The 2013 Federal Budget eliminated the tax benefits associated with character conversion transactions. A series of agreements had a transition period of 180 days before tax benefits would be eliminated. To provide additional transition time for short-term forwards, the Department of Finance is now proposing to extend grandfathering to include a continuous series of short-term forward agreements first entered into before March 21 2013.
Managers of foreign investment funds must carefully monitor the level of Canadian investment in these funds if they are to avoid exposure to reporting requirements. Under Canadian tax legislation, a reporting entity for a fiscal period is required to file with the tax authorities for that period a prescribed form setting out basic details about the entity, the type of foreign property owned and the income derived from that property.