Topics to Discuss
1. Federal Budget Changes
- Limits on Interest Deductibility
2. International Tax Initiatives
- Global Minimum Tax Rate of 15%
Federal Budget Tax Changes
Interest Deductibility Limits
- Starting in 2023 a corporation that is affiliated with a non‐resident will be able to deduct only 40% of "tax EBITDA"
- Namely, 40% of taxable income before taking into account interest expense, interest income and income tax, and deductions for depreciation and amortization
- After 2023, the limit is reduced to 30%
- Two important exclusions:
- CCPC's and their associated corporations having taxable capital of less than $15 million, and
- Groups of corporations and trusts whose aggregate net interest expense is $250,000 or less
International Tax Initiatives
Global Minimum Tax of 15%
- OECD/G20 Framework on base erosion and profit shifting ("BEPS" project)
- Starting in 2023, a Multinational Corporation with annual sales of at least €750 million will be required to pay a minimum tax of 15% determined on a county‐by‐country basis
- There will be a formulaic substance carve‐out that will exclude an amount of income that is at least 5% (in the transition period of five years, at least 7.5%) of the carrying value of tangible assets and payroll in a jurisdiction, and a de minimis exclusion
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