The Cross-Border Biotech Blog

Biotechnology, Health and Business in Canada, the United States and Worldwide

Canada Federal Budget 2010: Goodbye Section 116

As predicted by Mark McQueen among others:

Section 116: Eliminating tax reporting under section 116 of the Income Tax Act for investments such as those by non-resident venture capital funds in a typical Canadian high-technology firm.


“narrowing the definition of taxable Canadian property, thereby eliminating the need for tax reporting under section 116 of the ITA for many investments.”

With a shout-out to the CVCA (kudos)!

“The Canadian Venture Capital Association has indicated, in making representations for changes of this nature, that “…a broader exemption…would make Canada a more attractive destination for equity investments by non-residents and, in particular, venture capital and private equity funds.”

Here’s the stake:

“[T]he definition of taxable Canadian property in the Income Tax Act [will] be amended to exclude shares of corporations, and certain other interests, that do not derive their value principally from real or immovable property situated in Canada… This measure will eliminate section 116 compliance obligations for these types of properties.”

Deloitte has a bulletin out that notes the changes and puts it in the context of what we will now call the “bad old days.”

7 responses to “Canada Federal Budget 2010: Goodbye Section 116

  1. Pingback: Post-budget roundup « Researcher Forum

  2. Vancouver Rich September 24, 2010 at 6:27 pm

    It’s about time the government removed the Section 116 tax barrier … better late than never.

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