Canada: Tax Treaties

Foreign companies entering Canada face a complex tax landscape where home-country assumptions about deductibility, intercompany charges, and holding structures often don't apply.

Foreign companies and investors evaluating opportunities in Canada must consider how tax planning affects deal economics, financing flexibility, cash repatriation, treaty access and exit value. The structure and financing of an investment can significantly impact returns, flexibility and the ability to execute future growth plans, making early attention to these issues critical to avoid unnecessary cost and complexity.

US citizens moving to Canada face unique tax challenges as they remain subject to IRS obligations while becoming Canadian tax residents. From TFSA reporting traps and PFIC complications to estate planning with non-citizen spouses, understanding the cross-border implications before relocating can prevent costly compliance failures and optimize your dual-country tax position.

Permanent establishment Canada analysis has become increasingly complex due to the OECD’s 2025 remote work guidance. Remote work permanent establishment Canada risk is now a central concern for businesses operating across borders and provinces.

As of June 30, 2026, Canada's administrative relief for Regulation 105 withholding requirements ends, requiring businesses to withhold 15% of fees paid to non-resident service providers for work performed in Canada. Understanding the application criteria, compliance obligations, and available waiver mechanisms becomes critical for businesses engaging non-resident contractors to avoid penalties and ensure proper tax remittance.

À compter du 1er juillet 2026, les modifications de la phase 2 apportées aux règles canadiennes relatives aux dispositifs hybrides entraîneront le refus de déductions à l'égard d'un éventail beaucoup plus large de paiements.

The Tax Court of Canada's decision in ExxonMobil Canada Resources Company v R addresses the deductibility of $36 million in feasibility study costs for the Alaskan Gas Pipeline Project, examining whether transfer pricing rules apply to adjust or deny the deduction. The case explores critical questions about source of business income, arm's length transactions between related parties, and the application of Part XIII non-resident withholding tax in the context of cross-border pipeline development ventures.

Every year, as June 15 rolls around, hundreds of thousands of Americans living abroad receive the same unwelcome reminder: it's time to file US taxes again.

L'année écoulée a été marquée par un nombre de développements jurisprudentiels importants qui continuent à façonner l'interprétation et l'administration du régime d'imposition du Canada.