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.