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Published: July 14, 2022

David Rotfleisch of Toronto tax boutique Rotfleisch & Samulovitch Professional Corporation downplays the significance of the changes. He points out that “thin capitalization” rules, which limit capital injection through borrowing, have been part of the Income Tax Act for about 50 years, and show no signs of disappearing. The upshot is that foreign investors’ ability to leverage is in any event limited. “I don’t believe the changes to the interest deductibility regime will make a huge difference,” he said. “Canada remains an attractive investment target, and if a particular investment makes sense, foreign investors will still go through with it — though they may be holding their noses as they do so.”

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