The recent finalization of Section 385 regulations by the IRS and Treasury Department marks a profound change in the manner that basic U.S./Canadian cross-border tax planning will be conducted.  While these rules won't always directly impact cross-border financings by Canadian companies of their U.S. subsidiaries, U.S. investments or U.S. acquisitions, they will almost always be a key part of the tax planning related to these activities.  Because most of these new rules apply with an effective date reaching back to April 5, 2016, it is imperative that Canadian companies with U.S. activities assess their potential impact and develop a strategy for managing their exposure to these rules. 

To help Canadian clients in this process, we have prepared an instructional slide deck which serves as an overview of the key components of these rules.  We have also presented seminars on this topic in each of Montreal, Toronto and Calgary.  We are reproducing that slide deck here for clients that may have missed those seminars.  There are, of course, many details and nuances not addressed in our slide deck but we believe this presentation gives Canadian companies a helpful foundation for understanding how the new rules work. 

If you have questions or comments about how the final Section 385 regulations may apply to you, please feel free to contact any member of our New York Tax Department.

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