International Tax Reform – Pillar Two Global Minimum Tax
The OECD published Pillar Two model rules as part of its
efforts toward international tax reform. The
Pillar Two model rules provide for the implementation of a
15% global minimum tax for large multinational
enterprises, which is to be applied on a
jurisdiction-by-jurisdiction basis. Pillar
Two legislation has been enacted or
substantively enacted in certain jurisdictions
in which the Bank operates. On May 2, 2024,
the Government of Canada introduced Bill
C-69, which includes the
Global Minimum Tax Act
addressing the Pillar Two model rules. The rules will
be effective for the Bank in Canada and other jurisdictions
for the fiscal year
beginning on November 1, 2024. The Bank
is assessing its potential exposure
to Pillar Two income taxes.
Other Tax Matters
The Canada Revenue Agency (CRA), Revenu
Québec Agency (RQA) and Alberta
Tax and Revenue Administration (ATRA) are denying certain dividend and
interest deductions claimed by the Bank.
During the quarter, the RQA reassessed the Bank for $
1
million of additional tax and interest in respect
of its 2018
taxation year. As at April 30, 2024, the CRA has reassessed
the Bank for $
1,661
million for the years 2011 to 2018, the RQA has reassessed the
Bank for
$
52
million for the years 2011 to 2018, and the ATRA has reassessed the Bank for $
71
million for the years 2011 to 2018. In total, the Bank has been reassessed
for $
1,784
million of income tax and interest. The Bank
expects to continue to be reassessed for open
years. The Bank is of the view that its tax filing
positions
were appropriate and filed a Notice of Appeal
with the Tax Court of Canada on March 21, 2023.