• Tuesday, December 18, 2018

Big news for international shipping: New income tax rules - Subscriber Access Only

By BCShippingNews 29 January 2015

It is with great pleasure that I can report on a spectacular development for our industry. On December 16, 2014, Bill C-43, Economic Action Plan 2014 Act, No.2, a second Act to implement certain provisions of the budget tabled in Parliament on February 11, 2014 and other measures received Royal Assent and is now law.

This new law updates the tax rules for international shipping which include amendments that determine the residence of international shipping corporations and reduces the current threshold allowing the entity to qualify as a shipping company from 100 per cent to 25 per cent. The changes made by the federal government have modernized Canada’s shipping tax legislation and will assist in repositioning Canada as a world leader in the international shipping community.

Photo above: Graph 1: Value pyramid of a maritime cluster


The actual policy that was designed to attract the central control and management of international shipping companies to Canada was enacted back in the early 1990s. However, since that time, the nature of the international shipping industry has experienced many changes, becoming more complex and more competitive. Unlike other jurisdictions, Canada’s tax legislation had lagged behind its global counterparts and was missing the opportunity to grow an important and strategic industry sector.

The legislation restricted Canada’s ability to attract head offices and placed international shipping companies, with Canadian operational headquarters, at a competitive disadvantage. If the policy that was put in place in the 1990s was to remain effective, updates were required in order to maintain the purposive approach of the legislation that was developed.

The new tax rules