International Taxation (LAW349H1S)

This course is an introduction to the Canadian taxation of persons engaged in cross-border income-earning activities. In addition to substantive tax rules, which are principally drawn from bilateral tax treaties between Canada and our trading partners and from the Income Tax Act, the course will examine various underlying policy, administrative, and compliance issues. The goal of the course is to provide an overview of the relevant law—both internationally and domestically, treaty-based and domestically legislated–-giving due respect to its complexity, the policies underlying it, and the challenges facing taxpayers and tax administrators alike. Introductory classes consider the source of the income and the residence of the recipient as different grounds for tax jurisdiction, as well as the sources of international tax law, including domestic legislation as well as bilateral tax treaties. The next part of the course considers domestic and tax treaty rules governing the taxation of non-residents on different kinds of income earned in Canada: business income, capital gains, and passive income such as rent, interest, dividends and royalties. The course then examines the taxation of Canadian residents on income earned in other countries, reviewing the foreign tax credit and other mechanisms to eliminate inter-jurisdictional double taxation, and rules governing the taxation of income earned through foreign affiliates, non-resident trusts, and foreign investment entities. A class is devoted to transfer pricing, i.e., the manner in which related party transactions are priced for tax purposes – a topic of vital importance both to taxing authorities (in terms of protecting their jurisdiction’s tax base) and multinational enterprises (in terms of minimizing the enterprise’s worldwide effective tax rate). A final class examines international tax avoidance and statutory and treaty-based anti-avoidance rules.