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


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

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.


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