Intl Tax event-Canadian Government to Eliminate Withholding Tax on Interest

Wednesday 30 January, 2008

I attended this lunch event on 23 January, 2008 sponsored by Blakes, by the only all-Canadian law firm with an office in Chicago :

“Canadian Government to Eliminate Withholding Tax on Interest: What are the Opportunities?

The elimination of Canadian withholding tax on arm’s-length payments of interest — expected to come into effect on January 1, 2008 — will present significant opportunities for non-Canadian financiers. Deal structures that have not worked historically will now be possible, but attention must be paid to potential traps for the unwary.

You are invited to join us for lunch with a team of some of Canada’s leading banking and tax lawyers where we will discuss:

Which taxes are being eliminated and which remain?
Why does this create new opportunities for non-Canadian financiers?
Canadian regulatory issues
Opportunities in specific sectors, including oil and gas, ABL, mezzanine debt and consumer finance

We are delighted to have the Canadian General Consulate join us to make some brief introductory remarks.
The seminar will be held in both Chicago and New York.”

I’m not an expert in international taxes, & this presentation contained a lot of detail that meant a lot more to accountants & HR Block than to me. Because this event was hosted by lawyers, they simply spoke rather than make powerpoint presentations, & I don’t want to risk misquoting anyone, I’ll intersperse a few tidbits which I think are safe to say & just refer readers to the speakers that day so you can pose any further questions you might have directly to them:

Details of the treaty-Kathleen Penny 416-863-3898

-this pertains to interest & only to unrelated arm’s length parties

-there is no change in other withholding taxes

Regulatory issues in commercial lending to Canada-Paul Belanger 416-863-4284

-opening a branch of a bank in Canada can be more advantageous than opening a “real bank”

-branches are exempt from some regulations

Energy Sector impact-Dan Fournier 403-260-9636 (in Calgary)

-this makes a more level playing field

-Canada is #2 in proven oil reserves, behind only Saudi Arabia

-capital is needed in many areas & foreigners can take the lead on projects

Cross-border lending issues-Michael Harquail 416-863-2929

-contract & legislative rules are similar

-work in C$ only

-in bankruptcy, there is no cramdown like in the US & must be approved by all classes of creditors

-collective agreements can’t be disclaimed

-there can be advantages to stipulating Canadian jurisdiction

-Quebec law can be equated to Louisiana law


Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: