TEI testifies before Canada's House of Commons.

• Position: Tax Executives Institute

The implementation of a corporate group taxation system will both improve the competitiveness of Canada's tax system and better align it with the rest of the world," TEI President David M. Penney said on September 29, 2011. Speaking to the Canadian House of Commons Standing Committee on Finance in connection with a hearing on pre-budget consultations, Mr. Penney explained that "[m]ore than two thirds of OECD countries provide explicit legislative or regulatory regimes for loss transfers with Canada being the only G7 country that lacks such a feature."

After the hearing, Mr. Penney noted that the adoption of an annually elective loss- or attribute-transfer system for Canada has been one of the most important--and elusive--tax policy objectives for the Institute in Canada for years. "We have been urging the restoration of a group taxation scheme for Canada ever since it was eliminated and a new system proposed by the Department of Finance in 1985. Together with the 2010-2011 consultation on the taxation of corporate groups initiated by the Department of Finance, the hearing provided an opportunity to put the issue squarely before key Members of Parliament as well as the Department of Finance's decision-makers."

Pre-budget consultations are conducted annually by the Standing Committee on Finance, with Canadian stakeholders invited to submit written briefs recommending up to three tax or budget policy changes for Canada. The Institute has participated in the consultation process for a number of years, filing annual written briefs since 2002 and appearing before the committee more than a half dozen times since, Mr. Penney noted.

In other testimony to the committee, TEI recommended eliminating withholding taxes under Regulations 105 and 102 and replacing the current advance waiver requirement under those regulations with a system whereby nonresidents can self-certify their eligibility for...