Canada's continuing shortage of facility-based long-term care has shifted needs toward care delivered at home. This article assesses the full-time attendant at home tax credit and the home accessibility tax credit and finds that current design features—namely, non-refundability and the home ownership requirement—systematically underserve low-income seniors and their informal caregivers. The author recommends making the credits refundable for low-income seniors and caregivers, extending eligibility to senior renters, and introducing landlord incentives for accessibility retrofits.
Le contrôle des déclarations fiscales par une autorité est connu par de nombreux pays, en ce qu'il constitue la contrepartie de l'adoption d'un système déclaratif ou d'autocotisation. Pour autant, la conception de l'autorité exerçant ces contrôles et, avec elle, la conception de l'étendue des pouvoirs de contrôle, diffèrent selon les états. Il en est ainsi du Canada et de la France qui, bien qu'ayant adopté un système déclaratif, ne conçoivent pas les pouvoirs de leurs autorités fiscales de la même manière. En effet, au Canada, les pouvoirs de l'autorité fiscale sont conçus comme devant être les plus larges, au contraire de la France qui, par une mise en balance avec les droits et garanties offerts au contribuable, les aborde de manière restrictive. L'analyse propose de vérifier si cette différence de conception entre le Canada et la France se traduit par une différence dans la limitation des pouvoirs des autorités fiscales en matière de contrôle. Pour ce faire, une étude de droit comparé des limites au pouvoir de l'autorité fiscale est menée entre les droits canadiens et français pour les trois temps du contrôle : en amont, durant les opérations et en aval. Elle montre que les États étudiés partagent un certain nombre de limites similaires, tels la prescription, le respect d'une forme de procédure de contrôle, l'interdiction, en principe, de pénétrer dans un lieu privé à des fins de contrôle ou encore un but cantonné à la recherche de la responsabilité fiscale. Malgré ces similitudes, l'étude démontre en revanche l'existence de différences notables entre les limites aux pouvoirs de l'autorité fiscale canadienne et de l'autorité fiscale française. Ces différences illustrent majoritairement un pouvoir accru de l'autorité canadienne en matière de contrôle, conformément aux conceptions propres aux autorités fiscales des pays étudiés. Par exemple, certaines situations permettent à l'autorité fiscale canadienne de s'affranchir d'un délai de prescription, tandis que l'autorité fiscale française demeure toujours assujettie à un tel délai. De même, si les deux autorités fiscales sont soumises à une forme d'obligation de justification en aval du contrôle, l'autorité canadienne voit sa cotisation protégée par une présomption de validité, tandis qu'en droit français, c'est la déclaration du contribuable qui est présumée sincère.
La décision récente de la Cour d'appel fédérale dans l'affaire Canada c. Vefghi Holding Corporation s'est penchée sur une question nuancée mais cruciale du droit fiscal canadien : le moment à prendre en compte pour déterminer si une société qui verse des dividendes est « rattachée » à une société bénéficiaire en vertu de l'impôt de la partie IV lorsqu'une fiducie est interposée entre les deux. Cet article explore le raisonnement judiciaire et les implications pratiques de la décision et examine les répercussions des développements récents de l'impôt de la partie IV, y compris le budget fédéral 2025, sur la planification fiscale impliquant des fiducies et des sociétés bénéficiaires.
Reporting obligations under the Income Tax Act (Canada) have expanded significantly in recent years, with a corresponding impact on taxpayers and their advisors. This article examines the application of the reportable transaction rules in section 237.3. The authors argue that, while section 237.3 is broadly drafted, a disciplined approach to applying these rules demonstrates that there is a limit to disclosure. The article provides a practical framework for analyzing whether the reportable transaction rules apply in a particular circumstance and, through detailed examples, demonstrates how such a disciplined approach can clarify when reporting is—and is not—required.
This article explains why the comparison between oil and data is valid not only with regard to the wealth generated by oil companies and digital giants but also with regard to the legitimate taxation of that income by source states. The author focuses on the parallels between the transformation of crude oil into a wide array of profitable products and the processing of raw data into valuable information (data mining). The author contends that both oil and data are natural resources whose overexploitation leads to negative externalities in communities and territories where those resources are collected. The negative externalities justify the imposition of specific taxes with compensatory purposes—based on Pigouvian and Coasean theories—on oil extraction and data mining. Negative externalities also provide indisputable legitimacy to tax by the state where oil and data are collected. A specific tax with compensatory purposes on data mining would be independent of any general international solution granting taxing rights to market states and encompassing most economic sectors, and is not recommended as a means of circumventing tax treaties.
The recent decision of the Federal Court of Appeal in Canada v. Vefghi Holding Corporation examined a nuanced but critical issue in Canadian tax law: the timing of the determination of whether a dividend-paying corporation is "connected" with a corporate beneficiary for the purposes of part IV tax when a trust is interposed. This article explores the judicial reasoning and practical implications of the decision and considers the impact of recent developments involving part IV tax, including the 2025 federal budget, on tax planning involving trusts and corporate beneficiaries.
Canada's publicly funded health-care system faces growing fiscal pressures, which are prompting governments to explore tax-based instruments to encourage healthier behaviour. This article evaluates a provincial tax credit introduced in Newfoundland and Labrador to promote participation in physical activity as a Pigouvian-style subsidy intended to support public health objectives. Using regression analysis based on a difference-in-differences design, the study analyzes Canadian provincial panel data to estimate the effect of the credit on fitness-related industry activity following its introduction. The results show no statistically significant effect of the tax credit on industry outcomes, suggesting that the policy did not materially alter behaviour relative to trends in other provinces. These findings are consistent with earlier evidence on other health-related fitness tax credits and highlight ongoing challenges in using provincial tax measures to influence behaviour. The article concludes by discussing alternative policy frameworks for promoting health-related behavioural change within provincial public policy.
Governments worldwide have struggled with determining what role taxes or tax penalties should play in promoting public health by reducing sugar consumption. In Canada, the only tax on sugar-sweetened beverages (SSBs) was introduced by Newfoundland and Labrador in 2022, although it was eliminated in 2025 owing to public concerns about affordability. This article reviews four categories of policies that have been suggested to aid in reducing SSB consumption: financial, information, defaults, and availability. The authors find that, in Canada, policies have been enacted with respect to total sugar product labelling and school food policies, but further policy initiatives should be coordinated at the national level to reduce the consumption of SSBs.
The federal-provincial fiscal transfer system both redistributes from highto lowfiscal-capacity provinces and insures provinces against unexpected fiscal shocks. Fiscal redistribution in Canada is accomplished by (1) the equalization system, which is based on provinces’ revenue-raising capacities; and (2) federal health transfers and social transfers, which are given on an equal per capita basis. Insurance against fiscal shocks, which is the focus of Dahlby’s study, is provided by the equalization system and by the federal stabilization program (FSP). However, such insurance works better for some provinces than for others. Only those provinces that receive equalization can rely on it to cushion shocks to their revenue-raising capacity. The FSP augments equalization for provinces that suffer declines in their own-source revenues, but it does so only up to a cap of $60 per capita. Moreover, reductions in natural resource revenues trigger much less in FSP transfers than do reductions in non-resource revenues. Owing to a combination of these factors, Alberta gets virtually no fiscal insurance despite the fact that its revenues are very volatile relative to other provinces’. Equalization is of no insurance value to Alberta, since it is not an equalization recipient. In addition, as Dahlby points out, the FSP is of limited value to this province because (1) most of its volatility is caused by fluctuations in resource revenue, (2) the cap of $60 per capita precludes sizable insurance payouts when provincial revenues fall, and (3) FSP payments are based on single-year revenue reductions, so those sustained over several years are not covered. Dahlby proposes reforming the FSP so that it is based on standard insurance properties. A reformed program would be based on three core principles. First, only large unanticipated losses should be covered. Second, to preserve incentives to avoid losses, the program should cover only losses that are in excess of a deductible, and co-insurance should apply in such a way that only a proportion of eligible claims
Les Canadiens dont la structure de propriété comprend des fiducies et/ou des sociétés non américaines et qui ont l’intention de devenir résidents fiscaux américains peuvent être assujettis à diverses obligations en matière d’impôt sur le revenu et de déclaration de renseignements imposées aux fiducies et aux sociétés étrangères en vertu du droit fiscal américain. Cet article traite de plusieurs questions clés à prendre en considération avant un déménagement et suggère d’éventuels points de planification pour aborder les enjeux pertinents.
Intercorporate dividends arising on the redemption of preferred shares are a frequent aspect of transactions that are undertaken to purify an operating company of its non-active assets. This article discusses three methods of allocating the operating company’s safe income to the accrued capital gain on stock dividend shares originally issued to an individual that are transferred to a holding company prior to their redemption. The author discusses the absence of legislative guidance, limited jurisprudence, and uncertain administrative guidance of each allocation method, and how this lack of clarity may affect the allocation methods chosen by the recipient corporate taxpayer as well as the associated risks of reassessment.
Canadians with a property ownership structure that includes non-US trusts and/or corporations who intend to become US tax residents may be subject to various income tax and information reporting requirements imposed on foreign trusts and corporations under US tax law. This article discusses several key issues to be considered prior to relocation, and suggests potential planning points to address the pertinent issues.
With condominium construction stalled despite severe housing affordability problems in Vancouver and particularly Toronto, attention has turned to the question of whether foreign buyer taxes may have overshot the goal of making homes more affordable for domestic residents, to the point of reducing affordability by making condo development unprofitable. In this article, a model that simplifies the foundational analysis in Favilukis and Van Nieuwerburgh (2021) shows that foreign buyers help or hinder domestic affordability depending on whether housing supply is elastic or inelastic, whether foreign buyers overpay for units in the same buildings as locals, how intense foreign demand is, and whether foreign buyers occupy units or instead rent them to locals or flip pre-construction contracts near building completion. Casual data analysis and back-of-the-envelope calculations suggest that, in the absence of empty homes taxes, foreign buyers in Greater Vancouver and Toronto likely hindered local affordability, but that, in the presence of empty homes taxes, foreign buyer bans or taxes may worsen affordability for locals.
Recent changes in the Canadian tax landscape may have a negative impact on foreign investment in Canada. This article provides an overview of the key tax considerations relevant for foreign corporations making capital investments in Canada. Overall, the authors believe that recent tax changes create additional regulatory barriers that may deter future capital investments in Canada, which are already on the decline.
The Income Tax Act and the Excise Tax Act impose penalties on taxpayers who fail to comply with their obligations “knowingly” or “under circumstances amounting to gross negligence” (“KGN penalties”). The case law has established a high threshold for “gross negligence,” holding that it requires the taxpayer to have shown “a high degree of negligence tantamount to intentional acting.” The minister of national revenue bears the onus to prove the facts supporting the imposition of a KGN penalty. Since 2018, in appeals of KGN penalties that proceed to judgment, the Tax Court of Canada has completely vacated the penalties approximately 30 percent of the time, on the basis that either there was no non-compliance by the taxpayer, or the taxpayer’s non-compliance was unintentional and did not result from a high degree of negligence tantamount to intentional acting. In the civil courts, as endorsed by the Supreme Court of Canada, adverse cost consequences can result when a party alleges fraud or dishonest conduct and fails to prove the allegations (“the fraud costs rule”). This article argues that the Tax Court should adopt the fraud costs rule and allow taxpayers to claim enhanced costs when the Crown fails to meet its burden of proof when litigating a KGN penalty. Allowing taxpayers to presumptively claim such costs would, it is hoped, motivate the minister to take greater care when deciding whether to assess and litigate KGN penalties, which would in turn help to avoid the unfortunate situation—of which many troubling examples exist—of KGN penalties being unreasonably and improperly proposed or imposed on taxpayers.
This article examines implications of the global financial cycle for Canada's public sector borrowers, with a particular emphasis on the borrowing conditions of Canadian provinces. It makes three broad points. First, even relative to other advanced economies, Canada, and the government of Canada in particular, has done well by the global financial cycle. In a world of trade imbalances and uncertainty, investors need safe assets, and Canada's wealth, political stability, and open capital markets have made government of Canada bonds a natural haven. Second, the provinces have also done well by the global financial cycle, but their bonds are riskier and less liquid than government of Canada debt, which explains why their spreads tend to increase with global volatility, and why, if volatility becomes too severe, the provinces occasionally struggle to borrow. Volatility-related premiums are lower among provinces with relatively large and liquid pools of debt, and higher—if the volatility is associated with a significant drop in oil prices—among oil-producing provinces. Third, the global financial cycle is evolving, and one of the most important developments is the growing vulnerability of central governments. Sovereign bond yields no longer reliably fall in the face of adverse conditions, and in some cases they even increase. These developments appear to stem from a combination of technical factors and growing concerns about sovereign credit risk, particularly in the United States. They also represent a fundamental shift in the pricing of traditionally safe assets and expose the government of Canada and provinces to a number of unknown risks.
The release in 2016 by the Organisation for Economic Co-operation and Development of a draft multilateral treaty to modify thousands of global bilateral tax treaties was met with surprisingly strong support by the international community, with many states signing, ratifying, and implementing the treaty. One of the treaty's most contentious elements is the addition to the dispute resolution measures in bilateral treaties, a process known as mutual agreement procedure, of a mandatory arbitration procedure that is to be available where agreement cannot be reached under the conventional process. In contrast to the mutual agreement procedure, which includes no requirement that a final agreement be reached, the mandatory arbitration procedure can provide a guaranteed resolution of a treaty dispute. Although the arbitration article has been ratified by most developed countries, many developing nations have noted reservations to it, indicating that they will not incorporate it into their bilateral treaties. Central to the many arguments that have been put forward by opponents of mandatory arbitration in bilateral tax treaties is the argument that agreeing to mandatory arbitration would amount to an unacceptable surrender of sovereignty. However, when viewed critically in the context of tax treaties, this and many other concerns fall away or are revealed to be red herring arguments. A better view, this article suggests, is that entering into a tax treaty is an exercise of fiscal sovereignty, and any agreement to reduce taxing or other rights in the treaty should be seen as an element of that exercise of sovereignty to gain the benefits or advantages the parties seek through a treaty that grants mutual rights to and imposes mutual obligations on sovereign signatories.
