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Oral Response Dave Beaulne: In addition to speaking about this issue at the Canadian Tax Foundation in November, we spoke about it at last year's IFA conference in Calgary, where we outlined several factors being considered in the analysis. ... We will reiterate a couple of the factors that we considered to be of overwhelming significance- those being: legal personality- I know we went down that road a number of years ago, but these entities that we were asked to opine on [i.e. ... Our understanding is that US Parent, US Sub, and the ULC are all considered as fiscally transparent for U.S purposes, so for purposes of subparagraph 7(b), we are looking at the "same treatment" test for U.S. purposes under which there is a comparison between the treatment if the interest had been paid by the ULC as a fiscally transparent entity, or as a corporation that is not fiscally transparent. ...

My question is, in the case of a foreign taxation year that straddles the coming into force on July 1 st 2022, can you confirm that the deemed amount should not include the portion of the deductible amount for that year that could be considered to arise before the July 1 st 2022 date? ... It was a choice between that, and implementing the primary recommendation of having a more formal registration scheme, with reference numbers and things like that, and we considered that approach to be too onerous. ... In the BEPS Action 12 report, those were considered to be inconsistent with the use of a main purpose test. ...

As was pointed out in CRA document 2017-0682631I7, the automatic cash sweeps that occur as part of a physical cash pooling arrangement would likely be considered to form part of a “series of loans or other transactions and repayments”. ... The anticipated frequent and ongoing movements in the account balances of participants to a notional cash pooling arrangement would likely be considered to form part of a “series of loans or other transactions and repayments”. ... Would CCA under the Act be considered to have been claimed for taxation years that ended before US LLC became a foreign affiliate of Canco? ...

Admittedly, the CRA might have considered the proposed amendment to represent a change if it had been asked 15 years ago, but the new wording accords with the CRA’s current positions. ...

Official Response Official response Q.5 S. 91(4.7) and Brazilian deductible dividends Foreign tax credit generator (FTCG) rules in subsections 91(4.1) to (4.7) deny a deduction for foreign accrual tax (FAT) if a “specified owner” is considered under relevant foreign law to own less than all shares of a particular corporation than it is considered to own under the Act (Lesser Ownership Test). ...

Because the other provisions were not minimum standards, it was considered that there should be more flexibility as to whether or not to pick up those provisions. ... Response Stephanie Smith: As tools to interpret the MLI, we have the Explanatory Statement, which was developed by the entire ad hoc group, developed at the same time as the instrument, and so it definitely is a tool that should be considered, I think that is consistent with the Convention that it would be an applicable tool. ...

In Technical Interpretation 2011-0417471E5 dated February 21, 2012, the CRA took the position that a building is normally considered to be a single property for the purposes of subsection 45(1) unless the property had been legally divided into two or more separate properties. ... Consequently, a beneficiary who is part of a class of persons described in the instrument under which the testamentary trust has been established, such as children or descendants of the deceased individual, as well as a beneficiary who is unborn, would not be considered as a named beneficiary for the purposes of paragraph (b) of the definition of QDT in subsection 122(3). ...

It’s being considered at the OECD. I know Canada is considering risk-free rates of returns. ... In circumstances where the entity in Canada is considered to be offering more of a service-type arrangement to a related party (and the cost-plus model is fairly consistent with what we see in a lot of circumstances), where there’s agreement upon the model itself, and the nature of the appropriate methodology to test the price (which is usually a cost-plus methodology), we are saying that, absent proof that government assistance is being shared within the set of comparable transactions (the transactions which are usually comparable), there would be no deduction from or reduction in the cost-base by any government assistance. ...

However, the OECD members have recognized the interaction that individual country tax policies can have on each other and have thus agreed on a set of criteria to identify tax regimes that are considered to be harmful. ...

However, it seems that there may be broader issues to be considered with respect to these structures. ...