Capitalization rules could impact energy investment

Thin capitalization rules pack a big punch when it comes to the cost of financing operations, EY says in the latest edition of East Coast Offshore.

Companies looking to invest in Canada’s East Coast Offshore must be mindful of ongoing changes or risk paying more down the road.

Read: Rich PE firms eye Calgary

Foreign investment in Canadian oil and gas operations has increased substantially in recent years and with this we’ve seen ongoing refinements to thin capitalization rules to avoid any erosion of the tax base.

Investors, whether operating through a subsidiary corporation, partnership, trust or branch, must review their Canadian thin capital positions on an ongoing basis to ensure that they are not surprised with an unexpected tax liability at the end of the year.

The quarterly report highlights emerging legislative, regulatory and competitive issues affecting Atlantic Canada’s oil and gas industry. There’s also sections and examples on:

• Trends suggest offshore deep-water activities will grow
• Industry collaboration continues to drive new technologies and encourage new entrants

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Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.