Canadian liaison meetings, testimony before parliament highlight TEI's fall agenda: comments also filed on IRS budget and Form 5471.

PositionRecent Activities

Canadian Budget Hearing

In response to an invitation from the Canadian House of Commons Standing Committee on Finance, TEI President Drew Glennie of Shell Canada Limited recently testified on behalf of TEI as part of the Canadian government's pre-budget consultations.

In a written statement filed in connection with the November 6 heating in Calgary, TEI urged the government to adopt a number of measures to ensure that the Canadian business tax system is fully competitive in the global environment. Specifically, TEI recommended that the government continue its phased corporate income tax rate reductions and review whether all business sectors of the economy have competitive tax rates. In addition, TEI said that the Large Corporation Tax--a form of capital tax--is counterproductive to the goals of encouraging capital investment in Canada and enhancing productivity. TEI urged the Committee to recommend repeal of the LCT.

[Editor's Note: In the report to Parliament on the public consultations that was issued on November 29, 2002, the Finance Committee adopted both recommendations. The report recommends that the government fully eliminate capital taxes and also ensure that its corporate income tax rates for all industries is competitive and no higher than U.S. tax rates.]

TEI's testimony reiterated its opposition to draft legislation relating to foreign investment entities and nonresident trusts. TEI said that the third draft of the proposals introduced in October 2002 remains unworkable and urged the government to abandon the legislation. "[A]lthough the proposed legislation includes important and substantial revisions" from the previous drafts, TEI said, "the legislation remains extraordinarily complex, confusing, and, in the case of the FIE provisions, overlaps and conflicts with the entire foreign affiliate regime. As a result, the provisions will likely interfere with legitimate business operations." Moreover, the proposed January 1, 2003, effective date is unreasonable, TEI said, because taxpayers will need time to digest and understand the mind-numbingly complex legislation and to modify company information systems to capture and report the additional required information. TEI urged that the effective date of the legislation be postponed at least a full year if it is not withdrawn. For TEI's previous comments on earlier drafts of the proposed legislation, see the November-December 2001 issue of THE TAX EXECUTIVE, beginning at pages 469...

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