Dec 22, 2017 - 20XX-XX. Page 2 of 2. ⢠A permanent reduction in the corporation tax rate to 21%, repeal of the corpora
U.S. Enacts Tax Changes December 22, 2017 No. 2017-68 U.S. President Trump has now signed new U.S. tax changes into law. As a result, Canadian companies that do business in the United States and U.S. individuals living in Canada should determine how they will be impacted by these new changes that significantly affect both U.S. domestic and cross-border taxation. These new rules, many of which are effective January 1, 2018 or have retroactive effect to earlier periods, were enacted when President Trump signed them into law on December 22, 2017. For details of these changes, see TaxNewsFlash-Canada 2017-65, “Canadian Multinationals — Prepare for U.S. Tax Changes” and TaxNewsFlash-Canada 2017-63, “Highlights of New U.S. Personal Tax Changes”. Note also that certain U.S. individual shareholders residing in Canada may need to take action by December 31, 2017 due to U.S. mandatory repatriation rules (see TaxNewsFlash-Canada 2017-66, “U.S. Shareholders —Take Action by December 31”). Background The current U.S. tax bill was drafted by a formal House-Senate conference committee which was instituted to bridge some of the differences in the distinct House and Senate bills that were approved earlier this year (see TaxNewsFlash-Canada 2017-51, "U.S. Releases Proposed Tax Reform Changes" and TaxNewsFlash-Canada 2017-61, "U.S. Readying Final Tax Bill").
Highlights of the new changes The tax changes include substantial amendments to the taxation of businesses in all industries (including multinational enterprises), individuals and other taxpayers and include:
Page 1 of 2
TaxNewsFlash – Canada Title
Month XX, 2017 No. 20XX-XX
•
A permanent reduction in the corporation tax rate to 21%, repeal of the corporate alternative minimum tax (AMT), expensing of certain capital investments, limitation of the deduction for interest expense, and a multitude of other changes to the corporate tax rules
•
Changes to the taxation of U.S. multinational entities, including a shift from the current system of “worldwide” taxation with deferral to a “hybrid territorial” system, featuring a participation exemption regime with current taxation of certain foreign (i.e., non-U.S.) income, a minimum tax on low-taxed foreign earnings (i.e., non-U.S.), and new measures to deter base erosion and promote U.S. production
•
A new deduction for certain individuals, trusts, and estates with respect to qualifying income of passthrough entities and sole proprietorships
•
Reductions in the individual income tax rates, accompanied by new limits on itemized deductions (such as the deduction for state and local taxes), other temporary changes to the individual income tax rules, and a more restrictive permanent cost-of-living bracket adjustment.
We can help Your KPMG adviser can help you assess the effect of the U.S. tax legislation on your business and personal tax situations. Canadian corporations should consider the impact of the U.S. changes on their 2017 financial statement income tax provisions. For more details on U.S. tax changes and their possible impact, contact your KPMG adviser.
kpmg.ca
Contact Us | KPMG in Canada Privacy Policy | KPMG On-Line Privacy Policy | Legal Information is current to December 22, 2017. The information contained in this TaxNewsFlash-Canada is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. © 2017 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International.
Page 2 of 2
