Canada: Withholding Tax

Canada's tax system imposes income taxes at both federal and provincial/territorial levels on corporations and individuals, with rates varying significantly based on business structure, location, and other factors.

If you own 10% or more of a corporation outside Canada, alone or together with family members, the Income Tax Act may require you to file Form T1134 every year and may tax you on that corporation’s passive income before you receive a single dollar of it.

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.

The dissolution of a corporation creates confusion regarding its tax filing obligations. The question often boils down to: Does a dissolved corporation need to be legally revived to file outstanding tax returns with the Canada Revenue Agency?

In April 2025, the Canada Revenue Agency (CRA) issued the Income Tax Folio S3-F1-C1, Shareholder Loans and Debts, which can be relied upon as the accurate summary of the CRA's interpretation regarding subsection 15(2) of the Income Tax Act (ITA) and its related provisions.

Cross‑border tax planning typically assumes that if you structure legal agreements correctly and satisfy a tax treaty’s wording, a reduced withholding rate will follow where applicable. Husky Energy Inc.’s (“Husky”) fight with the Canada Revenue Agency suggests that assumption may no longer be safe.

Calgary is a growing and dynamic city that presents tremendous opportunity for businesses looking to expand. Historically known as an entrepreneurial oil and gas city, Calgary has embarked on a robust journey of economic diversification and is perfectly positioned for economic growth

Cash pooling arrangements are used by multinational organizations to centralize their cash management. The purpose is for an entity...

The One Big Beautiful Bill Act that passed in the U.S. House of Representatives on July 3, 2025 did not include the proposed Section 899 Internal Revenue Code...