Over the years, Canada's reputation as an investment destination for private equity and venture capital (VC) investors has been diminished by frustrating and costly exits for non-Canadian shareholders. The problem largely originates from Canada's legislative requirement that purchasers collect tax from non-residents who dispose of taxable Canadian property (TCP). TCP includes shares of private Canadian companies. This regime has complicated - and occassionally derailed - acquisitions of private Canadian targets that have foreign shareholders. This article will focus primarily on US-Canada cross-border transactions which are by far the most common, including:

• Section 116 of the Income Tax Act - Issues for US Investors
• 2008 Tax Reforms - A False Start?
• Use of Exchangeable Share Structures
• Disadvantages of Incorporating Outside of Canada

Republished with permission.

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