The concept of “taxation year of a foreign affiliate” is central to the proper operation of a foreign affiliate regime. Yet, the definition in subsection 95(1) of the Income Tax Act is arguably incomplete as it appears to refer to a financial statement year-end, rather than a taxation year-end. Usually, these would be the same. However, situations occur where the financial and tax year ends may differ or where one changes and the other does not. The definition in subsection 95(1) provides no guidance in these cases.
PwC’s Eric Lockwood shares his perspective and uncovers the Canada Revenue Agency’s views on the matter in this In Print issue.