Occasionally, a taxpayer moves from his/her principal home into a new home and rents the old home out, or converts part of the home for a different purpose. Alternatively, he/she may move into one of his/her rental properties and turns it into a principal home. While this may not be an issue if the change is short term and temporary, a permanent change could give rise to a deemed disposition of the property for tax purposes. If not carefully managed, this deemed disposition can create undesirable results for these taxpayers.

In accordance with regulation 200(1) of the Income Tax Act, every person paying commissions, fees or other amounts for services shall report these payments on a prescribed information return (i.e., the T4A slip). Over the years, the Canada Revenue Agency (the “CRA”) has not provided clear guidance on how the fees are to be reported on the T4A slip.

The use of creative international structures by multinational corporations to transfer a significant portion of their global profits to low tax jurisdictions led the Organisation of Economic Co-operation and Development (“OECD”) to undertake the Base Erosion and Profit Shifting (“BEPS”) study. The study concluded with 15 proposed initiatives, one of which is to address potentially abusive use of tax treaties between countries to shift profits.