The Department of Finance released two sets of draft legislative proposals to strengthen and create greater fairness in Canada’s tax system.
The first set of proposals would implement measures announced on July 20, 2011 relating to the taxation of specified investment flow-through entities (SIFTs), real estate investment trusts (REITs) and publicly-traded corporations.
The Department of Finance also released proposals responding to the Tax Court of Canada decision in Richard Lewin Re: The J.J. Herbert Family Trust #1 v. The Queen, 2011 TCC 476. In the absence of today’s proposals, the decision would make it more difficult to enforce the withholding tax rule that applies to payments from Canadian resident trusts to non-resident beneficiaries in circumstances where a trust emigrates from Canada.
These proposals address situations in which a Canadian resident trust makes an amount payable to a non-resident beneficiary of the trust but only actually pays or credits the amount in the beneficiary’s favour at some later time after the trust has ceased to be resident in Canada. In these circumstances, the amount will be deemed to have been paid or credited before the trust became non-resident.
For more information visit the department of finance website