In April of this year, the IRS introduced regulations that threatened to fundamentally change cross-border financing transactions. Last week, after considering voluminous taxpayer comments, the IRS issued the finalized (and temporary) version of these rules. The final rules contain important exceptions and modifications but continue to represent a fundamental and radical departure from previously U.S. tax law. More particularly, these new rules will reshape the manner in which U.S. inbound financings are structured, implemented and managed. Accordingly, Canadian companies with U.S. operations or investments need to accurately assess the modified impact of these final rules and plan for their impact.
Please join members of Osler’s cross-border tax practice for a practical discussion on these rules with a particular focus on how they will impact Canadian companies. Topics include:
- A brief overview of the key changes from the proposed regulations;
- An overview of the final regulations, including:
- Documentation requirements;
- Distribution and acquisition transactions that could cause mandatory equity characterization of related-party debt;
- Key exceptions and exclusions;
- The impact of the regulations on common Canada/U.S. financing structures; and
- Takeaways for how to preserve debt treatment on cross-border loans.
The discussion is designed to address issues that will be relevant across all industries as well as private equity funds and pension funds with portfolio investments in U.S. companies.