Please note that these publications may not be up-to-date as taxation matters are subject to frequent changes.
On February 18, 2003, the Minister of Finance released a number of proposed tax changes. We summarize the more significant ones in this commentary.
In the Budget, it states that legislative amendments are going to be considered with regard to interest deductibility. It appears that the government is not pleased with recent Supreme Court cases such as Ludco and Singleton, where the taxpayer was able to claim interest expense as a deduction. In Ludco, interest was held to be deductible where it was used to finance an offshore tax shelter, the income from which was not taxable except indirectly as a capital gain. In Singleton, a home mortgage was made tax-deductible by a sequence of financing transactions.
The Budget states that the results of these cases are not "consistent with appropriate tax policy." At this point, no specific amendments have been proposed. However, amendments were drafted about 10 years ago to deal with these issues but they have been held in limbo since their release and were never passed into law. Perhaps these amendments will now be acted upon.