Enhancing the Competitiveness of Canada’s International Tax System (Part 4)

By: Wally Conway

Taxation of Capital Gains From Dispositions of Foreign Business Assets  

In prior posts (parts 1, 2, and 3), I recommend that the competitiveness of Canada’s international tax system would be enhanced by adopting a territorial system for taxing foreign active business income.

The next question is “Should capital gains arising from the disposition of foreign active business assets and shares of foreign affiliates carrying on active businesses also be exempt from Canadian tax?”

Enhancing the Competitiveness of Canada’s International Tax System (Part 3)

By: Wally Conway

Taxation of Foreign Business Income Earned by Foreign Affiliates   

In my last post (see http://pwc.typepad.com/tax_exchange/2011/12/enhancing-the-competitiveness-of-canadas-international-tax-system-part-2.html ), I argued that Canada should adopt a territorial system for taxing foreign source business income earned directly by a taxpayer.

This week, I apply the same arguments to support a territorial system for taxing such income earned indirectly by a taxpayer through a foreign affiliate. Generally, a foreign affiliate is a non-resident corporation in which a Canadian taxpayer has a 10% or higher interest.