Subsection 18.4(1)
Canadian Ordinary Income
Paragraph (a)
Subparagraph (a)(iii)
Articles
Joint Committee, "Hybrid Mismatch Arrangements Proposals", 30 June 2022 Submission of the Joint Committee
Ambiguity as to whether general deductions come within the (a)(iii)(A) and (B) exclusions (under 4. “Canadian Ordinary Income” & “Foreign...
Dual Income Inclusion
Articles
Joint Committee, "Submission on Hybrid Mismatch Arrangements - Technical Comments and Recommendations", 10 March 2026 Joint Committee submission
Inappropriate failure to recognize dual inclusion income where multiple fiscally-transparent entities (pp. 5-6)
- The proposals may relieve...
Hybrid Entity
Articles
Joint Committee, "Submission on Hybrid Mismatch Arrangements - Technical Comments and Recommendations", 10 March 2026 Joint Committee submission
Application of para. (b) to CFC income (pp. 9-10)
- Assume “XCo”, resident in County X, wholly owns “Canco”, which earns $100 of active...
Ordinary Income
Articles
Joint Committee, "Submission on Hybrid Mismatch Arrangements - Technical Comments and Recommendations", 10 March 2026 Joint Committee submission
Ambiguity of a deduction etc. in computing income “in general” (pp. 3-5)
- The definition of ordinary income, which is crucial to avoiding...
Specified Entity
Articles
Joint Committee, "Hybrid Mismatch Arrangements Proposals", 30 June 2022 Submission of the Joint Committee
More explicit exclusion needed for mere security arrangements (under “9. Proposed Subsection 18.4(17) & Security Interests”)
The “specified...
Structured Arrangement
Articles
Joint Committee, "Submission on Hybrid Mismatch Arrangements - Technical Comments and Recommendations", 10 March 2026 Joint Committee submission
Inappropriate breadth of definition
- The “structured arrangement” is too broad in relation to the “hybrid payer arrangement” definition....
Subsection 18.4(3)
Articles
Joint Committee, "Hybrid Mismatch Arrangements Proposals", 30 June 2022 Submission of the Joint Committee
Recommended exclusion of ss. 12.7 and 18.4 from the foreign affiliate context (under “3. Application to Foreign Affiliates”)
- Where, for...
Subsection 18.4(5.6)
Articles
Joint Committee, "Submission on Hybrid Mismatch Arrangements - Technical Comments and Recommendations", 10 March 2026 Joint Committee submission
Hybrid payer mismatch where an investor in a hybrid entity makes a disregarded payment to that entity (pp. 7-9)
- Where an investor in a hybrid...
Subsection 18.4(7.1)
Articles
Joint Committee, "Submission on Hybrid Mismatch Arrangements - Technical Comments and Recommendations", 10 March 2026 Joint Committee submission
Potential additional Canadian tax where partially-owned hybrid entity (pp. 10-11)
- Where a Canadian-resident hybrid entity has multiple owners but...
Subsection 18.4(9)
Articles
Joint Committee, "Hybrid Mismatch Arrangements Proposals", 30 June 2022 Submission of the Joint Committee
Potential double taxation through considering there to be a mismatch where the amount is deductible (but not actually deducted) in the foreign...
Subsection 18.4(10)
Articles
Simon Townsend, Silvia Wang, "Can the Hybrid Mismatch Rules Affect Canadian ULCs?", International Tax Highlights, Vol. 3, No. 1, February 2024, p. 5
Example 1 (p. 5)
- A US C corporation (“US Parent”) wholly owns a Canadian ULC (“Cansub”) that is disregarded in the U.S. and to which it...
Subsection 18.4(15.1)
Articles
Joint Committee, "Submission on Hybrid Mismatch Arrangements - Technical Comments and Recommendations", 10 March 2026 Joint Committee submission
Triggering of reverse hybrid status by an arm’s length investor (pp. 16-17)
- As a general matter, a reverse hybrid entity is transparent in a...