• Taxable Canadian Property Changes Facilitate Inbound Investment
  • April 27, 2010 | Authors: Richard Eisenbraun; Larissa V. Tkachenko; Stephanie A. Wong
  • Law Firms: Borden Ladner Gervais LLP - Calgary Office ; Borden Ladner Gervais LLP - Toronto Office
  • Foreign investors, particularly private equity funds, have long had to deal with the complexity of the reporting requirements under section 116 of the Income Tax Act (Canada) (the “Tax Act”) when disposing of investments that are taxable Canadian property (“TCP”), such as shares of private Canadian companies. Gains on shares of private companies would normally be exempt from Canadian taxation under most of Canada’s income tax treaties, as long as the value of the shares was not derived principally from real or immovable property situated in Canada. Despite such treaty protection, foreign investors have been required to undertake extensive reporting obligations, and to file Canadian tax returns.