Canada Issues Draft Proposals to Amend its Global Minimum Tax Act

On August 13, 2025, Canada issued draft legislative proposals to amend its Global Minimum Tax Act to provide for aspects of the June 2024 and January 2025 OECD Administrative Guidance, as well as a new deconsolidation regime for certain private investment entities. 

The amendments are to apply to fiscal years of a qualifying MNE group that begin on or after December 31, 2023.

June 2024 OECD Administrative Guidance

Key amendments in draft law from the June 2024 OECD Administrative Guidance include:

Article 1.2.2 – 5 year unclaimed accrual election

Article 4.1 – Extension of the Substitute Loss Carry-forward DTA to PEs, hybrids and Reverse hybrids

Article 4.2 – Allocation of deferred tax expenses and benefits from a Parent Entity to a CFC, PE Hybrid or Reverse Hybrid

Article 4.2.2 – Five-Year Election to exclude the allocation of all deferred tax expenses and benefits to CFCs, PEs, Hybrids and Reverse Hybrids

Article 4.2.3 – Exclusion of deferred tax assets or liabilities arising under a Blended CFC regime from transition rules

Article 5.6.2 – Extension of taxes pushed down to include Reverse Hybrids

Article 6.1.4 – Amendments to the Switch-Off rule

The draft law also confirms that other aspects apply due to the interpretation of the Minimum Tax Act, and includes minor amendments to facilitate this, including:

Article 1.2 – Amendments for the recapture exception accruals including the Aggregate DTL Category basis etc

Article 2.1 – GloBE and accounting carrying values 

January 2025 OECD Administrative Guidance

Section 1(12) August 2025 Draft Law includes the deferred tax recognition  amendments to Articles 9.1 of the GloBE Rules in the January 2025 OECD Administrative Guidance (including the grace period for DTA reversals).

Deconsolidation rules for private investment entities

New subsection 9(2.1) of the draft law implements a de-consolidation rule in respect of certain qualifying MNE groups that include one or more private investment entities.

A private investment entity is generally an entity located in Canada that is not publicly listed, that controls a Canadian-located publicly listed corporation and that produces only unconsolidated financial statements under the Canadian Accounting Standards for Private Enterprises (or is a member of a group the ultimate controlling entity of which prepares only unconsolidated financial statements). 

Where it is determined that a private investment entity would be a constituent entity of a qualifying MNE group in the absence of subsection (2.1), the rules effectively de-consolidate the private and public subgroups of the MNE group for GloBE purposes. This is achieved by deeming any private investment entity not to have a controlling interest in any Canadian-located publicly listed corporation. By severing the control link between the private entities and the publicly listed corporation(s), the MNE group is split into multiple smaller groups. The one or more private investment entities in the group (together with any private entities they control) form a new group; and each publicly listed entity, together with any entities it controls, forms a separate group with the publicly listed entity as its ultimate parent entity.