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ABS

Canada close to cutting interest tax

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Canada is getting closer to the total elimination of the withholding tax on payments of interest to most non-residents of Canada. The Canadian federal government in its annual budget speech last Monday said that its on-going negotiations to amend the Canada/U.S. tax treaty are almost complete.

Removing the tax will significantly impact how Canadians raise their funds, both for corporate and consumer borrowings, as well as through securitization and other structured products, according to Martin Fingerhut, a partner at Blake, Cassels & Graydon LLP.

Aside from increased cross border activity, Fingerhut said that there would be more Canadian corporate and consumer debt securitizations, including commercial and residential mortgages, credit card obligations and car loans.

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