74 | LEXPERT • June 2018 | www.lexpert.ca/usguide
Finally, US parent companies would
have to pay 20-per-cent tax on 50 per cent
of any "high returns" (the excess over a
stipulated baseline rate) earned by con-
trolled foreign corporations — whether
the earning were actually distributed to
the US company or not.
Otherwise, Canadians should keep an
eye on other developments, such as the
provisions that subject US state and lo-
cal governments to "unrelatable business
taxable income" in the same way as tax-
exempt entities such as charities.
"Traditionally, the US has treated for-
eign governmental entitles similarly to
domestic governmental entities," he notes.
"If this were to change, it could have an
adverse impact on Canadian governmen-
tal pension funds that borrow to acquire
assets or that invest in partnerships that
do so."
"We've been living
through an extended
stretch of time where…
foreign nationals could
compete in the US on
a playing field that
wasn't even, because
they could avoid
tax easier than
US companies."
Paul Seraganian; Osler, Hoskin & Harcourt LLP
Tax
FOLLOW
