The Study in Brief

Recently, a storm of activity has swirled around rules governing the tax treatment of Canada-US crossborder investment. The high degree of integration of the Canadian and US economies means that the effects of such tax changes can be significant. One new development involves revisions to the Canada-US tax treaty--including the abolition of crossborder withholding tax rates for interest payments, the provision of treaty benefits for members of limited liability companies, and the development of mandatory arbitration processes for transfer pricing purposes-which could signal a readiness on Ottawa's part to make further efforts to ensure that tax does not unduly inhibit entrepreneurial efforts to tie together the North American economies.