FEDERAL BUDGET SUMMARY – 2019
DONATIONS OF CULTURAL PROPERTY
Budget 2019 amends the Income Tax Act and the Cultural Property Export and
Import Act to remove the requirement that property be of “national importance”
in order to qualify for the enhanced tax incentives for donations of cultural
This measure will apply in respect of donations made on or after March 19, 2019.
C. International Tax Measures
There has been debate regarding the conflict between the transfer pricing rules
and other income tax rules applying to a transaction. Budget 2019 clarifies that
the transfer pricing rules apply before the application of other rules in the Income
The Budget also aligns the definition of “transaction” in the extended
reassessment period available for transfer pricing adjustments to the definition
within the transfer pricing rules, which are broader in scope.
These measures apply to taxation years that begin on or after March 19, 2019.
FOREIGN AFFILIATE DUMPING
Current rules provide for a potential deemed dividend where a corporation
resident in Canada (CRIC) that is controlled by a non-resident makes an
investment in a foreign affiliate (foreign affiliate dumping rules). These rules apply
only in respect of certain CRICs that are controlled by a non-resident corporation
(or by a related group of non-resident corporations). Budget 2019 proposes to
expand the foreign affiliate dumping rules to a CRIC controlled by:
• a non-resident individual;
• a non-resident trust; or
• a group of persons that do not deal at arm’s length (which would include
the above and any non-resident corporation).
This measure applies to taxation years that begin on or after March 19, 2019.
CROSS-BORDER SHARE LENDING ARRANGEMENTS
Under securities lending arrangement structures relating to Canadian corporation
shares, a non-resident was able to receive dividend compensation payments as
interest payments or derivative contract payments without withholding tax
applying. Budget 2019 proposes to treat dividend compensation payments as
dividends subject to withholding tax.