La récente décision de la Cour suprême du Canada
dans 1068754 Alberta Ltd. c. Québec (Agence du revenu) confirme le droit de Revenu Québec d’envoyer une
demande péremptoire à une institution située en dehors du Québec sans que cette
demande n’ait une portée extraterritoriale.
En 2014, Revenu Québec a envoyé une demande
péremptoire de renseignements et de documents en vertu de l’article 39 de la Loi sur l’administration fiscale
(Québec) à une succursale de la Banque Nationale du Canada située à Calgary.
Par cette demande, Revenu Québec cherchait à établir le lieu de résidence de la
fiducie DGGMC Bitton Trust (la « Fiducie »), qui tient un compte bancaire à cette succursale, et à
déterminer si elle devait payer de l’impôt au Québec. Revenu Québec a envoyé sa demande à la succursale de
Calgary plutôt qu’au Québec afin de se conformer à la Loi sur les banques (Canada), qui exige que certains documents
concernant des clients des banques soient envoyés à la succursale de tenue du
La Fiducie s’est opposée à la demande de Revenu
Québec jusqu’en Cour suprême du Canada pour le motif qu’elle outrepassait sa
compétence. Selon la Fiducie, la Loi sur
les banques (Canada) exige que la succursale d’une banque doit être traitée
comme une entité distincte de la banque considérée dans son ensemble. En
conséquence, elle prétend que Revenu Québec a outrepassé sa compétence en
envoyant sa demande à l’extérieur du Québec.
La Cour Suprême du Canada, sous la plume
du juge Rowe, a rejeté l’appel de la Fiducie.
Selon la Cour, la Loi sur les banques (Canada) contraignait Revenu Québec à envoyer
sa demande à la succursale de la Banque Nationale du Canada à Calgary. En se
soumettant à cette obligation, Revenu Québec n’a pas agi de façon
extraterritoriale. Le fait qu’une
mesure prise par Revenu Québec dans l’exercice de ses pouvoirs ait des
répercussions à l’extérieur du Québec ne rend pas automatiquement une telle
De l’avis de la Cour, le facteur déterminant en
cause était le lieu où l’exécution de la demande de Revenu Québec peut être
réclamée. La Banque Nationale du Canada exerce des activités au Québec, et les
exigences procédurales de la Loi sur les
banques ne devraient pas empêcher Revenu Québec de transmettre une demande
péremptoire à une personne faisant affaires sur son territoire.
Il est clair pour la Cour que la Banque Nationale du
Canada forme une seule et même entité qui ne devrait généralement pas être
distinguée de ses succursales. Les faits en cause ne justifiait pas que la
succursale de Calgary soit traitée comme une entité distincte afin que les
objectifs de la Loi sur les banques
(Canada) soit satisfaits. C’est à la Banque Nationale du Canada que Revenu
Québec a adressé sa demande, peu importe où la demande fut envoyée.
Il appert clairement du texte du jugement que la
décision de la Cour, favorable à Revenu Québec, accorde une grande importance
au fait que la Banque Nationale du Canada fait affaires au Québec. La Cour
n’ayant pas statué sur la situation inverse, il y a lieu de se demander si la
demande de Revenu Québec à la succursale de Calgary aurait eu une portée
extraterritoriale si aucune activité n’était exercée au Québec.
In February and March of 2019, the OECD
organized a public consultation process, releasing a consultation document on
February 13, 2019, inviting public comments up until March 6, 2019, and holding
a conference where industry experts presented key issues on March 13 and 14,
2019. The consultation document sets out a range of possible solutions to what
have been identified as important issues for managing the tax challenges of an
international digital economy. Despite the limited time frame of the consultation
process, approximately 200 comments were received.
The OECD/G20 Base Erosion and Profit
Shifting (BEPS) Project consists of 15 discrete action areas which target gaps
in the international tax system that enable the shifting of profits away from
the jurisdiction of the underlying economic activity. Action 1 of the BEPS
Project is focused on tax challenges associated with digitalisation.
The Task Force on the Digital Economy
(TFDE) developed the 2015 BEPS Action 1 Report, “Addressing the Tax Challenges
of the Digital Economy”, which was released in October 2015 as part of the full
BEPS Package and was endorsed by the G20 Leaders in November 2015.
In June 2016, the OECD/G20 Inclusive
Framework on BEPS (the “Inclusive Framework”) was established to collaborate on
the implementation of the BEPS Package and the mandate of the TFDE was extended
to include the delivery of an interim report by 2018 and a final report in
In March 2018, the Inclusive Framework
delivered its Interim Report which provided analysis, but no conclusions,
regarding the tax challenges of the digital economy.
January 2019, the Inclusive Framework produced a Policy Note which established
two pillars, or focal points for discussion, on the digitalisation of the
economy: problems raised directly by digitalisation and general BEPS problems
exacerbated by digitalisation.
The public consultation document released
in March 2019 describes the Inclusive Framework’s proposals concerning the two
pillars established by the January 2019 Policy Note.
and Comments for Specifically Digital Issues: Profit Allocation and Nexus Rules
The key issue addressed by the proposals
regarding profit allocation and nexus rules is how “remote” participation in a
domestic economy should be taxed. As the Interim Report identified, there are
three characteristics of the digital economy which pose taxation difficulties:
the possibility of having scale without mass, a heavy reliance on intangible
assets, and the significant role of data and user participation.
The public consultation document proposed
three solutions: (i) the User Participation approach; (ii) the Marketing
Intangibles approach; and (iii) the Significant Economic Presence approach.
These proposed solutions all focus on value creation in the user/market
jurisdiction, which is unrecognized by the current framework where taxing
rights depend on taxable profits. Given that these proposed solutions would
require a reallocation of multi-national group profits to user or market jurisdictions,
the public consultation document anticipated that changes to existing tax
treaty provisions may be necessary to eliminate double taxation.
The User Participation Approach
The User Participation approach is
premised on the idea that acquiring users creates brand value, thereby
increasing income. This approach would apply exclusively to “digital
companies,” such as social media platforms, search engines, and online
marketplaces, and would modify current profit allocation rules. The approach
would require digital businesses to allocate an amount of profit to
jurisdictions where their active and participatory user bases are located,
irrespective of whether they have a local, physical presence. For example, the
profits of Facebook would be allocated to a given jurisdiction according to
user activity in that jurisdiction. To determine the value created by users, an
allocation metric would need to be developed and agreed upon.
In respect of the User Participation
approach, commentators have expressed concern that the approach:
fails to appreciate that
traditional companies are increasingly using digital means to achieve their business
objectives blurring the distinction between digital and non-digital such that
it doesn’t make sense to treat digital companies differently (Booking.com)
Valley Tax Directors Group) (Volvo
oversimplifies the relevant
issues by assuming that users contribute to the value of a company, when in
fact users are valuable because they provide data which must then be processed
in order to create value; and
Unlike the User Participation approach,
the Marketing Intangibles approach would apply more broadly, taking into
account digitalisation’s wide economic impact. The Marketing Intangibles
approach would exclusively target and reallocate profits from “marketing
intangibles,” such as income from brand name, customer data and customer
relationships. The Marketing Intangibles approach recognizes that a
multinational group can essentially “reach into” a jurisdiction, either
remotely or through a limited local presence, to develop marketing intangibles,
such as a user/customer base. The approach further recognizes there is an
intrinsic functional link between marketing intangibles and the market
Taking into account this link between
marketing intangibles and the market jurisdiction, the Marketing Intangibles
approach would modify current transfer pricing and treaty rules to require that
marketing intangibles, and their associated risks, be allocated to the market
jurisdiction. This would enable the market jurisdiction to tax some or all of
the non-routine income associated with such intangibles and the related risks.
All other income would be allocated among members of the multinational group
based on existing transfer pricing principles.
In respect of the Marketing Intangibles
approach, public commentators have submitted that the approach:
Echoing formulary apportionment
approaches to multi-jurisdictional taxation, the Significant Economic Presence
approach would update the traditional nexus approach such that a digital
business would be taxed like a traditional business. This approach would
achieve this by looking at a number of factors to determine whether an
organization has a “significant economic presence” in a jurisdiction. The OECD
lists several relevant factors: the existence of a user base and the associated
data input; the volume of digital content derived from the jurisdiction;
billing and collecting in a local currency or with a local form of payment; the
maintenance of a website in a local language; responsibility for the final
delivery of goods to customers or the provision by the enterprise of other
support services such as after-sales service or repairs and maintenance; and
sustained marketing and sales promotion activities, either online or otherwise,
to attract customers. The global profits of a multinational group would then be
allocated to jurisdictions where the group has a significant economic presence.
In respect of the Significant Economic
Presence approach, public commentators have submitted that the approach:
may be politically difficult to
implement because some countries will inevitably win or lose from such a system
(i.e. the tax base of countries which currently have nexus will likely
decrease, whereas the tax base of countries which do not currently have nexus
will increase) (Accountancy
will struggle to achieve
consensus on the factors that will create significant economic presence, the
allocation bases to be used, and what happens to losses in the value chain (Booking.com);
will not work because no set of
connecting factors will ever be precise enough to consistently and meaningfully
capture whether value has been created in the market;
fails to recognizes that
consumption is the only value attributable to the market (not the profit of the
corporate group as a whole), and as such, consumption taxes are the most
appropriate mechanism for dealing with the challenges in this area;
is preferable because it would
create more fundamental change, even if the details still need to be worked out
for Tax Fairness).
for BEPS Issues Exacerbated by Digitalisation
The key challenge addressed by the
proposals regarding global anti-base erosion is the shifting of the tax base to
low tax jurisdictions. The public consultation document considers a proposed
solution which includes two distinct elements: an income inclusion rule and a
tax on base eroding payments.
The income inclusion rule would tax the
income of a foreign branch of a controlled entity domestically if that income
was subject to a low effective tax rate in the foreign jurisdiction. The income
tax would be calculated under domestic law, with shareholders entitled to a
credit for tax paid to the foreign jurisdiction.
The tax on base eroding payments would
deny a deduction or treaty relief for certain payments, unless those payments
were subject to an effective tax rate at or above a minimum rate.
Both elements would be implemented by way
of changes to domestic law and tax treaties, and would include a co-ordination
or ordering rule to avoid the risk of double taxation that might otherwise
arise where more than one jurisdiction seeks to apply these rules to the same
structure or arrangements.
In respect of the proposals for an income
inclusion rule and a tax on base eroding payments, public commentators have
submitted that the proposals:
will be difficult to implement
because of challenges associated with developing a framework acceptable to all
that does not impose undue administrative burdens and uncertainty, including
the risk of double taxation (Association
of Chartered Certified Accountants);
risk negatively affecting
businesses’ legitimate economic activities in low-tax jurisdictions with
additional tax or costly restructuring (Accountancy
may negatively affect countries
that are able to support business activities that create value, but do not
require a substantial corporate income tax base to finance their public
should be limited to wholly
artificial arrangements which do not reflect economic reality (i.e. they should
essentially be avoidance rules) and should not apply to genuine economic
should not apply to payments to
or from third parties, and should only be applied to low-taxed passive income
(dividends, interest, and royalties); (Booking.com);
The public consultation process
demonstrates the wide variety of stakeholders who have concerns regarding the
digitalisation of the economy and the OECD’s response. This variety, and the
range of the comments submitted, further indicates the difficulties that will
be faced in achieving any amount of consensus.
The comments themselves offer rich,
though disparate, insights into the digitalisation of the economy. We are
looking forward to seeing the OECD’s proposed final solution to be delivered by
the end of 2020. Over the next year, we will continue to follow the process
closely, enabling us to help our international clients navigate the new regime.
Stay tuned for our next post, which comments on the OECD’s new Programme of Work. The document, which calls for intensifying international discussions around the two main pillars, was approved during the May 28-29 plenary meeting of the Inclusive Framework, which brought together 289 delegates from 99 member countries and jurisdictions and 10 observer Organisations.
La récente décision de la Cour canadienne de l’impôt dans Singh v. The Queen nous
rappelle l’importance pour l’administrateur d’une société de communiquer sa
démission en conformité avec les lois corporatives applicables.
Conditions d’application de la
responsabilité fiscale de l’administrateur
Selon l’article 323 de la Loi sur
la taxe d’accise [et son
équivalent en impôt fédéral selon l’article 227.1 de la Loi de l’impôt sur le revenu (Canada)], un administrateur est
solidairement responsable du paiement de la taxe nette impayée d’une société
s’il était administrateur au moment où la société était tenue de verser cette
L’administrateur n’encourt de responsabilité que si la société :
entrepris des procédures de dissolution ou liquidation;
a fait une
cession ou si une ordonnance de faillite a été rendue contre elle; ou
certificat a été enregistré auprès de la Cour fédérale précisant les sommes
pour lesquelles la société est responsable et qu’il y a eu défaut d’exécution
de ces sommes.
L’Agence du revenu du Canada (l’« ARC »)
peut ainsi cotiser un administrateur une fois les conditions remplies. Par
contre, l’ARC ne peut cotiser l’administrateur que dans les deux ans suivant le
moment où il a cessé pour la dernière fois d’être administrateur.
Afin d’exclure sa responsabilité, l’administrateur peut également démontrer
qu’il a agi avec autant de soin, de diligence et de compétence pour prévenir le
manquement de la société que ne l’aurait faire une personne raisonnablement
prudente dans les mêmes circonstances.
Dans l’affaire Singh v. The Queen, M. Singh a été cotisé par
l’ARC relativement à la TPS due par une société pour laquelle il est était
administrateur. M. Singh n’a pas soulevé lors de l’audience une défense de
diligence raisonnable, mais a soumis qu’il avait démissionné de son poste
d’administrateur en 2011, soutenant donc que la cotisation émise
en 2016 était prescrite.
Afin de démontrer qu’il a quitté son poste d’administrateur, M. Singh a
mis en preuve les documents suivants :
démission à titre d’administrateur signée en 2011 qui porte la mention de
transmission par messager à la société. De plus, dans le cadre de son
témoignage, M. Singh a également indiqué qu’une copie de la lettre avait
été remise à l’autre administrateur de la société, Mme Nadia Singh, son épouse;
du registre des administrateurs démontrant que M. Singh a été nommé
administrateur en 2004 et qu’il a démissionné de son poste d’administrateur en
de la résolution des actionnaires approuvant la démission de M. Singh;
de la résolution des actionnaires indiquant que Mme Nadia Singh
devenait l’unique administratrice;
consentement pour agir de Mme Nadia Singh.
Prétention de l’ARC
L’ARC soutenait que les preuves soumises par M. Singh n’étaient pas
suffisantes afin d’établir la démission de celui-ci à titre d’administrateur.
Afin d’appuyer sa position, l’ARC soulevait plusieurs motifs, dont le fait
qu’aucun avis de modification n’avait été produit relativement à la démission
de M. Singh en vertu de la Loi sur les
renseignements exigés des personnes morales de la
province de l’Ontario.
Décision du juge
Suivant l’analyse de la Loi sur
les sociétés par actions(Ontario) (la « LSAO »), le juge
conclut qu’en vertu de la LSAO le mandat d’un administrateur prend fin
lorsqu’il démissionne et cette démission prend effet à la date de réception par
la société d’un écrit à cet effet, sans autre formalité.
Ainsi, puisque la démission de M. Singh a été faite conformément à la
LSAO, le juge accepte la preuve de démission datée de 2011 et accueille l’appel
concluant que la cotisation n’a pas été émise dans les deux ans suivant la
Cette affaire rappelle bien l’importance pour l’administrateur qui
démissionne de respecter les lois corporatives applicables, et que lorsque cela
est fait, l’ARC ne peut exiger plus de ce dernier en tentant de recouvrer les
sommes dues par la société.
On June 21, 2019, one year after it was tabled in the House of Commons, Bill C-82, An Act to implement a multilateral convention to implement tax treaty related measures to prevent base erosion and profit shifting, received Royal Assent and became law. By way of background, Canada had signed the Multilateral Instrument (the “MLI”) on June 7, 2017 and had then announced its intention to adopt the minimum standards proposed by the Organisation for Economic Co-operation and Development (the “OECD”) under the Base Erosion and Profit Shifting project, as well as mandatory arbitration for tax treaty disputes.
step for Canada is to notify the OECD through the deposit of its instrument of
ratification which is likely to be done before the end of the year. The MLI
will then enter into force for Canada on the first day of the month following
the expiration of a three-month period from the date of notice to the OECD. For
example, if the notice is sent in October 2019, the MLI will enter into force for
Canada on February 1, 2020.
provisions on withholding tax will then take effect between Canada and a treaty
partner where the MLI is already in force on the first day of the next calendar
year, i.e. January 1, 2021. For other
taxes, such as the capital gains tax on shares meeting the real property asset
valuation threshold (discussed below), the MLI will have effect for the taxable
periods beginning after a six month period (or a shorter period if the
contracting states notify the OECD that they intend to apply such a period), i.e. for the taxable periods beginning
August 1, 2020.
July 4, 2019, out of the 89 countries who signed the MLI, 29 have deposited
their instrument of ratification with the OECD, including Australia, Finland,
France, India, Ireland, Luxemburg, Japan, the Netherlands, New Zealand, Sweden
and the United Kingdom.
As indicated, Bill C-82 confirms the adoption of the minimum standards, along with other measures for which Canada had initially registered a reservation, including the two following measures which are noteworthy.
1. MLI – Article 8, paragraph 1: Dividend Transfer Transactions
treaties signed by Canada call for a reduction in the domestic withholding tax
rate on dividends from 25% to 5% when the beneficial owner of the dividends is
a corporation subject to corporate tax in the contracting jurisdiction that
directly or indirectly holds at least 10% of the voting rights (and, in some cases,
of the capital) of the Canadian corporation paying the dividend. Fulfillment of
the 10% ownership test is determined when the dividend is paid.
By adopting the restriction described in paragraph 1 of Article 8 of the MLI, Canada agrees to apply the reduced withholding tax rate of 5% only if shares granting voting rights (and capital, where applicable) of at least 10% are owned throughout a 365-day period, including the day on which the dividend is paid. For the purpose of computing that period, no account shall be taken of changes of ownership that are a direct result of a corporate reorganisation, such as a merger or divisive reorganisation, of the corporation that holds the shares or the Canadian corporation that pays the dividend. This amendment will block surplus exit planning strategies where the shareholding of a Canadian corporation was modified within days prior to the payment of a dividend, which was generally easy to achieve from a Canadian tax perspective as the gain on the sale of the shares of a Canadian corporation is not taxable unless more than 50% of the value of the shares is derived directly or indirectly from real or immovable property, resource property or timber resource property situated in Canada.
2. MLI – Article 9, paragraph 1: Capital Gains from Alienation of Shares or Interests of Entities Deriving Their Value Principally from Immovable Property
domestic law stipulates a five-year test to determine taxation of a capital
gain from disposition of shares or other interests in entities whose value is
or was mainly (i.e. more than 50%)
derived from immovable property in Canada. Thus, if, at any time during this
60-month period ending on the date of disposition of the shares, more than 50%
of their value was derived directly or indirectly from an immovable property
located in Canada, the capital gain from the disposition is taxable in Canada.
In comparison, most tax treaties signed by Canada do not include a retroactive
test. In fact, the value test is generally applied at the time of disposition.
It was therefore possible, subject to the general anti-avoidance rule, to
proceed with an asset “stuffing” to decrease the relative value of the
immovable property in Canada below the 50% threshold before the sale.
paragraph 1 of Article 9 of the MLI, Canada is adopting a one-year retroactive
look back, i.e. Canada is reserving
the right to tax the capital gain if the 50% value threshold is exceeded at any
time during the 365 days preceding the disposition.
In the 2019 Federal Budget, the Canadian
government outlined its proposal to introduce a $200,000 annual limit on
employee stock option grants for employees of “large, long-established,
mature firms”. The government takes the view that the current regime of
preferential tax treatment for employee stock options does not help to achieve
the policy objective of supporting younger and growing Canadian businesses, but
instead, disproportionally benefits executives of large, mature companies who
take advantage of the rules as a preferred form of compensation.
In an effort to provide further
clarifications to the proposed new stock options rules, the Department of
Finance released a Notice of Ways and Means Motionon June 17, 2019.
Under the current stock option rules,
pursuant to subsection 7(1) of the Income
Tax Act (Canada) (the “Act”), at
the time when employee stock options are exercised by an employee, a taxable
benefit is added to the employee’s taxable income to the extent the fair market
value (“FMV”) of the underlying
shares exceeds the exercise price specified in the option agreement. However,
provided that at the time of the grant, the options are not in-the-money (i.e.
exercise price is not less than FMV) and, generally, common shares are issued
upon the exercise of the options, the employee is entitled to claim a deduction
under paragraph 110(1)(d) in the amount of 50% of the taxable benefit
determined under subsection 7(1).
The new draft legislative proposals, if
enacted as proposed, would impose a $200,000 annual vesting limit on employee
stock option grants (based on the fair market value of the underlying shares at
the time the options are granted) that could be entitled to receive the 50%
deduction allowed under paragraph 110(1)(d).
Under the new regime, a vesting year in
respect of an option agreement is determined by either: (i) the calendar year
in which the employee is first able to exercise his or her option as specified
in the option agreement; or (ii) if the option agreement does not specify a
vesting time, the first calendar year in which the option can reasonably be
expected to be exercised.
The new annual vesting limit would not
apply to employee stock options granted by “specified persons” as defined in
the Act to mean: (i) Canadian-controlled private corporations (“CCPCs”); and (ii) non-CCPCs that meet
certain prescribed conditions (yet to be released).
In addition, the new draft legislative
proposals introduce a tax deduction for an employer who enters into an option
agreement with its employee to grant non-qualified securities. The amount of
deductions the employer is entitled to claim against its taxable income for a
taxation year would be equal to the amount of taxable benefit its employees realize
under subsection 7(1) in respect of non-qualified securities.
An employer would be entitled to claim
such deductions under circumstances where the following conditions are met: (i)
at the time of entering into the agreement, the employer notifies the employee
in writing that the security is a non-qualified security; (ii) the employer
notifies the Minister of National Revenue that the security is a non-qualified
security in prescribed form filed with the employer’s income tax return in the
year the agreement is entered into; and (iii) the employer is a specified
person and the employees would have otherwise been entitled to claim the
deduction under paragraph 110(1)(d).
In order to be entitled to claim the tax
deduction, it is critical that the employer designates the options that would
have otherwise qualified for a deduction under paragraph 110(1)(d) as
non-qualified securities by specifying this in the option agreement.
The new draft legislative proposals will
apply to employee stock options granted on or after January 1, 2020.
The federal government is currently
seeking input on the characteristics of companies that should be considered
“start-up, emerging, and scale-up companies” for purposes of the prescribed
conditions as well as views on the administrative and compliance implications
associated with putting such characteristics into legislation. Submissions of
any comments with respect to the prescribed conditions for the consideration by
the Department of Finance are due on September 16, 2019.