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This paper studies the macroeconomic effects of seven key TCJA provisions, including the tax cuts for individuals and businesses, the bonus depreciation of equipment, the amortization of R&D expenses, and the limits on interest deductibility. I use a dynamic general equilibrium model with interest deductibility and accelerated depreciation. I find that, initially, the tax reform had a small positive effect on output and investment. In the medium term, however, the effect on output will diminish, and the effect on investment will turn negative. The tax reform will depress investment in R&D. Government debt will surge. [ABSTRACT FROM AUTHOR]

Taxation of interest is one of the most complex areas of tax in South Africa. Various provisions apply to interest, with some regulating the inclusion of interest in gross income, others allowing for the deductibility of interest incurred, others limiting the amount of interest that is deductible and yet others providing for anti-avoidance tax measures using interest. This makes tax planning using interest to be a technically intense exercise, time consuming and often costly. This article critically analyses the provisions applicable to interest and highlights the circumstances in which they apply as well as the results of their application. It also illustrates instances of the overlaps in the application of these provisions.

Taxation of interest is one of the most complex areas of tax in South Africa. Various provisions apply to interest, with some regulating the inclusion of interest in gross income, others allowing for the deductibility of interest incurred, others limiting the amount of interest that is deductible and yet others providing for anti-avoidance tax measures using interest. This makes tax planning using interest to be a technically intense exercise, time consuming and often costly. This article critically analyses the provisions applicable to interest and highlights the circumstances in which they apply as well as the results of their application. It also illustrates instances of the overlaps in the application of these provisions. [ABSTRACT FROM AUTHOR]

Copyright of Themis: Revista de Derecho is the property of Themis Asociacion and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Copyright of Themis: Revista de Derecho is the property of Themis Asociacion and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

The article reports the Tax Court of Canada's decision in case 'TDL Group Co. v. The Queen' in which court addressed the issue of deductibility of interest paid on borrowed money that is first used to purchase the shares of a corporation and later used by that firm to make an interest-free loan.

The article discusses two court cases Husky Energy Inc. v. Alberta and Canada Safeway Limited v. Alberta, wherein the Alberta Minister of Finance invoked the application of GAAR (General Anti-Avoidance Rule) to deny taxpayers deductions for interest expenses. It mentions that both the cases took advantage of a peculiarity of the Ontario corporate tax system which involves similar interprovincial financing structures. The Alberta Court of Appeal denied the appeal of plaintiffs.

Tracing the purpose and use of funds is fundamental in determining the ability of a taxpayer to deduct interest on a debt. Various judicial decisions regarding interest deductibility have commented on the practice of tracing, prompting the Canada Revenue Agency to publish its administrative practices. Numerous foreign affiliate rules that relieve a taxpayer from imputed income contain purpose-and-use tests as conditions for their application. This article describes the tracing requirements for certain foreign affiliate provisions, and demonstrates how interest-tracing concepts can be applied to support the purpose and use of funds by a foreign affiliate. [ABSTRACT FROM AUTHOR]

The article presents an overview and commentary on the decision held by Justice Donald Bowman, both as a judge and chief justice of the Tax Court of Canada, that dealt with the deductibility of interest. Historical background and related purpose of the enactment of the interest deduction provisions is discussed. It explains the four elements of paragraph 20(1)(c) of the Income Tax Act of Canada.

The article describes the qualities and characteristics of former Chief Justice Donald Bowman as a judge in the country's Supreme Court. It provides information on his contributions to the tax jurisprudence of the country. It explores the development and concept of the reasonable-expectation-of-profit (REOP) test and its application to a wide variety of activities performed by taxpayers.

The article discusses the case of a group of taxpayers who borrowed 1.8 million Canadian dollars in 1981 from a corporation in Alberta, to construct an apartment building for low-income people, that has an interest rate of 8.75 percent and payable for 15 years. It offers information on the decision of the taxpayers to exercise the option for early loan settlement. It focuses on the appeal of the taxpayers on the amount of interest to be paid on their loan.

Copyright of Canadian Tax Journal / Revue Fiscale Canadienne is the property of Canadian Tax Foundation and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

The article discusses the court case Lipson et al v. The Queen, which concerns the general anti-avoidance rule (GAAR) in Canada. The decision of the Court of Appeal in the case depict that the aim to produce a desirable tax outcome is relevant to determine if a series of transactions is abusive. The Queen argued that the deduction of loss by Lipson represented an abuse of interest deduction and attribution provisions of the GAAR Act. The Tax Court decided in favor of the Queen, which was upheld by the Court of Appeal.

This article discusses the policy aspects of the March 2007 federal budget proposals and the May 2007 revised proposals concerning the deductibility of interest expense relating to certain foreign investments. It also provides an overview of recent developments concerning the measurement and taxation of foreign income in a number of other countries. Readers should note that this article was submitted for publication in mid-September 2007. Soon after, on September 21, 2007, the Canadian and us governments concluded their negotiations on the fifth protocol to the Canada-us income tax convention, which will amend the treaty provisions on source-country taxation of certain interest income. Then, on October 2, 2007, the Department of Finance released draft legislation to implement the new interest deductibility rules, followed by a notice of ways and means motion tabled in the House of Commons on November 13, 2007. These developments are noted but not discussed in detail in the article. [ABSTRACT FROM AUTHOR]

In the federal budget presented to the House of Commons on March 19, 2007, Finance Minister Jim Flaherty proposed to effectively eliminate the ability to deduct interest on borrowings relating to investments in foreign affiliates. In response to widespread criticism, on May 14, 2007, Minister Flaherty announced a substantially revised and more narrowly focused interest denial rule. The revised proposal, referred to as the anti-tax-haven initiative (ATHI), has as its primary objective the prevention of "doubledipping"--the generation of two (or more) interest expense deductions in respect of one investment. The authors of this article examine the mechanics of the ATHI, including its practical limitations, and explore issues concerning the future integration of the ATHI with the foreign affiliate regime and other provisions of the Income Tax Act. [ABSTRACT FROM AUTHOR]

The Canadian federal budget of March 19, 2007 proposed to deny deductions for interest on funds borrowed by Canadian taxpayers to invest in foreign affiliates. On May 14, 2007, the finance minister announced a much narrower measure that would limit the denial to situations where a Canadian borrowing is part of certain cross-border financing structures-so-called double-dips. In this article, the authors comment on the economic impact of outbound investment, as well as technical issues and problems that can be expected to arise under the government's proposal. The authors argue that any limitation on interest deductibility should be considered in the context of a broader initiative that seeks to achieve greater neutrality between businesses, and at internationally competitive Fax rates. A comprehensive domestic thin capitalization rule is recommended as an alternative to the government's proposal, to limit excessive debt leveraging in Canada in respect of both inbound and outbound investment, and also to address Canadian debt dumping by foreign investors and leveraged buyouts of Canadian businesses. Businesses maintaining reasonable levels of debt financing in Canada would not be penalized. The authors also argue that high Canadian corporate income tax rates attract debt to Canada and discourage Canadian domestic investment, and that any proposal to restrict interest deductibility should be linked with significant reductions in Canada's corporate tax rates. [ABSTRACT FROM AUTHOR]

The US earnings-stripping rules may soon be tightened to severely restrict the amount of interest that may be deducted by us corporations with related foreign creditors and related foreign guarantors. Taxpayers and their advisers should be mindful of the proposed changes when structuring new investments into the United States. [ABSTRACT FROM AUTHOR]

The article discusses the ruling of the Tax Court of Canada in Lipson et al versus The Queen which involved the application of general anti-avoidance rule (GAAR). It is the first decision in which the court has used the rule to examine the underlying economic realities in an attempt to undermine what it regards as abusive tax planning. A summary of important facts in the case agreed upon by the parties is also provided. The court concluded that the planning in Lipson was abusive.

Presents the ruling of the Supreme Court of Canada on the issue of the deductibility of interest in Deputy Minister of Revenue of Québec v. Richard Moufarrège. Facts of the case; Legal basis of the Court of Quéc dismissed an appeal by Moufarrège; Legal precedents upon which the Quebec Court of Appeal reversed the decision of the lower court.

Copyright of Canadian Tax Journal / Revue Fiscale Canadienne is the property of Canadian Tax Foundation and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

This paper reviews the policy case for restrictions on the deduction of interest expense as necessary background to an assessment of the Department of Finance's recent proposal to establish the reasonable expectation of profit (REOP) standard as a statutory requirement for the tax recognition of losses. The author argues that the proposed statutory standard is defensible as a response to straddle transactions whereby taxpayers combine a borrowing and an asset acquisition with roughly offsetting expected cash flows. These transactions are profitable solely because of the tax benefit that they generate through the inconsistent tax treatment of the expected cash flows associated with the offsetting positions. In the tax policy context, straddle transactions have no desirable consequential attributes and should not be tolerated. With some suggested fine-tuning, the department's proposed statutory REOP standard can provide a target-effective response that should deter straddles. However, in addressing non-straddle transactions that are perceived to have consequential attributes comparable to those of straddle transactions, the proposed standard is hopelessly underinclusive (but also overinclusive in some respects). The author suggests that if the policy problem presented by an unrestricted interest expense deduction is considered to extend to a range of non-straddle transactions, deductibility restrictions patterned on the investment interest and passive loss rules in the United States are the only defensible response. However, as he points out, much of the controversy in the literature regarding interest deductibility restrictions focuses on the policy arguments for restrictions in the context of non-straddle transactions. Straddle transactions present a much clearer case for restrictions along the lines of the proposed statutory REOP standard. [ABSTRACT FROM AUTHOR]

The Department of Finance has said that amendments to the Income Tax Act regarding the deductibility of interest and other expenses are necessary in order to overrule recent decisions of the Supreme Court of Canada. In October 2003, Finance released draft legislation to address these matters. The draft legislation was criticized. The author of this paper reviews and comments on the proposals in the context of the policy issues. He also suggests an alternative drafting approach to address Finance's concerns. [ABSTRACT FROM AUTHOR]

The proposed changes to the interest-stripping rules of Internal Revenue Code section 163(j) included in last session's Thomas bill were not enacted. Yet Congress and the Bush administration appear intent on tightening those rules, as wells as blocking inversions, repealing export incentives, and easing subpart F inclusions. [ABSTRACT FROM AUTHOR]