Canadian And U.S. Tax Legal guidelines: A Overview Of 2020 And A Look Forward To 2021 – Tax

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Canadian And U.S. Tax Laws: A Review Of 2020 And A Look Ahead To 2021

01 February 2021

Davies Ward Phillips & Vineberg

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In our annual Tax Review and Outlook report, we outline

significant tax developments that shaped the Canadian and U.S. tax

landscapes over the past year and consider what to watch for in the

year ahead.

Key Canadian Developments in 2020

The federal government deferred its annual budget in response

to the pandemic, but adopted a raft of legislative support measures

including a wage subsidy for employers; direct payments to eligible

workers; interest-free, partially forgivable loans to small

businesses; and commercial rent relief.
The government released the Fall Economic Statement, a mini

budget containing changes to the GST/HST rules as they relate to

cross-border e-commerce and updates to previously announced changes

to the taxation of employee stock options.
The Supreme Court decided the MacDonald case

regarding the tax treatment of derivative transactions.
The Federal Court of Appeal issued rulings on treaty shopping,

Canada’s CFC rules and Canada’s transfer-pricing

recharacterization rule.

Key U.S. Developments in 2020

Congress passed legislation providing trillions of dollars of

COVID-19 relief to taxpayers through corporate and small business

loans, direct payments and changes to existing tax law.
The IRS continued its multi-year project of providing

regulatory guidance under the Tax Cuts and Jobs Act of

2017, and issued proposed and final regulations relating to

passive foreign investment and the characterization of financial

instruments as debt or equity.
The Tax Court handed the IRS a victory in a case concerning the

applicability of the comparable price method to a multinational

corporation’s transfer-pricing policies.
States continued to expand their taxing jurisdiction in the

wake of Wayfair, and some states adopted measures to

provide relief for or to assert jurisdiction over remote workers

and their employers.

For an in-depth review of these and other issues, read our

analysis.

Canadian Tax Review and Outlook

U.S. Tax Review and Outlook

The content of this article is intended to provide a general

guide to the subject matter. Specialist advice should be sought

about your specific circumstances.