Canadian liaison meetings top TEI's advocacy agenda: comments also filed on cost-sharing regulations; amicus brief filed in Cuno case.

A delegation of TEI members and staff led by Institute President Michael P. Boyle of Microsoft Corporation headed north in early December to meet with representatives of the Canadian Department of Finance and Canada Revenue Agency on income and excise tax issues. Other TEI representatives included Vice President for Canadian Affairs Monika M. Siegmund of Shell Canada Limited; Treasurer Vincent Alicandri of Hydro One Networks, Inc.; Canadian Commodity Tax Committee chair Natalie St-Pierre of BCE, Inc.; and Canadian Income Tax Committee chair David V. Daubaras of General Electric Canada. A smaller delegation also met with representatives of the Canadian Department of Justice.

The first meeting on December 6th with CRA addressed income tax matters. Later that day, there was a separate meeting with CRA on commodity tax issues. The next day, TEI also met separately with the Department of Finance on income and commodity tax issues.

"The meetings TEI holds with the Canadian officials each year are among the most productive liaison activities in which the Institute participates," Mr. Boyle stated. "We've met for more than three decades and the discussions between the two groups are always creative and practical. I'm pleased to be part of this year's delegation."

The four agendas are reprinted in this issue, beginning on page 644. The responses provided by CRA and Finance will be posted on TEI's website upon their release by the government.

Cost-Sharing Regulations

The proposed section 482 regulations on cost-sharing arrangements "threaten to undermine congressional intent to permit companies to conduct their affairs in an effective and cost-efficient manner," TEI recently told the Internal Revenue Service and U.S. Department of the Treasury.

In comments filed on November 28, the organization noted that the new rules assume that taxpayers use cost sharing abusively to disguise the transfer of intangible property outside the United States to an affiliate (often located in a tax haven) at a value substantially less than the fair market value of the intangible property. The regulations are intended to ensure that, where buy-in payments must be made to a participant transferring valuable external contributions to the other participants, such compensation is based on the arm's-length value of what is being transferred.

"The 'investor model' approach prescribed in the proposed regulations," the Institute stated, "goes beyond ensuring that buy-in payments...