Michael McLaren, Nicholas McIsaac
In addition, two provinces have introduced taxes on foreign buyers of Canadian real estate in the Vancouver and Toronto areas. The courts have also provided clarity on a number of issues, including the disclosure of tax accrual working papers to the Canadian tax authority, and the availability of the judicial remedy of rectification in transactions resulting in unforeseen tax consequences.
The Tax Act recognises two forms of corporate control: de jure (legal) control and de facto (factual) control. The concept of de facto control is broader than de jure control and is meant to restrict what the government considers inappropriate access to tax preferences. For example, whether or not a Canadian corporation is a Canadian-controlled private corporation and has access to the preferential small business tax rate is based on whether or not one or more non-resident persons exercise de facto control of the corporation.
The 2017 Federal Budget expanded the definition of de facto corporate control in direct response to the Federal Court of Appeal's decision in McGillivray Restaurant Ltd. v. The Queen, 2016 FCA 99. In McGillivray, the court found that a factor can be considered in determining whether factual control exists, only if it includes "a legally enforceable right and ability to effect a change to the board of directors or its powers, or to exercise influence over the shareholder or shareholders who have that right and ability". Unhappy with this decision, Parliament sought to clarify the meaning of de facto control for the purposes of the Tax Act.
The proposed legislation provides that all factors that are relevant in the circumstances must be taken into consideration when determining whether a taxpayer has direct or indirect influence that could result in de facto control. The new definition of de facto control provides that this influence is not limited to, and that the relevant factors to be considered in determining its existence need not include, a legally enforceable right or ability held by the taxpayer to effect a change in the corporations' board of directors or the board's powers or any ability to exercise influence over the shareholder or shareholders who have such right or ability. As a result, the proposed amendment would effectively overrule the test set forth in McGillivray and broaden the circumstances under which de facto control may exist.
In July of 2016 British Columbia introduced a 15% property transfer tax on foreign purchases of residential property in the Greater Vancouver area. On April 20 2017, Ontario announced it would also impose a 15% non-resident speculation tax on foreign purchasers of residential property in the Greater Golden Horseshoe area of southern Ontario, encompassing Toronto, Hamilton and neighbouring areas. The two taxes were introduced as part of initiatives to make housing more affordable for residents of two of Canada's largest urban communities.
These new taxes are imposed on foreign entities or taxable trustees that purchase residential property in the prescribed areas. The types of property that qualify as residential property differ under the Ontario and British Columbia rules, but both are aimed at taxing dispositions of single-family residences, certain multi-family residences and condominiums. Exemptions are available in certain situations, including, for example, where the spouse of a non-resident entity is a resident of Canada for purposes of the Ontario tax, and rebates are available under other circumstances.
As part of a federal plan to stabilise Canada's housing market and ensure compliance, the Federal Government also introduced amendments to the principal resident exemption rules contained in the Tax Act. Paragraph 40(2)(b) of the Tax Act provides an exemption from capital gains on the disposition by an individual of a residential property that was at any time the individual's principal residence. The extent of the exemption is determined pursuant to a formula that factors in the number of years the individual designated the property as his or her principal residence while he or she was resident in Canada, plus one. This 'plus one rule' ensures that an individual who sold one property and purchased another in the same year can eliminate the full gain on both properties.
As of October 3 2016, the plus one rule no longer applies to individuals who were not resident in Canada at the time of the acquisition of the property. This change is meant to address non-residents who buy and sell property within the same year, using the plus one rule to exempt the entire gain from tax. In addition, restrictions have been placed on the types of trusts that may benefit from the principal residence exemption.
The Tax Act contains a number of provisions that, for various policy reasons, provide tax-deferred treatment on the transfer of property in certain instances. These provisions do not currently apply to situations where non-resident corporations owning taxable Canadian property, as the term is defined in the Tax Act, merge, and the property is transferred to a successor corporation.
In September 2016, Parliament introduced new provisions allowing taxpayers to elect for dispositions of taxable Canadian property that are shares of a Canadian-resident corporation to occur on a tax-deferred basis, where the disposition results from a foreign merger that meets certain conditions. The proposed provisions do not provide tax-deferred treatment of the disposition of other types of taxable Canadian property.
In order to qualify for the tax-deferred treatment, the merger must occur between two or more predecessor foreign corporations that were resident in the same country and related to each other prior to the merger. In addition, no shareholder of either predecessor foreign corporation may receive consideration other than shares of the new corporation, and the Canadian corporation whose shares represent taxable Canadian property to the non-resident must not have been subject to a loss restriction event in the 24-month period prior to the merger. If tax-deferred treatment is desired, the new corporation formed on the merger and the predecessor non-resident corporations must file a joint election in accordance with the prescribed rules.
Parliament also introduced provisions clarifying the tax consequences where shares are exchanged pursuant to a foreign spin-off. The proposed amendments to the Tax Act provide that where a non-resident corporation is divided under the laws of its jurisdiction and new shares are received by a shareholder on a pro rata basis, there is deemed to be a dividend paid to the shareholder rather than a taxable benefit. Conversely, if shares are not received on a pro rata basis, a shareholder is deemed to have received a taxable benefit from the non-resident corporation.
These amendments apply to foreign mergers and spin-offs that occur on or after the Announcement Date of September 16 2016.
Life insurance companies resident in Canada have historically enjoyed an exemption for their income from carrying on business in a foreign jurisdiction. While the foreign accrual property income (FAPI) rules did apply to controlled foreign affiliates with respect to the insurance of Canadian risks, there was no similar rule regarding foreign branches of Canadian life insurance companies.
The 2017 Federal Budget proposed to amend the Tax Act to ensure that Canadian life insurers would be taxable in Canada with respect to their income from the insurance of Canadian risks both through controlled foreign affiliates and foreign branches. The rules apply where 10% or more of the gross premium income (net of reinsurance ceded) earned by a foreign branch of a Canadian life insurer is premium income in respect of Canadian risks. Where the rule applies, it will deem the insurance of Canadian risks by a foreign branch of a Canadian life insurer to be part of a business carried on by the life insurer in Canada, and the related insurance policies to be life insurance policies in Canada. Anti-avoidance rules that were introduced to the FAPI regime in the 2014 and 2015 Budgets will be extended to foreign branches of life insurers and new anti-avoidance rules dealing with a transaction or series of transactions, one of the purposes of which was to avoid the existing rules, will be introduced to reinforce the existing anti-avoidance rules in the FAPI regime.
On July 18 2017, the Federal Government of Canada introduced proposed legislation dealing with what they describe as a variety of tax loopholes achieved through the use of private corporations. While these proposals are currently still in the consultative phase, their application is far-reaching and has the potential to impact a wide array of taxpayers.
Proposed section 246.1, for example, is an anti-avoidance rule aimed at "surplus stripping" whereby corporate surplus is distributed to Canadian shareholders on a tax-free or tax-reduced basis in a non-arm's-length context. While this provision would generally not apply to non-resident shareholders of Canadian private corporations, proposed subsection 246.1(3) will reduce the capital dividend account (CDA) of the corporation to nil where such a distribution is made and it "can reasonably be considered that one of the purposes of the transaction, event or series was to effect a significant reduction or disappearance of assets of a private corporation", such that tax is avoided.
The Consultation Paper on the proposed legislation also addresses the taxation of passive investment vehicles. While no specific legislation is proposed and the consultative process remains open, some of the concerns addressed include the taxation of passive income in non-Canadian controlled private corporations and the use of complex cross-border corporate structures to defer taxes. As such, the forthcoming legislation may have an impact on non-residents investing in such vehicles.
On June 7 2017, Canada signed the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI). It is one of sixty-eight jurisdictions that have signed the agreement, which is designed to efficiently implement certain BEPS measures without the need to amend treaties already in place.
Not all countries have adopted all the measures contained in the MLI. Canada has registered several reservations, but has adopted provisions setting out BEPS minimum standards for treaty abuse prevention and dispute resolution procedures, including an opt into the mandatory binding arbitration provisions. Measures from the MLI only modify existing treaties where both parties to the treaty have signed the MLI and neither party has registered a reservation with respect to a particular provision.
Canada has accepted the MLI measure on the BEPS minimum standard for treaty abuse provision. This provision essentially modifies the preambles of applicable treaties to state that in addition to preventing double taxation, the agreements are not intended to create opportunities for non-taxation or reduced taxation through tax evasion or avoidance. The MLI also sets out optional substantive rules providing a mechanism for determining treaty abuse. Canada, in signing the MLI, adopted the principal purpose test to determine whether or not a tax treaty has been abused. Canada did not adopt the limitations on benefits test contained in the MLI, although the provisions do appear in a variety of forms in certain Canadian bilateral agreements, including, for example, those entered into with the US and Hong Kong.
In World Tax 2017, we noted that Canada and Taiwan had entered into an income tax convention but that convention was not yet in force. This convention came into force on December 15 2016, the same date as the coming into force of the convention between Canada and Israel, which was signed on September 21 2016.
On November 24 2016, Canada also entered into an income tax convention with Madagascar. This convention is not yet in force.
On February 8 2017, the Agreement Concerning the Application of the Arbitration Provisions of the Convention between the Government of Canada and the Government of the United Kingdom of Great Britain and Northern Ireland for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and Capital Gains was entered into force. The agreement modifies the current convention between Canada and the UK to implement mandatory binding arbitration.
On June 7 2017, Canada and the US entered into an arrangement to exchange country-by-country reports. These reports will outline the global allocation of income, taxes paid, and other information regarding multinational enterprises. This arrangement complements the Multilateral Competent Authority Agreement on the Exchange of Country-by-Country Reports, signed by Canada on November 5 2016 and entered into by 64 countries. The US is not a signatory.
This past year, the Canadian courts have addressed the disclosure of documents to the tax authority under a variety of circumstances. For example, in The Minister of National Revenue v Iggillis, 2016 FCA 1352, the Federal Court of Canada examined what is referred to as common interest privilege in the context of a commercial transaction.
Solicitor-client privilege protects communications between a lawyer and a client where such communication is made for the purposes of giving or seeking legal advice and is intended by the client to be confidential. This privilege may be waived where the client shares these communications with a third party, in which case the communications are no longer protected. The doctrine of common interest privilege, while not a separate type of privilege itself, was, before Iggillis, often recognised by Canadian courts as an exception to this waiver where privileged communications were shared with unaffiliated parties with the common interest of completing a transaction.
However, in Iggillis, the Federal Court departed from precedent in finding that a legal memorandum addressing the tax consequences arising from a series of commercial transactions, prepared by counsel of a party with whom the taxpayer had dealings, was not protected by solicitor-client privilege. The memorandum had been shared with the taxpayer as it was necessary for both parties to understand the structuring discussed therein to complete a deal. The court found that to apply the doctrine of solicitor-client privilege to communications in the allied lawyer setting, such as the sharing of the memorandum in question, was to protect communications that were not solely between a lawyer and client. While not explicitly stating that the sharing of the memorandum represented a waiver of solicitor-client privilege, the court found that the doctrine of solicitor-client privilege should not apply to communications received by the taxpayer that represented communications between the other party to the transaction and its own lawyer.
The 2015 Federal Court decision in BP Canada Energy Co v The Minister of National Revenue, 2017 FCA 61, resulted in much concern in the tax community. When granting the tax authority access to the taxpayer's list of uncertain tax positions, prepared as part of the taxpayer's tax accrual working papers, the court cited fairness as grounds for the access. However, the Federal Court of Appeal overturned the compliance order, establishing an important limitation on the tax authority's information gathering powers.
While the Federal Court of Appeal noted that subsection 231.1(1) of the Tax Act provides the Canadian tax authority with broad information gathering powers, it found that restraint should be used with respect to tax accrual working papers, in accordance with the intent of the provision. The court found that to decide otherwise would result in self-auditing by the taxpayer and would likely result in a chill on the preparation of useful documents for fear of disclosure to the tax authorities. While the tax authority may still request access to such documents in certain circumstances, the BP Canada case limits unrestricted access to tax accrual working papers.
In World Tax 2017 we discussed the Supreme Court of Canada decisions in Canada (Attorney General) v. Chambre des Notaires du Quebec, 2016 SCC 20, and Canada (National Revenue) v. Thompson, 2016 SCC 21, as they related to solicitor-client privilege. The Supreme Court of Canada found that lawyers and notaries should be excluded from the requirement regime contained in the Tax Act. In Revcon Oil Constructors Inc v The Minister of National Revenue, 2017 FCA 22, a taxpayer argued that its documents were subject to solicitor-client privilege and that a Federal Court order to disclose such information was an indirect order for the taxpayer's law firm to disclose information in contravention of the two Supreme Court decisions.
When dismissing the taxpayer's appeal, the Federal Court of Appeal found that the order was directed only against the taxpayer, requiring it to disclose all documents in its power, possession or control, and was not in contravention of the Supreme Court cases. The taxpayer could still argue that certain documents were in fact privileged, but the requirement regime in the Tax Act was still applicable to persons other than lawyers and notaries.
Historically, rectification has been a useful tool in revising transactions to account for unforeseen tax consequences. However, in the past year, two Supreme Court of Canada cases have significantly curbed a taxpayer's ability to use rectification as a means to achieve such objectives. In the cases of Jean Coutu Group (PJC) Inc. v Canada (Attorney General), 2016 SCC 55, and Canada (Attorney General) v. Fairmont Hotels Inc., 2016 SCC 56, the Supreme Court of Canada refused rectification orders in instances where the taxpayers had simply a general intention to avoid or minimise tax. While the former decision dealt with the civil remedy of rectification in the province of Quebec and the latter with the common-law remedy available in Ontario courts, the results in each were similar.
In both instances the parties sought to rectify documents related to transactions that produced unanticipated tax consequences. In Jean Coutu, the taxpayer wished to rectify written documents that resulted in the creation of FAPI. In denying the application, the court concluded that when unintended tax consequences arise from a contract, rectification will be available only if: (1) such consequences were originally and specifically sought to be avoided through sufficiently precise transactions, and (2) the transactions, if they had been properly executed, would have had the intended effect. The court found that the criteria were not met in this instance as the transactions contemplated by the parties were implemented as planned and there was no intent to avoid FAPI in their execution.
In Fairmont, the taxpayer sought to change a share redemption that triggered a foreign exchange gain to a loan, resulting in tax neutrality of the series of transactions implemented. The court again denied granting rectification finding that such an order requires more than a general intention to pursue a transaction in a tax-neutral manner. The court held that in order to grant rectification, the taxpayer must be able to point to a specific intention expressed in definite and ascertainable terms to achieve the results for which rectification was being sought, for example a prior agreement that was incorrectly recorded in the actual legal instrument.
Further to these cases, the Federal Court of Appeal in Canadian Forest Navigation Co. v The Queen, 2017 FCA 39, found that foreign rectification orders were not necessarily dispositive or binding on a Canadian tax assessment, but must be taken as facts at trial even in the absence of domestic recognition through homologation. As such, any analysis at trial to decide whether a taxpayer's foreign rectification orders would be sufficient to avoid Canadian income tax consequences would still need to meet the requirements set forth in Jean Coutu and Fairmont.
In Rio Tinto Alcan Inc. v The Queen, 2016 TCC 172, the Tax Court of Canada made a major change to the deductibility of investment banking fees paid for services rendered to assist board members in deciding whether to approve proposed transactions. Historically fees such as these were considered by the tax authority to be capital in nature and were not deductible in the year incurred, instead being added to the adjusted cost base of the acquired property.
The taxpayer in this instance deducted professional advisory fees incurred in regards to a share acquisition of an aluminum producer, and a subsequent spin-off of certain assets, from its income as current expenses for the taxation year. After being reassessed by the tax authority, the taxpayer appealed, arguing that the expenses were incurred as part of its ordinary business operations and were properly deductible as current expenses under the Tax Act. Partially allowing the appeal, the Tax Court of Canada drew a distinction between "oversight expenses", related to professional services rendered to the board in the oversight and decision-making process, and "execution costs", related to the actual implementation of the approved transactions. The court found that the former, which were incurred up until the point where the transactions were approved and committed to, were deductible as current expenses as they allowed the board to properly exercise its oversight function. The latter remained capital expenses and were added to the adjusted cost base of the acquired property.
The Canadian courts released two cases this past year dealing with the mutual agreement procedure (MAP). In CGI Holding LLC v The Minister of National Revenue, 2016 FC 1086, the Federal Court found that the conduct of the Minister of National Revenue (Minister) in the context of MAP negotiations between the Canada Revenue Agency (CRA) and the Internal Revenue Service (IRS) that resulted in no agreement between the two competent authorities was reviewable by the Federal Court. While finding that the Minister's conduct was reasonable in the circumstances, thereby granting no remedy to the taxpayer, this decision opens the door for judicial review of MAP outcomes. However, given the level of deference the court showed to the Minister in reaching its decision, whether such an application will be worthwhile is questionable.
In Sifto Canada v The Queen, 2017 TCC 37, the Tax Court of Canada found that agreements between the CRA and IRS, concluded pursuant to MAP negotiations, were binding on the Minister. The taxpayer had originally understated its income with regards to the sale of rock salt to a related US company for certain taxation years. After disclosing these errors to the Canadian tax authority through the voluntary disclosure program, the taxpayer was reassessed on its income, resulting in double taxation in Canada and the US. The taxpayer and its US affiliate made applications to their respective competent authorities and an agreement was reached through MAP negotiations. The Canadian tax authority subsequently audited the taxpayer and increased its income for the years in question.
In allowing the taxpayer's appeal, the Tax Court of Canada found that the Canadian tax authority was bound by its agreements with the taxpayer and the US competent authority. Since the reassessments were inconsistent with these agreements, they were referred back to the tax authority for reconsideration based on the fact that the tax authority could not vary the rock salt income from those amounts determined in the agreements.
In the section 'Statutory developments' above, we discussed the 2017 Federal Budget proposal to amend the definition of de facto control. However, before the 2017 Budget, the Tax Court of Canada was forced to provide clarification of the test for de facto control based on the current provision and the common-law in reaching its decision in the case of Aeronautic Development Corporation v The Queen, 2017 DTC 1019.
In deciding whether a non-resident individual and/or non-resident corporation had direct or indirect control of the taxpayer for the purposes of determining its status as a Canadian-controlled private corporation, the court used the narrow test for de facto control set out in McGillivray. In this instance the taxpayer was partially owned by Seawind, a US-resident corporation that held 46% of the voting shares of the taxpayer. Seawind was in turn controlled by a US-resident individual.
In finding that the taxpayer was controlled in fact by Seawind and/or its non-resident shareholder, the court placed a heavy emphasis on a development agreement between the taxpayer and Seawind, which was the taxpayer's only client. The court found that the US resident individual who controlled Seawind had the ability to affect the economic interest of the voting shareholders in a manner consistent with de facto control of the taxpayer. As a result, the taxpayer was not a Canadian-controlled private corporation for purposes of the Tax Act. Given that the stricter test for de facto control set forth in McGillivray was met in this instance, circumstances such as those present in this case would also likely represent de facto control under the proposed definition.
Reducing Canada's national deficit is a central goal for Prime Minister Justin Trudeau's administration. As a result, the government has adopted a series of tax measures which it believes will help increase revenue.
Arguably the most significant development in the Canadian tax system in the past year was the Department of Finance's legislative proposals and consultation paper in respect of the taxation of private corporations and their shareholders. The proposed amendments to the Income Tax Act have been released to counter "income sprinkling", said Carrie Smit and Jon Northup, head of tax and partner at Goodmans. "Income sprinkling is the practice of diverting income from a high-income individual to family members with lower personal tax rates, as well as the multiplication of the capital gains exemption and the conversion of regular income into lower taxed capital gains," Smit and Northup said.
The Department of Finance is also considering various approaches that would eliminate the current tax advantages associated with investing after-tax income earned by a private corporation. "These proposals represent a fundamental change to the Canadian tax system and have caused significant concern in the tax community," Smit and Northup said. The proposals have been defended by the Trudeau administration on the basis of bringing greater fairness to the Canadian tax system. However, reports have suggested that, if introduced, the changes would have a detrimental effect on Canadian small businesses and their owners while introducing additional complexity and compliance burdens.
Furthermore, the Canada Revenue Agency (CRA) has followed the international trend and increased tax audits in response to global tax scandals such as the Panama Papers. However, in the BP Canada Energy Company case decided in March 2017, the Federal Court of Appeal held that audits did not grant the CRA unrestricted access to companies' financial statements, a significant decision as it reduces the CRA's regulatory scope.
Another talking point has been in relation to the carbon tax, which imposes a tax on businesses that engage in activities that produce greenhouse gases. The government wants all provinces and territories to impose a minimum cost of $10 per tonne of greenhouse gases emitted by 2018. The scheme has caused confusion and uncertainty in the market, but it seems the incentive to make businesses greener is working, as corporations are looking for ways to minimise both greenhouse gases and their carbon tax bill.
Blake, Cassels & Graydon LLP
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Members of the Blakes Tax group across Canada provide our clients with innovative and effective tax advice in all areas of tax law.
Blakes tax lawyers are recognized both in Canada and internationally as leaders in all areas of Canadian tax, including mergers and acquisitions, restructuring, corporate finance, international tax, transfer pricing, private equity, structured finance, taxation of investment funds, resource taxation and employee benefits. Blakes commodity tax lawyers have unparalleled expertise in customs, sales tax, and goods and services tax/harmonized sales tax legislation. Blakes tax controversy and litigation lawyers have the depth, experience and expertise necessary to effectively represent our clients' interests in dealing with tax authorities at all levels, including in the courts.
Davies Ward Phillips & Vineberg LLP is a law firm focused on high-stakes matters. Committed to achieving superior outcomes for our clients, we are consistently at the heart of their largest and most complex deals and cases. With offices in Toronto, Montréal and New York, our capabilities extend seamlessly to every continent.
Business leaders conducting complex transactions want efficiency, innovative thinking and a smart, successful path to the finish line. That's what our market-leading Canada-U.S. tax lawyers deliver.
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Based in Toronto, Goodmans LLP is a leading Canadian full-service business law firm of over 200 lawyers providing legal advice and representation to domestic and foreign business clients. Our tax practice is transaction-driven and focused on providing our clients with dynamic, strategic and practical tax advice in structuring and successfully completing their business transactions. Our tax lawyers have worked on many of Canada's most innovative deals.
Goodmans' core tax strength is its M&A tax practice and all of our partners practice in this area. We specialize in strategic acquisitions and joint ventures, private equity transactions and public company M&A, including going private transactions. Goodmans' tax group provides tax expertise and strategic advice in structuring and implementing sophisticated, innovative corporate finance transactions in domestic, cross-border and international equity and debt capital markets. Goodmans' tax group is also a part of Canada's leading restructuring and insolvency practice and has been consistently involved with Canada's most significant corporate restructurings, insolvencies and recapitalizations.
Goodmans' tax group has particular expertise with cross-border transactions. Much of our tax practice involves the inbound and outbound structuring of international business arrangements and investments, requiring us to work seamlessly with co-counsel in other jurisdictions.
Our market leading practice areas are further bolstered by top-quality expertise in tax dispute resolution and litigation, transfer pricing, commodity tax, executive compensation and trust, estate and personal domestic and international tax planning.
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Osler, Hoskin & Harcourt LLP
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Osler is widely recognized as one of Canada's best law firms for tax. Our 60+ tax planning and tax controversy lawyers operate as an integrated team. Clients involved in complex tax litigation benefit from the specialized expertise of tax planning lawyers. Clients with sophisticated tax planning can leverage the unique perspective of tax litigators. This combination is unique to Osler and allows us to deliver unparalleled advice.
Osler's tax lawyers regularly act in Canada's most complex tax-related transactions. They are integral to the firm's M&A practice, developing innovative approaches and structures for Canadian and foreign multinationals. Lawyers in our pre-eminent tax controversy and litigation practice have argued a number of landmark cases in the Supreme Court of Canada, including successfully arguing the first GAAR case, and the first and only transfer pricing case heard by the Court. Osler is also a leader in transfer pricing dispute resolution and provincial GAAR litigation.
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Osler is recognized for the breadth and depth of its expertise in business law and is consistently ranked as one of Canada's top law firms. We serve our clients through offices in Toronto, Montréal, Calgary, Vancouver, Ottawa and New York.
Thorsteinssons LLP was founded in 1964 by P.N. Thorsteinsson, Q.C. Since then, Thorsteinssons has grown to become Canada's largest firm practicing exclusively in tax.
Our practice encompasses all aspects of federal and provincial tax matters including tax planning, compliance, representation and civil and criminal tax litigation.
Tax is an area of great complexity. By restricting our practice to tax, we are better able to provide the level of skill and attention demanded by our clients. Our level of specialization ensures that we complement – not compete with – other professional advisors representing our clients.
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Torys LLP is an international business law firm that works with clients who expect the best advice and exceptional service. Torys' dedication to excellence across practice areas and industries has resulted in an enviable record of experience in Canada and globally. Teamwork is one of the firm's distinguishing features, reflected in all aspects of how the firm partners with clients and collaborates internally. Long-standing clients continue to retain Torys not only for its excellent service and legal expertise, but also because of a shared value for lasting partnerships based on trust and respect.
Our tax practitioners have represented corporations in significant cross-border joint ventures where the participants are strategic, financial or tax-exempt. We represent large multinational businesses, domestic public and private companies, and financial institutions, including banks, insurance companies and trust companies. We also represent issuers and sponsors of private equity investment funds and superannuated pension funds, and assist venture capital investors, start-up companies and mature businesses with national and international tax management.
Peter J. Keenan
|Federal corporate income tax rate||15%|
|Royalties from, for example, patents, know-how||25%|
|Branch Remittance Tax||25%|
Aird & Berlis is a respected firm that provides services in domestic and international tax planning, structuring of business transactions and tax disputes. The firm's professionals have advised clients in respect to M&A, reorganisations, plans of arrangement, financings and sale transactions.
Barbara Worndl is the practice group leader in the tax group, while Jack Bernstein is the chair of the international tax practice. David Malach and Louise Summerhill co-chair the tax litigation team.
Baker McKenzie offers services in tax planning and transactions, tax controversies, transfer pricing, indirect tax and global wealth management. The firm acts for many of the world's largest multinationals, offering them legal advice on a range of business issues.
A key member in the firm's tax practice is Jacques Bernier. Bernier's practice focuses on tax litigation and representations before the Canadian tax authorities at the federal and provincial levels.
Bennett Jones is a respected firm that is experienced in cross-border transactions, corporate law, tax litigation and transfer pricing. Thomas Bauer and Darcy Moch co-head the tax practice. Bauer's expertise includes M&A, corporate reorganisations, cross-border transactions and investments, while Moch's practice focuses on corporate reorganisations, M&A, debt and asset-based financings. Another key member in the practice is partner Alan Rautenberg whose specialism includes M&A, takeovers, public debt and equity financing structures, reorganisations and cross-border investment structures.
Clients of the firm comes from the manufacturing, financial services, communications, technology, real estate, transportation and power sectors.
Members of the firm's tax group are active participants and leaders in tax organisations such as the Joint Committee on Taxation of the Canadian Bar Association and the Canadian Institute of Chartered Accountants.
Blake, Cassels & Graydon is a leading firm in the Canadian market. Its tax practice is led by Jeffrey Trossman and comprises 29 partners and 15 other fee earners. New members of the firm include associates Monica Cheng, Shavone Bazarkewich, Matthew Weaver and Eric Brown.
The firm's core practice is corporate income tax. It has also acted as counsel in tax planning and tax dispute matters. Its professionals are deeply experienced in advising clients on complex cross-border transactions and multi-jurisdictional reorganisations.
Blake, Cassels & Graydon also has a team of highly skilled lawyers devoted to deal with commodity tax and customs matters, including HST/GST/QST and other sales taxes. On the dispute front, the firm assists clients in all aspects of the audit and appeal process, including audit management. Further, it has advised on domestic and foreign requirements in relation to the preparation of notices of objection and in the negotiations with the appeals branch of Canada Revenue Agency (CRA).
In 2016, the firm advised TransCanada Corporation in relation to its acquisition of all of the outstanding shares of Columbia Pipeline Group worth approximately $13 billion. It also acted for Trilogy International Partners on its $875-million business combination with Alignvest Acquisition Corporation.
Borden Ladner Gervais's tax group has strong expertise in each of its five offices. The firm provides tax services in industries such as the electricity markets, energy, mining and oil and gas.
The tax group is well-known for providing strategic tax advice, innovative planning, efficient tax structures and comprehensive risk assessments to national and international clients. The practitioners at the firm are also extensively experienced in M&A, private equity, inbound investments, public offerings and tax litigation.
This year, Borden Ladner Gervais assisted Enersource to complete a multi-billion dollar merger with Horizon Utilities, PowerStream and subsequently Hydro One Brampton under the trade name Alectra. This merger of four major Ontario electricity distribution utilities is the largest amalgamation in the history of the Ontario electricity sector. The deal will also create one of the largest municipally-owned electricity utilities in Canada.
Lindsay Holmes is the national leader of the tax group. Holmes's practice focuses on providing tax counsel to Canadian and foreign entities on income tax matters, including acquisitions and divestures, structuring of joint ventures and partnerships.
Burnet, Duckworth & Palmer represents a broad spectrum of clients in transactional and litigation matters. Its tax team has assisted clients with the development of domestic and cross-border tax strategies. The firm's expertise includes M&A and resource taxation, reorganisations, restructurings and financings, flow-through shares, tax planning for start-ups and family-owned businesses, among other things.
The firm comprises eight professionals, five of which are partners. John Brussa is chair of the tax practice. His practice focuses on resource taxation, corporate reorganisations, cross-border and international transactions as well as tax-deferred financing.
John Ulmer, Ian Crosbie and Brian Bloom co-head Davies Ward Phillips & Vineberg's tax practice. Its tax group has 20 partners, 11 based in Toronto and 9 in Montréal.
The firm's lawyers have played a leading role in many of the most significant and innovative Canadian and cross-border business transactions across all business sectors. In the healthcare and logistics sectors, it has acted for McKesson Corporation in connection with its $3-billion acquisition of Rexall and Rexall Pharma Plus from Katz Group. Furthermore, it has advised Air Canada in structuring the first Canadian enhanced equipment trust certificate, permitting Air Canada to efficiently finance the acquisition of aircraft valued at over $900-million. It also acted for HP in the electronics sector in connection with its $1.05-billion acquisition of the printer business from Samsung Electronics.
The firm's tax litigators are known for their expert representation on all aspects of dispute resolution and tax litigation, from audits through to litigation before the courts. Guy Du Pont heads the firm's tax litigation practice and has represented clients at the Supreme Court of Canada in more than 30 instances.
Clifford Rand is the national managing partner for Deloitte's tax practice. The firm provides a broad range of services that span from tax, assurance and advisory, risk management, financial advisory and consulting. Its Canadian practice has offices in Toronto, Calgary, Vancouver and Montréal.
Deloitte's tax lawyers have extensive experience in tax controversy and tax litigation. Rand specialises in the management of large, complex audits and rectifying compliance and taxation issues.
Alycia Calvert oversees the tax practice at EY. The firm offers services in business tax consulting, compliance and reporting, international tax law, transfer pricing, indirect taxes and controversy. Calvert is experienced in the structuring of royalty trusts and income funds, acquisitions of Canadian public and private corporations as well as post-acquisition restructuring.
Chris Steeves heads the corporate tax department at Fasken Martineau. Its highly experienced team provides advice across a wide range of industries. The firm has 30 partners and 11 other professionals, including Jenny Mboutsiadis who joined the firm in 2016.
In the past year, Fasken Martineau has advised on many of the largest and most high-profile cases. The firm's tax litigation practice has garnered much accolade in deals relating to complex and high profile tax mandates in the mining, energy and financial institutions.
Moreover, the firm has advised the Minister of National Revenue and Canadian Revenue Agency in a tax dispute with the Computershare Trust Company of Canada.
Felesky Flynn specialises in tax. The firm's expertise spans tax planning, representation and litigation. Its core practice includes corporate tax, personal tax, M&A, reorganisations, international tax, resource tax, commodity tax, audits, CRA proposals and criminal tax defences.
Donald Biberdorf and Siobhan Goguen are the co-managing partners in the Calgary office, while Richard Kirby is the managing partner in the Edmonton office.
Goodmans' tax practice provides dynamic, strategic and practical tax advice in relation to M&A, corporate finance and restructuring transactions.
The firm's core practice is in M&A. Goodmans specialises in public company M&A, private equity transactions including going private transactions as well as strategic acquisitions and joint ventures.
In the past year, the firm's most significant M&A transactions have included advising Spectra Energy in its merger with Enbridge. The transaction marks the largest foreign takeover by a Canadian company and the largest takeover of a US energy company by a Canadian company. Furthermore, it has advised Vista Equity Partners on its acquisition of DH Corporation and Vista's merger of DH with its portfolio company, which will create the third largest financial services technology company in the world.
The tax team at Goodmans comprises seven partners and four other professionals, including practice lead Carrie Smit.
John Sorensen oversees the tax practice at Gowling WLG (Canada). The firm comprises 20 partners and eight other professionals, including Steven Baum and Greg Shannon who joined the firm in 2016, and Brian Cohen who joined in 2017. The team consists of lawyers, accountants, economists and former senior officers of the CRA.
Gowling WLG (Canada)'s tax group is recognised in the areas of corporate tax, private equity, transfer pricing, tax dispute resolution, aboriginal taxation and indirect tax. Its team has been counsel to both national and international clients ranging from mid-sized businesses and non-profit organisations to Fortune 500 companies. It also has an in-depth understanding of a wide range of industries including automotive, financing and leasing, real estate and transportation.
In November 2016, the firm advised Plains Midstream Canada ULC on its acquisition of Empress NGL. It also provided counsel to PowerStream and its shareholders with respect to the purchase of Hydro One Brampton Networks by PowerStream, Enersource Corporation and Horizon Utilities Corporation.
One client said: "Their knowledge of the subject matter and their ability to provide timely communication to us is all testament to their level of expertise."
Greg Wiebe is the managing partner of KPMG's tax practice. The firm has the largest tax practice in Canada with over 6000 professionals, 226 of which are partners. Its tax group has expertise in international tax, transfer pricing, indirect tax, global mobility services, disputes and controversy, tax incentives, US corporate tax, M&A and tax management consulting.
KPMG serves many of Canada's largest public and private companies. Specific sectors include financial services, real estate, mining, oil and gas, digital tax and public sector taxation.
Patrick McCay is the national practice group leader at McCarthy Tétrault. Its tax team comprises 18 partners, nine associates and two of counsel. Among these are Nicole Platanitis and Justin Shoemaker, who joined the firm in 2016 and Jeremy Ho, who joined in 2017.
The firm offers strong tax expertise in areas of financial institutions, financial products, M&A, reorganisations, REITS and cross-border transactions. Its team of lawyers are situated in each of the four principle business cities in Canada: Vancouver, Calgary, Toronto and Montréal.
In 2016, it advised Fairmont Hotels in a tax dispute with the Canada Revenue Agency. It also represented Club Intrawest in a case involving common law principles of agency law in relation to federal sales tax.
Members of the firm's practice are authors and have on advised on committees with senior government officials. The firm's lawyers have also provided recommendations to the Department of Finance on legislative amendments to Canada's tax laws.
Michael Friedman oversees the tax practice at McMillan. The firm advises clients at every stage of the tax dispute resolution process, from voluntary disclosures and audits through to administrative appeals and court challenges. The team also resolves tax disputes with Canada's federal and provincial revenue authorities.
In 2016, the firm represented Catalyst Capital Group in the restructuring of Pacific Exploration and Production Corporation, the largest independent oil producer in Colombia. This restructuring is among the top five largest oil and gas restructurings in history. It also provided counsel to Williams Companies and Williams Partners on the tax aspects relating to the sale of their Canadian natural gas businesses to Inter Pipeline.
One client said Friedman and Michael Templeton are "world-class advisers and strategists".
The boutique tax and trade law firm Millar Kreklewetz is led by Jack Millar and Robert Kreklewetz. The firm provides a broad range of tax services including alcohol tax and duties, income tax, commodity tax, transfer pricing, valuation and audits. Millar's practice focuses on commodity tax, customs and trade as well as tax litigation. Kreklewetz's expertise includes direct and indirect tax, income tax, international trade and customs as well as litigation.
Norton Rose Fulbright is a global firm that assists clients with domestic and international tax planning, dispute resolution and litigation, transfer pricing, commodity taxes and customs matters. Jules Charette is a senior partner in the firm's Montreal office. Charette advises businesses, developers, public bodies and financial institutions on the tax aspects of financings, M&A, reorganisations, executive compensation and international transactions.
Monica Biringer and Firoz Ahmed co-chair Osler, Hoskin & Harcourt's national tax practice. The firm has offices in Toronto, Montréal, Calgary, Ottawa, Vancouver and New York and are able to assist clients with complex taxation issues. With close to 60 tax professionals, the firm offers clients expert advice on a broad range of tax matters. Its services include M&A, corporate reorganisations, restructurings, general tax, litigation and dispute resolution.
A key member of the firm is Al Meghji, who specialises in tax controversy and litigation.
PwC offers services in corporate tax, compliance, international tax, dispute resolution, VAT and trade and transfer pricing. Lana Paton is the national managing partner in the tax services group. Paton is broadly experienced in advising clients from the mining, power and utilities industries on tax matters. Her expertise includes cross-border tax planning, acquisitions, divestitures, corporate reorganisations, payments in lieu of taxes and provincial mining taxes, among other things.
The tax practice at Stewart McKelvey is led by Jim Cruickshank. The firm offers services in tax planning and reorganisation, commodity taxes, tax dispute resolution and litigation.
Cruickshank has assisted clients with tax and business structuring and is broadly experienced in corporate reorganisations and M&A.
Clients of the firm come from industries such as healthcare, financial services, insurance, manufacturing, and media and entertainment, among others.
John Lorito heads the tax group at Stikeman Elliott. The firm offers services in tax advisory, planning and litigation. The firm has advised national and international clients on a range of tax matters, including income tax, tax controversy, transfer pricing, customs and sales tax. Its tax group has represented clients in their discussions and negotiations with the tax authorities.
Lorito assists clients in the areas of corporate reorganisations, M&A, investment funds, REITs and international tax planning. He also advises clients on tax issues relating to cross-border and domestic financial products as well as non-resident investment in Canadian real estate. In addition, Lorito has acted as counsel on federal and provincial income tax appeals before the Federal Court of Appeal and the Ontario Court.
Thorsteinssons is Canada's largest law firm specialising solely in tax law. Its team of lawyers provides services in corporate tax advice and planning, tax litigation, international tax, resource tax, sales tax, GST and HST, customs and international trade, tax exempt organisations, investment funds and estate planning. The professionals provide effective and reliable tax advice to assist national and international clients from a wide range of industries. The practice is led by David Davies.
Davies has extensive experience representing taxpayers in disputes with the CRA and in complex tax planning matters. His clients include public and private corporations, individuals and participants in syndicated partnerships.
The tax practice at Torys comprises seven partners and 11 other professionals, including Corrado Cardarelli who heads the team.
The firm consistently acts in the largest and most complex M&A transactions, including domestic and cross-border. Its practice also provides tax advice on capital markets transactions to major financial institutions in Canada, including many of the top five Canadian banks. In addition, it has advised some of Canada's largest multinationals such as Woodbridge, Thomson Reuters, Brookfield, Fairfax and Rogers.
This year, the firm provided tax advice to Oxford Properties Group in the sale of its 50% interest in a portfolio of office properties in downtown Toronto and Calgary. It has also represented the Bank of Montreal in a tax litigation concerning the application of the general anti-avoidance rule to disallow a foreign exchange loss on a cross-border financial structure.
|Tier 1 - Canada|
|Blake, Cassels & Graydon|
|Davies Ward Phillips & Vineberg|
|Osler, Hoskin & Harcourt|
|Tier 2 - Canada|
|Tier 3 - Canada|
|Norton Rose Fulbright|
|Tier 4 - Canada|
|Borden Ladner Gervais, Taxand Canada|
|Tier 5 - Canada|
|Aird & Berlis|
|Burnet, Duckworth & Palmer|