Canadian multinationals that do business in the United States and U.S. individuals living in Canada should prepare to determine the effect of possible U.S. tax changes. The United States outlined potential upcoming tax measures intended to be proposed in the fiscal year 2022 U.S. budget in a report released on May 28, 2021 known as the “Green Book”. Specifically, this report provides new details on the Biden administration’s plans to increase the statutory corporate income tax rate to 28% and to tax long-term capital gains and qualified dividends at ordinary rates for certain individuals, among other possible changes.
Note that these potential measures may face legislative challenges due to the Democrat’s narrow control of U.S. Congress. It’s not yet clear how these challenges may affect any forthcoming legislative proposals or the enactment process. While these changes would generally be effective January 1, 2022 with some exceptions, Congress will ultimately determine the effective dates of any legislation, as well as any transition and grandfather rules. It’s also possible that there may be significant modifications made to the proposals if they are considered in Congress.
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