In this episode of Clean Incentives, host Brendan Sigalet speaks with Jeremy Matthies, a tax insurance specialist at CAC Specialty, about how tax insurance is becoming a critical tool for clean energy project developers and investors in Canada. They explore how tax insurance helps mitigate risks associated with investment tax credits, including Canada Revenue Agency reassessments, compliance with labour requirements, partnership structures and tax shelter rules. Drawing on lessons from the US market, they break down how tax insurance can improve project bankability, reduce uncertainty and unlock capital for renewable energy, carbon capture, and other clean economy initiatives.
Transcript
Jeremy Matthies: [00:00:00] If you've built a $50 million ITC into your project and that doesn't happen, do you still have a project? Is this dependent on getting that ITC is your payback period? Is it important for you to get that ITC within a certain amount of time? So those are all things that right now what I'm seeing is it's getting lenders comfortable, and lenders are quite happy to know that a client is going to be able to ensure those ITCs and guarantee that they're, the bank is not going to be out of pocket if the ITC doesn't come to fruition.
Brendan Sigalet: [00:00:41] Welcome to Clean
Incentives, a podcast series within the Bennett Jones Business Law
Talks podcast that discusses topics around taxation incentives for
developing clean technology projects in Canada. I'm Brendan
Sigalet, tax associate at Bennett Jones, LLP, and my practice
focuses on the tax aspects of energy transition deals, including
renewable energy, carbon capture, and hydrogen projects.
Before we begin this podcast, please note that anything said or
discussed on this podcast does not constitute legal advice. Always
seek proper advice from your legal advisor as every situation is
different and outcomes can vary.
Today we're discussing a critical topic for businesses and
investors looking to capitalize on Canada's clean economy
investment tax insurance, investment tax credits, or ITCs play a
vital role in incentivizing clean energy projects across Canada.
However, like any tax-based incentive, there is an inherent
uncertainty, whether it's related to eligibility, compliance or
potential reassessments by tax authorities.
This is where tax insurance comes in, offering companies a way to
de-risk their projects and ensure that they receive the full
financial benefits that they expect. To help us look at this
complex but increasingly essential tool. We're joined by Jeremy
Matthies, tax Insurance specialist at CAC Specialty, an insurance
brokerage and advisor that provides expertise in placement
capabilities across the spectrum of insurance and capital
markets.
Jeremy has been at the forefront of structuring insurance solutions
for companies navigating the evolving tax landscape, particularly
for projects relying on clean economy, ITCs. On this episode
we'll explore the history of tax insurance and how it developed
in Canada, how tax insurance has been applied in the US for clean
economy ITCs, and what Canadian businesses need to know about
securing tax insurance for their projects and key considerations
around structure tax shelters in the general anti avoidance rule or
gaar.
Jeremy, welcome to the podcast.
Jeremy Matthies: [00:02:43] Thanks for having me.
Brendan Sigalet: [00:02:44] So, just to start our discussion today, just kind of want to set the stage with respect to some tax insurance basics. Can you start by giving us a quick overview of what tax insurance is and how it works?
Jeremy Matthies: [00:02:57] I can, yep. Thanks.
So generally, tax insurance has been around for 15 years.
It's probably been more prevalent in Canada in the last five.
Generally, I would say the purpose is to crystallize a future
looking tax risk, knowing that. Risks with the CRA after you make a
tax filing tend to have a long tail on them. There can be a
seven-year statute of limitations on how long they can take to
reassess a tax filing.
And lots of businesses look at that risk and you know, that can
cause problems in M&A for indemnities. You want to give their
long life and their unknown quantum, you know, you're closing
out a private equity fund and you're sitting on capital because
you may have to escrow it pending, what will CRA do down the road,
as sort of a couple of examples.
So, I think really just crystallizing a tax risk so that you can
move on with your business. Redeploy capital. Close out a fund.
Close a transaction. Is kind of what the main purposes of the
product are.
Brendan Sigalet: [00:04:03] And you mentioned kind of M&A, is that generally where, you know, tax insurance started in Canada? How has it evolved historically?
Jeremy Matthies: [00:04:10] Yeah, I think tax
insurance, much like rep and warranty insurance, which, many folks
are probably more familiar with, started through private equity
firms needing a new vehicle to avoid typical holdbacks on M&A
transactions, or escrow and M&A transactions. So, in the rep
and warranty con sort of construct, they were looking for ways to
make it easier for the seller to get a deal done and get their
capital in their pocket.
Similarly, for tax, if you look at it from a, it started with
private equity saying, look, we've got a due diligence bust and
an M&A deal. We're going to need some way to allow this
deal to move forward so that the buyer doesn't take on a budget
tax risk, and so that the seller doesn't have to give a big
indemnity or escrow a bunch of funds for a long period of
time.
And insurance stepped in and said, we can cover that risk. If
it's reasonable, we will allow you to do away with your escrow.
And the buyer can rely on insurance to pay if this tax bust comes
to fruition.
So, at the end of the day, a big insurance carrier comes in and
says, you have the potential of a $10 million tax problem. The
seller doesn't think it's a problem. The buyer thinks it
is, it may never come to fruition, but if it does, we can pay out
the $10 million after receiving some premium, of course, and the
buyer can walk away whole, and the seller doesn't have to give
a big indemnity. So, it's really, that's sort of the nexus
of it came from M&A.
And it's become now a product that's evolved into many
other things.
Brendan Sigalet: [00:05:47] And so, what kind of tax risks do companies typically seek to insure in the M&A context? You know, I understand, you know, sort of some non-resident withholding issues, that sort of thing. You know what, what else is typical out there in that context?
Jeremy Matthies: [00:06:04] Yeah, absolutely.
Like taxable Canadian property is a big one. It's probably been
the most prevalent over the last five years. Obviously capital
versus income is a big risk for folks that, because the delta and
what you have to pay for capital gains tax versus income tax. But
we've seen it creeping into other areas for sure, like safe
income.
We've got, you know, transfer pricing can now be covered, which
never used to be able to be covered. So that's been huge on
sort of the international scene, VAT tax sort of vats across
international. Sort of cross-border businesses and valuations,
which, you know, you have a private company, you're valuing
some shares that you're disposing of, for example, you'll
typically get a range of valuation metrics from an accounting firm,
and you're going to choose which of those to pay tax on.
Typically, you couldn't ensure that Delta, and now insurance
companies are looking at those valuation metrics as they relate to
tax. So, it's expanded. I like to tell clients, if you can get
an opinion from a law firm, we can usually get you coverage.
So, if your legal counsel can tell you, at Bennett Jones, I think I
can opine on this. Even though it's never been covered before,
it doesn't mean you can't get coverage. All of these tax
underwriters are lawyers. I'm a lawyer. Our whole team are
lawyers, so everyone kind of has a good sense of what the risk
proposition is when they see a should level tax opinion.
The market is very open to covering things they haven't looked
at before.
Brendan Sigalet: [00:07:37] Interesting. I actually wasn't aware that you could cover valuation as well, and I hadn't heard of that one. It makes sense, I suppose if you're, you know.
Jeremy Matthies: [00:07:44] Yeah, I've had
those shut down before in the past. You know, a client comes and
says, we were, they were continuing out of Canada and it was a sort
of a billion dollar valuation, but it was $200 million either side
of that billion, and they wanted to pick the lowest number to have
tax attributed to, obviously an underwriter's not going to say,
well, let's cover you in just in case it's the top number
in the valuation.
But now with enough homework and enough diligence and a client
picking a reasonable price point in the middle, we can potentially
get tax coverage for that delta from something reasonable to the
top. If that makes sense.
Brendan Sigalet: [00:08:23] Interesting. Yeah, no, it seems kind of a more of a factual, you know, scenario, situation that they're covering there.
Jeremy Matthies: [00:08:31] That's with any
kind of insurance, right? Like it starts off in a very narrow band,
and then as underwriters and carriers get more comfortable with the
product and they start, you know, generating more revenue, they
start expanding the scope, right? And the scope kind of creeps into
other areas that maybe weren't traditionally there.
But if they can get their head around it, they'll look at it
and always starts with, you know, the most conservative players or
the last entrance, right? But you can find sometimes there's
new entrants, there's MGAs, which are managed general agents
for underwriters, or sorry for carriers. So, if you have Liberty
and Chubb and AIG, that's their money that they're,
they're usually the most conservative.
But these MGAs groups that other insurers, like Zurich and
Lloyd's say, hey, go place this tax insurance for us. You
understand it better than we do. We trust you, we'll give you
the capacity. And they're usually the leading edge of new
products because that's all they do is they place tax or they
place reps.
So as opposed to also doing home and auto and D&O, they
don't focus on that stuff. So, they have a little better sense.
They've got in-house lawyers, they're looking at these
products going, I think we can move onto these other areas. Right.
So that's kind of how it evolves.
Brendan Sigalet: [00:09:52] Mm-hmm. I think that makes sense. And so, there's kind of a whole marketplace of different players. Some of them are going to be a little bit more conservative and then some of are a little bit more willing to take on the risk and kind of enter into these new markets.
Jeremy Matthies: [00:10:07] Right. And I mean,
obviously, we'll, we'll be transparent with clients about
who those markets are and, but I mean, we're never going put a
policy in place with, you know, a underwriter who's not a
rated, for example. So, there's 30-some-odd underwriters doing
tax insurance in the us. A dozen of those will cover Canada.
There's another, you know, dozen in the UK that'll
participate in Canada and the US. So, the scope is very broad. So,
if you go to the market and you seek quotes from 35 different
carriers, you might get quotes from two or you might get quotes
from 20, but usually you can find a home for it.
Brendan Sigalet: [00:10:46] You mentioned the US and the UK. Is that where this market kind of developed with respect to tax insurance generally and is that why there's more players in those spaces?
Jeremy Matthies: [00:10:56] Yeah, absolutely. I
mean, most insurances stem from rom Lloyd's and starts in and
moves its way into the market. The US has, I would say, been
pitching, US brokers have been pitching tax insurance for 10
years.
I've been doing this for, this is the start of my fourth year
in Canada, but in the last three years, tax insurance in the US has
gone sort of parabolic. It's being used in the ordinary course
by Fortune five companies six times a year. They'll take out
policies on all kinds of international risks, on domestic risks,
you know, state tax, anything you they can think of that they can
get coverage for, they're now willing to take that off their
balance sheet and foist it onto an insurance carrier.
That hasn't happened yet in Canada, but you know, we typically
trail sort of that capital movement in the US by a few years, and I
think we're getting there and our businesses here are a little
more open to saying, look, even though I'm a large company and
I have a deep balance sheet, I have lots of cash on hand.
I don't necessarily need to self-insure, right? If I'm
going to self-insure, I need $50 million set aside for that
possibility that there could be a tax issue. Why wouldn't I pay
a premium, move that $50 million off balance sheet to an insurance
company and redeploy my capital somewhere else? So, I think the
market has really evolved in the US and hopefully we'll get
there in the, in Canada where it's not just a sort of one-off
product, it's something that companies are now putting in their
toolkit and using it quite often.
Brendan Sigalet: [00:12:34] And so tax insurance hasn't quite caught up in Canada to the place where it's in the US There's still, you know, some of the bigger companies are still self-insuring, but do you expect that they will follow the trend, the cattle led by the US and you know, so the bigger companies will, will start to kind of look at this and born the ordinary course?
Jeremy Matthies: [00:12:53] I think so. I mean, it makes sense. It's obviously, I mean, tax insurance is industry agnostic, but there's certain industries where it's going make more sense, right? Like if you're doing work internationally, if you've got retail or you've got sales tax issues, there's going to be different industries where there's going to be more components of tax that are in play, for example, and upstream oil and gas company might have.
Brendan Sigalet: [00:13:24] Yeah, I think that
makes sense. With respect to, you mentioned some of the industries
that are kind of typically relying on this, it sounds like it's
more kind of international businesses that, you know, might have
more complicated tax structures. And are there some industries
where this is, you know, historically have taken advantage of tax
insurance more than others?
Or is it kind of industry agnostic and more dependent on the
particular structure of the business in question?
Jeremy Matthies: [00:13:50] Yeah, I think
it's more the latter. I don't think you could just pinpoint
and say these are the industries that use it. I mean, tech
businesses use it, retail uses it. Obviously renewable energy
businesses use it.
So, there are certain instances where oil and gas businesses will
use it. Mining businesses, so it's, and it's also a bit a
good product for transactions because obviously if you have a due
diligence problem with tax on an M&A transaction, which was
entirely industry agnostic, your rep and warranty insurance, if you
were going down that path, wouldn't cover a known issue.
So, as soon as you find a problem in due diligence, when you're
buying a business, that buyer is relying on rep warranty insurance.
If they find a bust in the tax due diligence, it's now kicked
out of your rip and warranty policy. So now you're pivoting
going, well, we need something to help us cover off this, this gap
for tax. It could be tax insurance.
So, I'd say, you know, it's valuable for any industry, and
it depends on the scenario, but to your point. We get calls on
things that we'd never considered being something we'd
insure. We take the advice from the law firm, and we go to the
market and they're like, yeah, we think this can be
covered.
This makes sense, right? It has to be, the risk has to be
reasonable enough, like the product isn't for something
that's a coin flip. It's got to be sort of in that 25%
risk, 75% certainty, which is sort of your should level, should
level opinion, kind of comfort. But I would say every industry
should know it exists and then their tax team or their in-house
team will have a good sense of where, where are my risk?
We see lots of real estate businesses looking at this right now,
saying, you know, I've got developments, I've got raw land.
There are certain things I'm looking at. Maybe, maybe my tax
filing position can get. Insulated by some insurance and I can
redeploy the capital on my next project.
Brendan Sigalet: [00:15:54] Certainly, I think
that, you know, within our firm, definitely, and it seems like
across kind of the spectrum of tax lawyers in Canada, this is, you
know, we're increasingly looking at, you know, tax insurance as
an option.
Whereas, you know, 10 years ago it wasn't really something that
was considered. Speaking. You know, turning to the, with respect
to, you mentioned the clean energy space. A lot of what we're,
you know, the clean economy ITCs were a direct response to the
clean energy incentives in the IRA in the states.
And so, a lot of the trends that we're kind of seeing, we first
see occur down there, um, because they had their legislation passed
before us. Four ITCs that were, were just passed in June last year.
So, I understand we've seen tax insurance playing a growing
role with respect to the US clean energy sector.
Can you walk us through how it's been applied to ITCs in the
US?
Jeremy Matthies: [00:16:50] Yeah. I think
it's important to be cautious when comparing the US renewable
space to the Canadian space. I mean, the businesses are the same,
obviously, when, when project solar projects, they don't change
based on what country you're in. But in Canada we have a refund
system. In the US they do have a direct basis, and it started off
as payment and now it's more of a credit. And the IRA when it
was put in place now allows you to trade those credits, and
that's really been the uptick on insurance in the us.
So, for example, a company's building a wind project is going
to come into some ITCs, but they're not really that valuable to
that business because they're not going to have taxable income
for a long time.
So, they can't really make use of those credits. What they can
do is monetize them by transferring them or selling them to a buyer
who says, I'm taxable now. I'd love to have those credits.
I'll pay you 90 cents on the dollar for all these, and that 10
cents a savings on my tax bill make sense to me? If I can
accumulate enough of these.
So, on all those transactions, or most of those transactions, that
buyer will mandate that there's insurance from the seller's
perspective to backstop those ITCs in case there's a bus or
case there is something that it turns out maybe that. Project
developer wasn't entitled to those ITCs. So it's another
level of due diligence, another level of security for that buyer to
say, when I get these, I'm going to apply them against my
taxable income and in the event that there's a breakdown and I
don't get to use them and the IRS says, sorry, you bought
something that wasn't valid, insurance will step in and gimme
that money and I'll be kept whole.
So, I would say roughly 50% of the US tax insurance market right
now is those credit transfer policies that are backstopping a
market that's gone incredibly wild. You know, we're doing
15 of these at any one time. And if you took those out of the
market entirely, you'd see a much, you know, sort of smaller
tax market.
But it's been great because it's introducing all these
clients to the product and then they're saying, wow, is there
other places I can use this product because this is pretty seamless
on my ITC deal. So, it's really taken the US market and, and
sort of exponentially doubled it in the last sort of three or four
years, or three years for sure.
Brendan Sigalet: [00:19:30] Yeah. A can you
walk us through exactly how that, how that works in the US market?
Because I, you know, so the tax, the particular corporation
that's building a project gets the ITC and then they sell it
to, you know, a third party and in order to sell it, they have to
have it insured.
And, but there's kind of ongoing requirements that they have to
meet in order to con to generate those ITCs. Right?
And understanding you're not a US expert in respect of, you
know, the IRA, the production tax credit system they have down
there. But you know, they have labor requirements down there, for
example, which are kind of ongoing requirements that have to be met
by the particular, you know, project proponent.
So how does it work that you know that they can get tax insurance
when there's kind of ongoing requirements by the project
proponent, which is kind of wiped its hands of the deal, sort of
thing, when they sell the ITC.
Jeremy Matthies: [00:20:33] In the US carriers
will ensure prevailing wage and apprenticeship compliance, the US
equivalent of our labor requirements during the five-year recapture
period, subject to an exclusion for non-compliance.
However, that exclusion will not apply, i.e., the policy will not
apply to any failure to satisfy the prevailing wage and
apprenticeship requirements. If that work was completed pursuant to
a contract with an EPC and engineering procurement construction
company, or a third-party service provider that was under contract,
assuming that contract was reviewed by the underwriter, consented
to by the underwriter or contained provisions substantially similar
to those that the underwriter reviewed.
So, in short. The answer is labor requirements can be covered, but
a contract with a reputable third-party EPC that's in place at
the time of underwriting will definitely allow us, the broker, to
negotiate better policy terms.
Brendan Sigalet: [00:21:39] That's
interesting that the US markets going develop to be comfortable
with the long tail on these things as, as you mentioned, because
obviously, you know, there are similarities in the Canadian
context, not from the project proponent selling the ITCs, but the
project proponent is, you know, claiming the ITC and then they have
continuing obligations, whether it's labor requirements,
recapture, claw back, those sort of things.
And potentially, you know, it's something we can point to and
say, well, you know, they figured it out in the US. So, therefore,
you know, potentially they might be able to figure it out here as
well. Turn to that, you know, how does the Canadian market
currently compare with respect to the clean economy ITCs? And what
kind of risks are, you know, tax, insurance helping to mitigate for
the clean economy ITCs in the Canadian context?
Jeremy Matthies: [00:22:34] Yeah, not to give
the impression that the ITC market is entirely just credit
transfers in the US there are opportunities to ensure ITCs that are
future ITCs, much like Canada. There are direct pay opportunities.
There's financing where you build a model in the US just like
in Canada and you say, hey, here's how much of an ITC we're
building into our model.
And if that doesn't come to fruition, the lender in that
scenario might say, well, if there's a bust in your ITC, your
model's kind of broken, how do we know that's going to
happen? Right. So, in Canada, I think that's more the model.
It's a lot of, are going to require lending and that
lender's going to want to get comfortable with if you've
built a $50 million ITC into your project and that doesn't
happen, do you still have a project?
Is this dependent on getting that ITC, is your payback period, is
it important for you to get that ITC within a certain amount of
time? So those are all things that, right now what I'm seeing
is, it's getting lenders comfortable and lenders are quite
happy to know that a client is going to be able to insure those
ITCs and guarantee that they're, the bank is not going to be
out of pocket if the ITC doesn't come to fruition.
That being said, generally the projects that are going ahead, there
doesn't seem to be a lot of lender sort of trepidation around,
is this going to qualify or not? So, I think right now we're
finding that the ITC risk that requires insurance is kind of few
and far between at the moment. I think as the lending community
grows and it becomes less just the big five sort of charter banks
and other groups are looking at this, I think we'll see
insurance become more and more prevalent.
If there's any questions, like really what we're ensuring
is structure. So, if you have a unique structure or using a
partnership instead of a corp, or you have any, because the rules
require that you take your ITC in a corp. There are some questions
around using limited partnerships. That's been sort of the
normal course for fundraising.
So that can be insured. I'm doing that at the moment. Also, do
you qualify for, you know, if you had a carbon capture project and
you were looking at does all this equipment, capital costs qualify,
qualification be, can be covered. Again, it's just, it's
trying to find that sweet spot where there's risk, but it
serves a purpose to get a lender over the line.
I've sat down with a very large carbon capture project client
yesterday and they said, look, we don't need the insurance, but
our partners in this project might because they're smaller than
we are, they don't have our sort of capital to backstop this.
It's something I would like you to pitch to me, so I can pitch
it to them.
So, I think it'll expand, and it'll grow. But everything
sort of seems down the fairway right now in a lot of these projects
and there's not a lot of unique structuring being done because
everyone's just trying to get in the door. And I think as
projects grow and evolve, I think we'll see it becoming the
insurance side becoming more prevalent. That's just, that's
my soapbox stance on it
Brendan Sigalet: [00:26:03] No, I think that
makes sense. I think that there's so many risks with respect to
the clean economy ITCs, you mentioned, you know, the structuring
aspect, uh, particularly in the limited partnership or partnership
context. I think that that makes a lot of sense.
You know, any corporation who's planning to claim a clean
economy ITC through a limited partnership, you know, you have the
risk of, first of all, how much ITC are you taking out, so you have
to ensure that you have sufficient at-risk amount of the
corporation and limited partnership. And then, additionally,
there's always the looming risk that, you know, a particular
limited partnership interest might be considered a tax shelter
investment.
Which in that case you have claw back of the entire ITC for the
entire project in some cases. So, you know, that risk is obviously
something that I would anticipate would be, you know, just table
stakes. You need to have that insured. Is that kind of what
you're seeing so far in the down-the-fairway deals, as you
said?
Jeremy Matthies: [00:27:13] That's exactly
what I'm seeing. So, I'm on my second deal that's
covering reasonable allocation for the partnership, right. At risk
amount, tax, shelter and gaar. So, all four prongs are being
insured under one policy. If any one of those fours is named in an
assessment or reassessment, the insurance will kick in.
Right. And in these deals, the one I've closed and the one
I'm working on, it's really to backstop a bridge financing
that clients said, look, I want, notionally, I have a $50 million
ITC coming to me. I'd love for the bank to gimme that money now
because I have two years of work to do and it'd be great to
deploy that.
And the bank needs some sort of certainty. In some instances,
there's nothing left to secure because the solar project or the
wind farm has already been fully sort of secured on the main
financing. When you get to the bridge, it looks a little skinny and
they're kind of wondering, how are you going to pay this back
if you don't get your ITC?
So, the insurance is a great way to get the bank comfortable, and
the insurers have been okay to say, yeah, we'll cover gaar in
this instance. It seems pretty low risk. We'll cover all those
components that, you know, we've mentioned, tech, shelter. At
risk amount, reasonable allocation. And we've, you know,
received a strong opinion from the law firm on those files.
So, it's been, it's been doable, and I think that's
going to continue to be the case. And I think as these projects get
done and you know, people like yourself get more comfortable seeing
more of them come across your desk, you know, even in these two
deals we've seen a little bit of a pivot to more, I
wouldn't say aggressive, but just some tweaks have been made to
the structure because they feel more comfortable that, hey, you
know, maybe our allocation can change here because we think
we're okay.
So, I definitely see the structural piece continuing. And I think
as there are just, it's, every lender's a little different.
Some are very conservative, and they want everything covered off
and buttoned down. Others are more flexible because they have to
be, because, you know, they, that's how they get their business
in the door.
So, we'll see what other unique structures we see. I
wouldn't call these unique and they seem like very low risk
prospects to me. But the banks want no risk. So, it's been a
valuable tool.
Brendan Sigalet: [00:29:36] Yeah, and I think
that, you know, from, from my perspective, having advised on some
of these projects, you know, we've generally seen somewhat of a
trend towards moving towards just incorporating a, a corporation
and, you know, having that be the vehicle for the Clean Energy
Project, precisely to head off the risk associated with the
partnership structure.
But, as you know, we're drawing close to an election here and,
you know, there's obviously different viewpoints as to what is
going to happen with these clean economy ITCs. But one particular
ITC that hasn't been enacted yet is the clean electricity ITC,
and that particular ITC is available for tax exempt entities,
particularly for First Nations groups.
And so, First Nations groups who are participating in these
projects participate through a limited partnership structure
historically. And the draft rules allow for the First Nation
limited partner to a limited partnership to claim the clean
electricity ITC on the same property that the taxable Canadian
corporation claims, the clean technology ITC.
And so, I anticipate that, you know, we're going to be looking
at a lot more of these limited partnership structures moving
forward for these particular projects. And I think that, you know,
having reviewed the rules in detail, I would not be comfortable
using that structure unless you're getting tax insurance.
That being said, you know, you're talking about low amount of
risk, but these rules haven't really been through the system
yet. And so, I think that any project proponents should be just
table stakes, should be getting tax insurance for the things that
we talked about, tax and shelter investment, you know, reasonable
allocation tests, at risk amount. But that's just my view on
it.
Jeremy Matthies: [00:31:40] That's
absolutely, what it just dovetails into something I should probably
touch on because it would be important to the listeners. As more of
those structures come into play, and, as you mentioned, none of
these have really been vetted yet, right? Like CRA hasn't come
back. We haven't seen assessments and reassessments on 25 of
these yet. So, I know the first few are actually being filed, and
I've talked to counsel has said, you know, I've actually
got my returns in now the project's done.
So, to that point, I think it's important to know how these
policies get diligenced is you write an opinion for your client,
and I take it to the market. And the market then retains Canadian
counsel other than yourself to review your memo and or your opinion
and say, yeah, I think these guys have it right.
So really all we're doing is interpreting the law because we
don't have a bunch of case law, we don't have a bunch of
examples of audits being done and failing. But you can still get
coverage. I think it's important to know it doesn't, this
doesn't have to be, you know, 10 years of. Supreme Court case
law for coverage to be implemented.
We just need the other side's counsel, the underwriter's
counsel, to look and say that's a reasonable view that Bennett
Jones has taken. I like it. I tend to agree. And the underwriter
will then say, okay, let's get a policy in place. So even
though it's new law, there's still legislation that we can
lean on.
Reasonable allocation rule has lots of, you know, it's been
around for a long time, so there's, we can sort of sift through
that, get a good opinion on it, but the fact that this hasn't
been litigated doesn't matter for the insurance purposes. I
just want sort of point that out that it's going be
available.
Brendan Sigalet: [00:33:30] Yeah, and I
completely agree with you. I think that, you know, the that whole
limited partnership question and, and tax insurance on structure, I
think that, you know, that's just going to be, you know, like I
said, table stakes. I think moving forward, until we get more
clarity on how these rules are supposed to work.
I think that the interesting area will be in respect of things that
haven't to date been insured in the Canadian context. And I
think that, you know, the experience in the US can kind of give us
some insight into things that haven't been insured yet, but
that will become insurable. Particularly I'm thinking, you
know, situations where, you know, you mentioned, you know,
equipment eligibility for example, and, you know, we have some
information as to what equipment's eligible.
There are some gray areas on the edges, and some of the eligibility
question is factual in nature as to, you know, what is the intended
purpose of this equipment? And it gets into kind of engineering in
addition to the, the interpretation of the law. And I think that,
you know, given that there's kind of this history in the US of
dealing with those kind of factual situations and getting
comfortable on those areas and you know, needing to deal with the
Natural Resources Canada aspect, which, you know, they have to
approve project plans and they're the ones who are ultimately
going be tasked with determining what equipment's eligible and
what isn't.
In addition to the CRA, I think that, you know, there, that might
be an area where we'll increasingly see, you know, tax
insurance for kind of those gray areas. And in addition, I think
that, you know, with respect to even labor requirements, you know,
they, if it seems that in the US they've been able to get
comfortable on insuring those, is that right?
Jeremy Matthies: [00:35:30] Yep. I mean,
obviously anything that's got that sort of forward looking or
third-party reporting aspect to it is a little deeper dive on the
underwriting due diligence side for sure. But I mean, what I
touched on earlier on, transfer pricing, you're going to need a
big report to get in front of underwriters to be able to
demonstrate that you can ensure that valuation is factual.
You got an accounting report that you're looking at an
evaluation very similarly. There are third parties now doing, you
know, tracking labor requirements, monthly reporting to the client
so that they can demonstrate we're on top of this. So as soon
as those third parties get involved, that's always a deeper
dive for underwriters.
But I do think having those third parties doesn't stop you from
being able get a coverage because the underwriters now go out and
they have their third-party vet, just like you would vet the
opinion. They're saying, yeah, this report looks good. These
guys have the structure in place. They've got the sort of, KPIs
in place to make it's all tied down.
So, it doesn't stop you from getting the coverage. It's
just an extra sort of hurdle you have to meet. But to your point,
everyone's going to be sort of out there seeking these
third-party groups to do their labor inducement review so they can
stay on top of it because they want the money.
So, underwriters are used to that in the US and they're very
excited to be into the Canadian ITC market. And we send our
submissions out to the entire market in the US even though we know
50% of them don't participate in Canada. Because every time we
go to the market and they're not allowed to participate, they
go, okay, we need to start thinking about getting into Canada.
Right?
So, it sort of encourages more participation in the Canadian
market, which we have seen grow over the last three or four years.
So, I think over time it's just going to become easier and
easier for us to find a home for replacements as the Canadian
market grows and more underwriters move here.
Brendan Sigalet: [00:37:37] I think that makes
a lot of sense.
I think that as you have these third parties, whether it be labor
requirements or you know, engineering firms with respect to
technical aspects of these projects and whether or not equipment
qualifies and compounding that with the, you know, the legal side
of things to ensure that the legal test for, you know, whether it
be the labor requirements and or the equipment eligibility.
For example, if you get an engineering report that says this is
what this equipment does, then you compound that with a legal
opinion saying that, you know, this is the test for what
equipment's eligible and you put those together, then you have
a pretty solid factual underpinning and legal basis that this
equipment qualifies.
And you can take that to an underwriter, I would assume, and be
able to, you know, get, get covered for, you know, something that
maybe you otherwise wouldn't look to insure, at least at this
stage.
Jeremy Matthies: [00:38:42] Really those third
parties are just confirming the facts. Right? And to the extent
facts are true, you don't have coverage in any insurance policy
regardless of industry or regardless of type of insurance,
right?
When you sign these policies up, you do sign a rep letter saying
that to the best of our knowledge, everything we've provided is
true. There are no misrepresentations. All our tax filings are
consistent with what we've been telling you are going to be our
future tax filing. So, I don't think that would be news to
anyone in the business community that you know, to the extent you
have a third party validating your facts that should allow you to
open doors into the insurance space because it's not just you
putting your hand on your heart, you've got an engineer saying,
we agree. So, it shouldn't be an impediment.
Brendan Sigalet: [00:39:28] I think that makes
sense. And I just see this area just, I just see it exploding over
the next number of years as businesses start to grapple with, you
know, the ability to, from a risk management perspective, to take
that risk off the table and lenders get more comfortable with
getting into this space and providing bridge financing and, and,
and all the kind of things that we use project proponents without a
massive balance sheet.
And even those with a massive balance sheet need to, you know, get
these projects built. Just as you said, it's kind of an ability
to redeploy capital, but otherwise you're sitting there with it
just kind of sitting and self-insuring. So, I think it makes a lot
of sense. So, you had mentioned kind of the factors that, you know,
the underwriters consider when evaluating a policy for clean energy
project.
You need the opinion from your legal counsel. What else do they
typically require in order to, you know, place one of these
policies?
Jeremy Matthies: [00:40:34] Well, really
that's sort of the entry point as you get your legal opinion,
we go to the market with that opinion. We solicit the market to see
if we can find quotes, and once the quotes come in, you pick a
carrier and you move forward.
The due diligence process from there would be, well, what did
Bennett Jones review to get to this opinion point? So, if you have
partnership agreements, limited partnership agreements, what is it
that that ITC opinion is relying on. So, you're going to have
to provide documentation. Everything's done under NDA.
We're happy to do common interest privilege letters to protect
privilege for clients. But, at the end of the day, it is going to
be a bit of a document dump that whatever you were provided with in
order to get to your opinion, the other side's counsel's
going to want to see as well. There's going to be a short
20-minute Q&A with the underwriter on what we call it, an
underwriting call, where they're going to ask some questions
about, you know, how's the project function if you don't
have the ITC money? Can we see your model? So, can you show us how
you've modeled this out? What does this look like? Because at
the end of the day, if it's a bridge, for example, where are
you financially? If this all goes according to plan, how much room
do you have? How tight are you on debt? So, all the things the
insurers are going to want to know.
So there is sort of a deeper dive outside of the opinion, but I
wouldn't say there's any other, other than providing a
model in the background information that's kind of the table
stakes to, to get coverage and having that call is just really to
get management to explain how they got to this project, what does
it look like, have you checked all the box, the regular boxes?
Right.
I guess another important thing to note is if you're, a plug
for Bennett Jones is if you're getting counsel on this, you
need good counsel, right? Underwriters are not interested in, you
know, your divorce lawyer doing your ITC opinion. So, it's
important to have competent counsel that the underage recognize and
has a, has a brand name behind it because, you know, when they go
get their counsel to review it, they're going to want to know
where this came from and it just makes it an easier process as well
when there's sort of a mutual respect for where that memo came
from at the outset.
Brendan Sigalet: [00:43:02] Yeah, no, I think
that makes sense. And as far as you know, pricing, what can clients
look to project proponents look to expect from a pricing
standpoint? I understand kind of right now, largely it's been
in the realm of structure.
So, you know, these are concrete legal issues. You know, what is
the reasonable allocation for a particular partner in a
partnership? We can look to the case law in section 103 and kind of
go from there, apply that to the facts, you know, see how it shakes
out. Similar with, you know, a tax shelter investment for example,
that sort of thing.
But what's the pricing been like for the deals that you've
seen thus far?
Jeremy Matthies: [00:43:39] So, the deals
I've seen, the pricing is sort of in that 4 to 5% rate online.
So, four or 5%, 4 or 5 cents on every dollar that you need coverage
for would be the premium amount. So, I think it's important
because there's some different tools in the toolkit of
insurance.
Like you can go out and get coverage for a select piece. I want to
just know that if I don't get my ITC get it paid back and I
don't care when, right? It's not a bridge, it's just
regular financing. I want my $50 million bucks. I don't care if
we have to go to federal court to resolve this in eight years. If I
get my money back, I'm happy.
That could be the big company with deep pockets, you know? It's
not the timing, I just want to know I don't have to worry about
it. Whereas a smaller entity might say I'm getting a bridge,
but my bridge is expiring in 36 months and I'm going to have
two years of building the project. I have 18 months to get this
thing paid off. If I don't get my ITC, I'm at risk of
breaching and defaulting on my, on my bridge.
In that instance, what we have secured is what we're calling
advanced tax payment, which as you know, for large corporations, in
order, when you file your notice of objection, you have to put up
half of that risk tax amount in order to appeal a
reassessment.
So, the market is familiar with advanced tax payments. What
we've structured is being able to say to clients, if you have a
bridge, maybe you want a bridge less than a 100% of your ITC,
because we can probably get you 50% of that ITC advanced tax
payment provided to you so that you can actually pay off your
bridge at the 36 month stage, for example, as opposed to having to
wait to go through federal tax court or whatever that litigation
process looks like.
You might not see that payout from insurance for five years. You
need it now. So, insurers are open to that. Does that make sense?
Like being, they'll front you some money, usually 50% of the
limit. So, you took out $50 million and they'll give you 25 so
that you can deposit it with CRA to have a fight. In this instance,
you wouldn't be depositing it with CRA, you'd be using it
to pay your bridge off. Right.
But they're still open to that, that structure. Initially we
went out in our first deal and we were able to secure 100% of the
ITC being paid back through advanced tax payment. Second deal, the
markets have pulled back a little and said, hey, I don't think
we're going to cover a full ITC bridge, if you want to bridge
less than the full ITC we need you to have some skin in the
game.
I think advances payments in the UK and in Canada generally have,
there's been some pushback in the last six months in the
markets, so that's a harder lift than it was a year ago or nine
months ago. So my recommendation to clients on bridges is just if
you have $50 million of an ITC coming your way, you may want to
only bridge $25 million of that, so that we can get you the
adequate coverage so that you don't default. Meaning, maybe we
take out a $50 million policy, but we know that 25 will come your
way if you need it before the bridge expires.
So those are just, that's pretty nuanced and it would be
different for every deal, but it's something to think about
because these bridge deals.
Brendan Sigalet: [00:47:21] Just to be clear on this, so you know, you're getting the advanced tax payment is a feature of the insurance. So you can get that as in order to, basically you, you have a 50% advanced tax payment to pay off, you know, 50% of whatever, it's 50% of your bridge in order to, you know, put the money up in order to fight with the CRA, you, you still have the full amount insured in that scenario.
Jeremy Matthies: [00:47:48] Yeah. So, you'd
still insure the rest of the ITC if it wasn't involved in the
bridge for sure. Right. It just might not come to you until after
the dispute's been resolved. So, I think it's important for
clients to know the coverage covers interest penalties, obviously
the amount of tax that the, the refund is for. Right.
But in regular, just tax insurance, that isn't a refund. If the
CRA says you owe us a hundred million dollars, your policy would be
a hundred million dollars. But you'd also be adding limit for,
penalties, and interest in the event that a hundred million was
paid to you, is that going to need to be deemed income in your
hands?
Is there a gross up needed so that you're kept whole after tax
on that payout? That can be covered. Advanced tax payment, if you
had to put up 50 to fight to not pay the hundred, that's
coverage that's available. But you also don't need to take
all those pieces. You can sort of a la carte decide, I don't
need advanced tax payment, or I'm not gross up, won't apply
here.
Or there's no penalty risk for us on this refund because we
don't have the money in hand or no interest risk because we
haven't been paid out. So, all those things are available in
the coverage. There might not always be something that the client
needs. So, when we look at a potential file. One of the things we
ask for from the team is we need a loss calculation.
We need you to say, what's the worst-case scenario here?
We'll work backwards from that. What would you like to cover?
Right? So you might say, I have a $50 million tax risk, but with
gross up, assuming I got taxed on a payout and with contest costs,
meaning this is how much it's going to cost me to pay a lawyer
to fight this, if I have to fight, you might take out $65 million
of limit on a $50 million issue, right?
Because you never want to fall short on that if, if the
insurer's paying for your lawyer and then, and paying penalties
and paying interest. You want to run all that math on a worst-case
scenario going, what if I get reassessed on the last day of this
policy, right? And I've got seven years of interest in
penalties. What do I owe?
So that's kind of how we start that process of valuing how much
limit you need to take out in the ITC. On these bridges, it's
available. I just want clients to know that we need to have a
conversation early in the piece before the bank has decided how
much of a bridge you're going to get.
It's for, especially for you if you're there early, to say,
hey guys, when you're deciding on how much the ITC you're
going to bridge, we should talk to the insurance guys to make sure
we know how much coverage you can get. We know what pricing it is.
Maybe you can get a hundred percent coverage. I can tell you, you
can, I think it's very important that it doesn't cost any
money to have that conversation early in the piece.
Brendan Sigalet: [00:50:37] Yeah, no, I think
that makes sense. And Jeremy, I think it might be helpful for
listeners just to kind of walk through, you know what this looks
like from a practical perspective. We're talking about some
complex factors here with respect to, you know, bridge financing
and advanced tax payouts and payments and that sort of thing.
So, let's just say we have a, you know, a solar project,
vanilla, $50 million project. They're expecting, you know, 30%
of the entire capital cost in ITC. So, $15 million in ITC. And they
come to you, and they ask you, you know, let's say they have it
in a partnership. And you know, they're concerned about the
reasonable allocation test for all parties.
So, they want to insure the entire $15 million ITC. So, you know,
they want to insure, you know, the, the reasonable allocation test.
They want to insure that they're sufficient at risk, they want
to insure the tax shelter investment, and they want to insure that
gaar as a throw in, even though probably it's not going to
apply.
So, can you walk us through the process as to getting the
insurance, you know, so the legal counsel's going to provide an
opinion that, you know, this meets all the requirements for
reasonable allocation and all that sort of thing. They get a strong
should opinion that this qualifies and you know that they're
all good on all those tests.
So, they come to you, they have this strong opinion, so they want
to get $15 million in coverage, in order to cover that, now you
would say, is that all you want to get? Is that right? Because you
want to increase the amount potentially in order to cover, you
know, the interest that might be owing, et cetera, et cetera. I
think it might just be helpful to kind of run through a fictional
example.
Jeremy Matthies: [00:52:23] Yeah. So, on that
$15 million we'd sit down and say, can you talk to Brendan and
find out if there's interest risk, penalty risk, gross up risk,
meaning if you got paid out, would there be any tax on that? And
then we would also just build in, and it's not something you
flag for underwriters, but we would say, you know, and worst-case
scenario, maybe you have a couple million dollars of fees if you
have to fight this right to the end of the earth.
So, we might say, hey, you know, just ballparking, maybe $20
million is the limit you want to look at. So, you go out and say,
okay, alright, we're going to take our $20 million policy,
we've got the memo, we go to the market sign NDAs, we approach
30 different markets. The 12 that we know come that operate in
Canada, we'll come back.
We'll either get quotes that say we're interested,
here's our terms. And some will say maybe we're not
interested for certain reasons. And if we had four quotes, for
example. I would provide all those quotes to you and the client and
say, here's the pricing range, here's the exclusions.
Typically, they're not different. They're all willing to
cover this. Who do you want to participate with?
And at that point, before you've even made a decision, it
doesn't cost a client anything. I've just been out there
trying to price discovery and see who's interested. And from
that point, the client would say, okay, we want to go with AIG
because we recognize the name and it looks like, you know, we think
our stakeholders would appreciate that.
So, we go with AIG and say, "the team wants to work with
you". AIG would have something called an underwriting fee
where they would say, when you sign on with us, we need you to pay
us, let's call it $50,000 because we use that to pay our
lawyers to review your memo. And that's a non-refundable fee.
So, you can include that in your premium.
So, if your quote was for $20 million at 4%. And you owe whatever
that amount is $800,000 of premium, you can add $50,000 of
non-refundable underwriting fee to that. And other than that,
there's no other cost.
So, at the end of the day, we signed that agreement. They ask us
for a list of documents that were used to write the opinion. We the
client provides those. We have a due diligence call to walk through
a conversation with management about the deal and the model, and a
policy would get put in place. This whole process would take three
or four weeks, and we would help vet through that policy, make sure
all the terms are, were great, we'd bind it.
Premium would be due at the end of that whole process. And then
you'd have a policy you could stick in your closing book, and
you sort of move forward knowing you have coverage. What would
happen, how coverage would sort of kick in, or what a claim would
look like, is the solar project is done. You file your first tax
return applying for the ITC, and six months later you get a letter
back from the CRA saying we've assessed your project. We
don't think you qualify.
We take that letter, we provide notice to AIG and say, guys, we
think we have a claim. The client's been rejected. And at that
point, as you can appreciate with all insurance, whether it's
your house or your car or tax, usually some level of deductible
that they include. We do have files where the underwriter will
waive any deductible, but what the deductible is, it's called a
retention.
In this case, they might say there's $150,000 retention. You
started a claim. Please keep track of how much money you're
spending in your correspondence back and forth. And why does that
cost money? Well, because your law firm is helping you write it.
Maybe you've got your accounting experts also giving you
advice.
So, all of that is called contest costs. As those add up and you
get to $150,000 spent, AIG is happy that you at least made an
effort to try to make this go away because you can't just sort
of hand them the first letter and say, start paying that a lot of
these things that you know can be resolved over time with CRA and
they go, okay, we see the error of our ways. The check is on the
way. Your ITC is valid. We just didn't understand.
But if that the case and you get through your $150,000 of contest
costs and you're still being rejected, now AIG starts paying
for your legal fees and you're in the process of whatever that
litigation looks like or that dispute looks like, whether it's
tax court, federal court, you know, just generally debating with
the audit officer at the CRA. And at the end of the day, if you
come out on the wrong side of this, and if you don't get an
ITC, the company would get a check for the $15 million ITC and
whatever the total of all those other expenses up to $20
million.
Brendan Sigalet: [00:57:30] I think that's
helpful to give the overall timeline as to how this works. And I
think, you know, you'd mentioned the advanced tax payment, so
that's a feature available within the ITC or the policy.
So, let's say you have the advanced tax payment. So, if you
don't have the advanced tax payment, you would have to come up
with the 50% of the claim in order to, you know, to stop interest
from accruing sort of thing. If you have the advanced tax payment
feature, then insurance will provide you that advanced tax payment
to provide to the CRA in your dispute.
And if you don't, then you'd have to come up with it
yourself.
Jeremy Matthies: [00:58:07] Yeah. And I
don't know, you're the expert on this Brendan, but I
don't know if on an ITC, I think how it would work on an ITC
for advanced tax payment to actually trigger, other than in a
bridge would be, here's your check for $15 million.
Six months later you get a letter going, wait a second, we
shouldn't have paid you, we don't think you qualified. We
took another look. You owe us $15 million back. In that instance,
much like any kind of tax reassessment, they're telling you,
you owe money. You're saying I don't want to pay. I think
you're wrong.
You would probably have to put up seven and a half million dollars
to go through that process to stop interest from occurring. To your
point. So, in that instance, yes, insurance companies will pay that
money for you keep your balance sheet whole, you don't have to
come up with that capital to the extent it applies.
Brendan Sigalet: [00:59:05] Okay. Gotcha. And then in the bridge financing?
Jeremy Matthies: [00:59:08] Yeah. In the bridge
financing, it's not that you got the money and you owe it back,
because if you did get the money, you would've paid the bridge
off and it would be done right. And then they'd be coming back
going, we want the money. The money's been spent. We can't
give it to you. But we'll have this fight with you.
In the bridge scenario where you haven't received the money and
they're telling you you're not getting it, what insurers
have been doing, and hopefully they continue to do, is saying,
look, we understand you need to pay that off. We'll give you a
type of advanced tax payment, meaning we'll front you the money
before the fight so that you don't default at a certain,
whatever that cost is.
So that's where, in the bridge, the advanced tax payment
isn't traditionally an advanced tax payment. It's more of a
mechanism to help avoid default of the bridge. But they've been
calling it an advanced tax payment because that's the mechanism
they're used to and it allowed us to get comfortable on the
bridge side.
Brendan Sigalet: [01:00:09] Okay. I think that makes sense. So just as far as final thoughts for companies considering tax insurance for their clean energy projects, what are some of the key steps they should take?
Jeremy Matthies: [01:00:19] Well, I think they
should, when they're sitting down with you, it probably makes
sense for them to discuss, you know, is insurance something that
will help us maximize our use of capital?
Is this something that our lenders are going to want to look at? Is
this something that any other third-party stakeholders are going to
want us to have? And maybe we should investigate this now as
we're structuring. I just think the earlier in the piece that
the insurance can be considered is the better one is now you're
going to be writing a memo that takes time trying to jam insurance
at the end of your deal.
It can be done, we can, we've done deals in seven days, but
it's always better to have more time, much like someone comes
to you for legal work. The more time you have the better job you
can do. So, I think just being open to the fact that this is an
option. And then exploring it if you think it is an option, allows
us more flexibility to find you the right product, to get you the
right partner and to get the best pricing.
If it's later in the day and it becomes apparent that
you're going to need it, we can act quickly. We're all
lawyers and we're all used to working under time crunches. We
don't, you know, the clock doesn't stop on the weekend. We
work as much as we have to, to get it done. So, I think it is
important to know that just because you didn't get in us in the
door a month ahead of time doesn't mean you can't use
it.
So, I think structure is an early, early discussion and because
structure's insurable, I think it's also important to know,
hey, we could have gone that path. We may have been able to ensure
that and got everyone happy. Instead, we went the safer route,
which maybe some of our investors weren't as pleased with
because we weren't allowed to do the partnership. Right.
It's probably worth a phone call.
Brendan Sigalet: [01:02:15] No, I think, I think that makes a lot of sense and uh, you know, just kind of mapping it out as, you know, opposed, you know, with the, the potential risk and the cost of covering that risk as opposed to the certainty, you know, just deciding to go with the taxable Canadian corporation offers. I think it's helpful to, you know, map that out at the outset.
Jeremy Matthies: [01:02:36] Yeah. I've had
clients call me while they're looking for a lender and
they've got ERMS from a US lender. That's, you know, a
non-traditional source, but they're quite flexible, but
mandates that they get insurance, or they go to a big bank in
Canada that maybe doesn't need the insurance, but they're
not as happy with the terms.
So, there is, I think even at that lender stage, as Canadian
businesses sort of go further down market to look for lending
options, I think it's going to become more important that
insurance is canvased early in the piece.
Brendan Sigalet: [01:03:18] And I think, you
know, from the tone of our conversation today, it sounds like
you're pretty bullish as far as tax insurance and the clean
economy ITC space in Canada.
But do you have any thoughts as to how you see the role of tax
insurance evolving in Canada generally, or in the clean economy ITC
standpoint?
Jeremy Matthies: [01:03:35] Yeah. Other than
the fact that I think there's still lots of education to be
done, which things like this podcast are helpful with. A lot of
clients, and you probably know this, don't know, it's,
it's an option. And don't understand that this is something
that they can help to de-risk the tax piece of their deal.
I would say regardless of the government, we have, you know, case
laws changing all the time and tax insurance that's kind of
been around long enough to have dealt with all those sorts of
changes like the US is dealing with it now and a change of
administration really, it still serves the same purpose.
So, I don't see it going anywhere. I see it growing just
through education and whether that's ITCs or otherwise. But I
think the longer that a product is in the market, like, you know,
the renewable ITC product, I think the more flexible it becomes the
same, you know, from your perspective, it's probably the same
in your business.
The longer this legislation exists, the more time smart people have
to figure out ways to save money doing it. And even if the
legislation gets tweaked or things change, all those changes make
tax that much harder to put your finger on and all that much more
important to be able to crystallize that risk for a business.
Brendan Sigalet: [01:04:58] No, I think
it's just an immensely valuable tool. Thank you so much for
your time today. I really appreciated the conversation. I think,
you know, from my perspective, this industry is just going to
continue to grow. I think, you know, 20 years ago there wasn't
this capability to, you know, crystallize the risk as you put
it.
I think that tax advisors such as, you know, myself and others are
increasingly becoming aware and live to, you know, this potential
tool in our toolbox and it's just going to continue to lead to
further development of this industry and risks that can be
crystallized as we put it sort of thing as we move forward. Thanks
so much for your time today, I really appreciate it.
Jeremy Matthies: [01:05:38] Thanks for having me and ever need me, you know where to find me.
Brendan Sigalet: [01:05:47] Absolutely.
Thank you for taking the time to listen to this episode. Don't
forget to hit the follow and like button on whatever podcast
platform you're using to listen to this episode.
Take care, and we will catch you in the next episode.
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