Profile: Richard G Tremblay

Canadian Tax Aspects of Creating Leverage in Subsidiary Operations

Multinational groups with Canadian subsidiaries are typically keen to adopt strategies to introduce leverage into their Canadian operations. The goal is to use deductible interest to reduce the Canadian subsidiary’s (‘Canco’) tax rate. Other considerations can also come into play. Foreign tax credit planning, for example, can mandate that funds be repatriated from Canada. This introduction is an overview of select Canadian tax considerations, relevant to a multinational group undertaking a financing transaction to introduce leverage into Canco.

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