern." Like them or not,
the final and proposed regulations provide a form of closure and
allow Canadian businesses to turn the page and move forward with
financing their U.S. operations.
