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CRA can reallocate amounts to a non-competition or other restrictive covenant

Draft technical amendments to the Income Tax Act, released on February 27, 2004, BUT NOT ENACTED AS OF OCTOBER 2009, provide CRA (the Canadian Income Tax department) with the ability to reallocate amounts to a non-competition or other restrictive covenant. Last fall, the Department of Finance released proposals whereby non-competition and other restrictive covenants could be fully taxable, thus reversing the former tax advantage, based on case law, that was available in certain circumstances.

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