Financial Services Industry — Prepare for 2016 Budget.. | KPMG | CA

Financial Services Industry — Prepare for 2016 Budget Measures

Financial Services Industry — Prepare for 2016 Budget..

March 24, 2016, No. 2016-13. The financial services industry may want to start preparing for the effect of certain tax changes proposed in the 2016 federal budget. Specifically, the budget proposes corporate and indirect tax measures for:


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  • Mutual fund corporation (“switch funds”) share exchanges
  • Sale of linked notes
  • Derivatives — Lower of cost or market
  • The closely related test for GST/HST elections
  • GST/HST on cross-border reinsurance with affiliates
  • GST/HST de minimis financial institution— Interest from GICs or deposits
  • Zero-rated call centre services to non-residents.

The budget introduces a “bail-in” regime to protect taxpayers in the event of a large bank failure. This would allow authorities to convert eligible long-term debt of a failing bank into common shares to recapitalize the bank and allow it to remain in operation. Finance has indicated that legislation implementing this measure will follow, and that stakeholders will have an opportunity to provide comments.

The budget also commits $4.2 million over five years for Finance to review banking and insurance legislation and extends the current statutory sunset date to March 29, 2019.

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Information is current to March 23, 2016. 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.

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