The Canadian Budget has proposed to amend the definition of "taxable Canadian property" to generally exclude shares of any Canadian-resident corporation, whether or not the shares are listed on a designated stock exchange, with a few exceptions. As a result of this proposed amendment, the Section 116 Certificate process will not apply to a disposition of shares of a Canadian corporation except where the value of the shares is derived from real property situated in Canada, Canadian resource properties or timber properties. This will eliminate what has long been an irritant to foreign private equity and venture capital investors, particularly those structured as limited partnerships.
Read more : Government of Canada announces significant liberalization of Canadian tax laws applicable to foreign investors in Canadian businesses