Accounts receivables and other debts owing from non-residents – Ensure amounts outstanding more than one year bear interest at reasonable rates. Exceptions apply.
Thin capitalization – If your corporation has debt owing to a foreign lender that is a significant shareholder or related to a significant shareholder, consider whether the thin capitalization rules limit the deduction of interest on the debt. The rules limit the permitted debt/equity ratio to 2:1.
Payments to non-residents – Be aware that you may be required to withhold 15% of certain payments made to a non-resident that relate to fees, commissions or other amounts in respect of services (excluding remuneration) rendered in Canada. See our beyond Borders “Non- Residents Providing On-Site Installation and Training Services in Canada” (March 2010) and podcast “Iain Morris Discusses the Tax Issues Facing Non-residents who Provide On-site Installation and Training Services in Canada.”
Sales taxes/value added tax and customs duty –
Transfer pricing – If your corporation has transactions with a related party in a foreign country, ensure your transfer-pricing documentation meets the requirements imposed by the Canadian transfer-pricing rules and by the rules of the foreign country. Non-compliance can result in penalties.
Tax Information Exchange Agreement (TIEA) – Be aware that Canada intends to negotiate and sign TIEAs with non-treaty countries and has implemented tax measures to encourage non-treaty countries to enter into TIEAs. Canada has signed TIEAs with nine jurisdictions and has commenced negotiations with sixteen others; however, no TIEAs have entered into force as of the date of publication. For determining when the TIEA applies, the entry into force of a TIEA is important, not the date that it is signed. See our Tax Memo, “Canada Signs Four New Tax Information Exchange Agreements (TIEAs).”
If your company has activities (e.g., selling, importing or exporting goods or supplying services) in foreign countries, determine whether it is required to register for sales tax/value added tax (VAT) or pay custom duties or other levies.
Ensure that documentation of your foreign transactions meets local requirements. Check whether the structure of your transactions is optimal for sales tax/VAT and customs purposes.
If you have dealings with foreign businesses in Canada, ensure that you meet federal and provincial sales tax obligations.
If you are a non-resident of Canada that makes a taxable supply in Canada and “carries on a business" in Canada, you may be required to register for GST/HST. Once registered, you must collect and remit the tax as well as file periodic GST/HST returns.
Individuals and Businesses with U.S. Connections
(This document was not intended or written to be used, and it cannot be used, for the purpose of avoiding U.S. federal, state or local tax penalties that may be imposed on the taxpayer.)
new legislation may be enacted in 2010 that will extend 2009 rates and exemptions or introduce new rates and exemptions for 2010 and subsequent years.
Deferred compensation – If you are a U.S. citizen or green card holder and participate in a deferred compensation plan (e.g., supplementary executive retirement plan, retirement compensation arrangement, deferred share unit plan, stock appreciation right, severance arrangement) or are entitled to receive deferred compensation, discuss with your PwC adviser how U.S. rules that regulate the deferral of income, plan funding and plan distribution may affect you.
Canadian RRSPs, RRIFs, RPPs and DPSPs – If you are a U.S. citizen, green card holder or U.S. resident alien in 2010, and are the beneficiary of a Canadian registered retirement savings plan, registered retirement income fund, registered pension plan and/or deferred profit sharing plan, determine:
what information you need to provide to the Internal Revenue Service (IRS);
U.S. estate tax – If you are not a U.S. citizen or resident, determine whether your property holdings include shares in U.S. corporations (including stock options to acquire such shares), U.S. real estate, debt obligations issued by U.S. residents, interests in U.S. partnerships, or any personal property that is located in the U.S. If so, determine your possible exposure to U.S. estate tax and how to minimize it. Be aware that the estate tax was repealed entirely in 2010; without further legislative action, it will be re-established in 2011, using the 2001 rate regime. However,
the format for reporting this information; and the reporting deadlines.
U.S. retirement plans – If you are a Canadian resident who has investments in U.S. 401(k) or IRA plans, discuss with a PwC adviser if you can transfer them on a tax- deferred basis to an RRSP.