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Please use this identifier to cite or link to this item: http://hdl.handle.net/1807/18158

Title: Income Tax Treatment of Credit Swaps in Canada: Enhancing Tax Neutrality
Authors: Begaliyev, Rinat
Advisor: Alarie, Benjamin
Department: Law
Keywords: derivatives
tax policy
credit swaps
taxation
Issue Date: 16-Dec-2009
Abstract: This study examines the issue of tax neutrality of the income tax treatment of credit swaps in Canada in domestic context. It analyzes the applicable tax regime consisting of rules on tax characterization, timing and tax rates through the lenses of symmetry, consistency and certainty approaches. The study argues that the Canadian tax policy focuses on achieving symmetry in income tax treatment, rather than consistency. This is because introducing consistency would contradict the fundamental principles of the Canadian law. The study finds that the current tax regime is only partially neutral because symmetry has not been achieved in respect to credit swaps entered between non-financial organizations. To enhance symmetry, the study proposes to adopt a mandatory mark-to-market basis of taxation of credit swaps for the non-financial organizations. Further, to make income tax treatment more certain, the study proposes that the CRA should issue a non-binding guidance on credit swaps.
URI: http://hdl.handle.net/1807/18158
Appears in Collections:Master
Faculty of Law - Master theses

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