At a recent meeting of the International Fiscal Association, Revenue Canada officials offered comments and responded to some prepared questions. Second-tier finance structures. A Canadian sub of a foreign multinational invests in shares of a foreign sub, which in turn invests in shares or debt of other foreign group members. Revenue previously indicated that it would consider invoking GAAR to assess part XIII tax, and any dividends received by the Canadian sub might be recharacterized as interest income.
Revenue continues to pursue the issue and has several active files.
LLCs and treaty benefits. A Finance official indicated that the resolution of this issue is not high on the treaty agenda. A US corporation that is registered as a Barbados IBC and has its central management and control in Barbados is subject to a 2.5 percent tax there. Revenue says that the residency test under Canada's treaties generally requires that the entity be liable for the most comprehensive form of tax to qualify for treaty relief. Definition of consolidated group.