Canada: Canadian Tax @ Gowlings: March 29, 2012

Edited by Brent Kerr

Contents

  • Federal Budget 2012
    • Partnerships
    • Thin Capitalization
    • Foreign Affiliate Dumping
    • Base Erosion Rules – Canadian Banks
    • Transfer Pricing-Secondary Adjustments
    • Research and Experimental Development
    • Mineral Exploration Tax Credit for Flow-Through Share Investors
    • Eligible Dividends
    • Clean Energy Generation Equipment
    • Retirement Compensation Arrangements
    • Employee Profit Sharing Plans
    • Expansion of Streamlined GST/HST Accounting
    • Group Sickness or Accident Insurance Plans
    • Registering Charitable Foreign Organizations as Qualified Donees
  • Taxand- access Taxand's Take for the latest tax issues affecting multinationals worldwide as well as Taxand's latest range of publications.

Federal Budget 2012

Although every penny counts on Canada's return to balanced budgets, when introducing Budget 2012, Finance Minister Jim Flaherty announced the elimination of the penny – Canada will stop making them. 

The Budget does not increase tax rates, but it does propose a number of technical tax changes that will result in $3.5 billion in additional tax revenue over five years.  In this newsletter we have summarized some of the key changes to the Canadian tax rules proposed in Budget 2012. 

Partnerships

Partnerships are an important form of business organization that have tax advantages as flow-through entities.  For example, partnerships can be useful in synthesizing tax consolidation.  However, their flow-through nature can also be used in more aggressive tax planning, which seems to have perpetually troubled Canada's tax policy makers.

Last year, Budget 2011 proposed significant changes to the taxation of partnerships and their partners by ending the ability of corporations to defer income recognition through the use of partnerships, particularly multi-tiered partnerships.  Clearly, the Department of Finance still has concerns with certain tax planning techniques involving partnerships since Budget 2012 proposes further changes to the partnership rules. 

Bump Planning

Some corporate acquisitions use partnerships to facilitate an increase ("bump") in the tax basis of the target corporation's assets.  Budget 2012 proposes to reduce the bump available in certain situations involving partnerships. 

Existing tax rules permit a bump in the adjusted cost base (ACB) of certain non-depreciable assets of a target corporation where control of the target is acquired followed by a merger of the target and the acquirer.  These rules are useful where the purchase price for shares of the target is higher than the target's aggregate tax basis in its assets.  Although the bump is limited to certain non-depreciable assets of the target, it is not unusual for a target, at the request of the acquirer, to transfer depreciable assets to a partnership in advance of the acquisition so that, at the time of the acquisition, the target holds non-depreciable partnership interests.  The "bump" rule is often used by tax-exempt purchasers and non-resident purchasers to extract businesses from a target on a tax free basis. 

To prevent this kind of tax planning, Budget 2012 proposes that the bump on a partnership interest held by the target will be reduced if the bump is reasonably attributable to the underlying fair market value of the partnership's depreciable property, Canadian or foreign resource property, or any other property that is neither a capital property nor a resource property.  For depreciable and other non-qualifying property, the bump reduction will depend on whether the fair market value of such properties exceeds their tax basis.  This change will be applicable to corporate amalgamations that occur, and windings-up that begin, on or after March 29, 2012, subject to limited grandfathering.

Sales to non-residents

Partnerships have also been used to avoid recapture and other adverse tax consequences on a sale of assets to non-residents.  Budget 2012 proposes to eliminate the use of partnerships for this purpose by extending the rules in section 100 of the Income Tax Act

Section 100 currently applies where an interest in a partnership that owns depreciable property and other assets is sold to a tax-exempt purchaser.  In general terms, that section will cause the capital gain realized by a taxpayer on the sale to be increased to the extent the gain is reasonably attributable to depreciable property and certain other assets. 

Budget 2012 proposes to extend this rule to the sale of a partnership interest to a non-resident purchaser.  An exception to the new rule will apply if all of the property of the partnership is used in a business carried on through a permanent establishment in Canada.  In that case the business will generally continue to be taxable in Canada.

Thin Capitalization

The Canadian "thin capitalization rules" limit the deductibility of interest by a Canadian-resident corporation.  Presently these rules apply where the amount of debt owing to certain non-residents exceeds a 2-to-1 debt-to-equity ratio.  In 2008, the Advisory Panel on Canada's System of International Taxation recommended changes to the thin capitalization rules.  Consistent with those recommendations, Budget 2012 proposes to amend the thin capitalization rules by:

  • reducing the debt-to-equity ratio to 1.5-to-1 for taxation years that begin after 2012;
  • extending these rules to partnerships with a Canadian-resident corporate partner, for taxation years beginning on or after March 29, 2012.  This will be achieved by (i) attributing to each corporate partner its "specified proportion" of the debts owed by the partnership and (ii) including in the income of the corporate partner an amount equal to a portion of the interest on the debts owing by the partnership to "specified non-residents" reflecting the extent to which the debt of the corporation exceeds its debt-to-equity limits; and
  • treating disallowed interest expense under the thin capitalization rules as dividends for Part XIII withholding tax purposes. 

These changes will prevent foreign corporations from stripping excess income from their Canadian subsidiaries in the form of non-deductible interest, to which low or no Canadian withholding taxes apply.  The disallowed interest expense will not merely attract withholding tax when it is actually paid.  Instead, the accrued, unpaid, disallowed interest will be deemed to have been paid by the corporation as a dividend at the end of the taxation year.  This forces payment of withholding tax on the disallowed interest even if the interest is not paid.  This proposal will apply effective March 29, 2012, subject to pro-rating for taxation years that include that day. 

In contrast to these tightening rules, Budget 2012 also proposes relief from certain adverse tax consequences arising from the application of the thin capitalization rules to internal financing arrangements.  In certain cases, interest earned by the foreign affiliate of a Canadian corporation may be included in the income of the Canadian corporation under the foreign accrual property income (FAPI) rules, even if the deduction for interest payable by the Canadian corporation is denied under the thin capitalization rules.  In such a case, the deduction will not be denied to the extent the interest is included in computing the income of the corporation under the FAPI rules. 

Existing internal financing arrangements should be reviewed to mitigate the impact of these proposals.  A number of factors should be taken into account in considering any changes, including foreign exchange considerations.  In some cases, reducing the debt-to-equity ratio could affect the interest rate that can reasonably be charged on internal debt.  This is because the interest rates on such loans must be comparable with arm's length loans and appropriate interest rates may depend on the debt to equity ratio of the debtor corporation.

Foreign Affiliate Dumping

Concern has been expressed for a number of years, including by The Advisory Panel on Canada's System of International Taxation, about Canadian subsidiaries using borrowed funds to acquire shares from their foreign parents.  The concern has revolved around the fact that interest paid by the Canadian subsidiary on such borrowed money is generally deductible in computing income for tax purposes while, at the same time, certain dividends received by the Canadian subsidiary on the shares of a foreign affiliate are exempt from taxation in Canada.  The Department of Finance has expressed its concerns with variations of these transactions, including, for example:

  • acquisitions of shares of a foreign affiliate that are made with internal funds of the Canadian subsidiary (the Department views such transactions as providing a mechanism for foreign parent corporations to extract earnings from their Canadian subsidiaries free of Canadian dividend withholding tax);
  • acquisitions of newly-issued shares of a foreign affiliate, whether financed with internal or borrowed funds, where previously-issued shares of the foreign affiliate are owned by the foreign parent or another non-resident member of the same corporate group;
  • acquisitions of foreign affiliate shares from a foreign subsidiary of the foreign parent; and
  • acquisitions of foreign affiliate shares from an arm's length party at the request of the foreign parent.

Budget 2012 proposes changes that will deem a dividend to be paid by a Canadian subsidiary to its foreign parent to the extent the Canadian subsidiary pays cash or gives any other non-share consideration for the acquisition of the shares of a foreign affiliate. The deemed dividend will be subject to Canadian withholding tax.  The Budget further proposes to disregard the paid-up capital of any shares of the Canadian subsidiary that are given as consideration.  These changes are expected to generate significant tax revenue.

Since these new rules could hinder business transactions, Budget 2012 proposes an exception for transactions that meet a "business purpose" test.  The details of this test are to be the subject of public consultations, and stakeholders are invited to provide comments before June 1, 2012.  The Budget proposes that the primary factors to be considered in applying the business purpose test will be non-tax factors that will be set out in the legislation. Budget 2012 states that the factors will be intended to assist in determining whether it is reasonable to conclude that the foreign affiliate "belongs" to the Canadian subsidiary more than to any other entity of the foreign parent's group and lists a number of such factors.  

This measure will apply to transactions that occur on or after March 29, 2012, subject to limited grandfathering.

Base Erosion Rules – Canadian Banks

Budget 2012 proposes amendments to alleviate the tax cost to Canadian banks of using excess liquidity of their foreign affiliates in their Canadian operations.  These amendments affect the so-called "base erosion" rules in the foreign accrual property income regime applicable to "upstream loans".  The amendments will be developed to ensure that certain securities transactions undertaken in the course of a bank's business of facilitating trades for arm's length customers are not inappropriately caught by the base erosion rules. These amendments are to be developed in conjunction with the financial industry.

Transfer Pricing-Secondary Adjustments

Canadian transfer pricing rules effectively require cross-border transactions between non-arm's length entities to be priced at arm's length prices and conducted on arm's length terms.  Where the actual terms of the transactions do not reflect arm's length terms and conditions, the tax consequences will be adjusted based on the prices and terms that would have prevailed between arm's length parties.  This adjustment to the transfer price between non-arm's length parties is the primary adjustment.  In some situations, secondary adjustments may be appropriate, but the existing transfer pricing rules do not expressly contemplate secondary adjustments.

Budget 2012 proposes an amendment to confirm that amounts in respect of secondary adjustments that arise from transfer pricing primary adjustments will be deemed to be dividends subject to Canadian withholding tax.  This measure will increase the overall tax liability in connection with a transfer pricing adjustment.

Primary adjustments typically occur when the Canadian corporation either overstates expenses or understates income on transactions with a non-arm's length, non-resident entity in a lower tax jurisdiction, for example, by overpaying for goods or services received or undercharging for goods and services supplied.  The primary adjustment is to use arm's length prices which will often result in an increase in the taxable income of the Canadian corporation.

Despite a primary adjustment to the Canadian resident, the non-arm's length non-resident entity may derive a benefit from the transaction since it will either be paying less for the goods or services it receives from the Canadian corporation or receiving relatively greater consideration for the goods or services it provides to the Canadian corporation.

In the past, CRA has relied on other provisions in the Income Tax Act to levy a secondary adjustment on the corresponding benefit to the non-arm's length non-resident entity.  However, there is no explicit provision in the existing transfer pricing rules to allow deemed dividend treatment.

Under the proposed amendment, a Canadian corporation subject to a primary adjustment will be deemed to have paid a dividend to each non-arm's length non-resident participant in the offending transaction in proportion to the amount of the primary adjustment that relates to the non-resident.  This deemed dividend will be subject to Canadian withholding tax.  The Canadian corporation will have the responsibility to collect and remit this withholding tax. 

Scientific Research and Experimental Development

Budget 2012 contains important changes to Canada's scientific research and experimental development ("SR&ED") rules, and introduces new measures to support innovation and research and development.  These changes are modeled on the recommendations of an expert panel tasked with reviewing federal support for research and development.  The panel submitted a report in October 2011 called Innovation Canada: A Call to Action (the "Jenkins Report"). 

While Budget 2012 proposes reductions to the SR&ED tax credit and new restrictions on deductions, relative to the changes recommended in the Jenkins Report, the proposed changes to the SR&ED rules in the Budget are incremental, rather than revolutionary.  In contrast, the Jenkins Report called for significantly larger reductions and more fundamental changes to the SR&ED rules.

Reduced SR&ED Investment Tax Credit Rate

Under the current SR&ED rules, there are two investment tax credit rates for qualified expenditures.  The general rate is 20% and there is an enhanced rate of 35% for eligible Canadian-controlled private corporations (CCPCs).  CCPCs may claim the enhanced 35% investment tax credit on up to $3 million of qualified SR&ED expenditures annually. 

The general 20% investment tax credit rate applicable to SR&ED qualified expenditures at the end of a taxation year will be reduced to 15%, for taxation years that end after 2013.  The enhanced 35% rate for eligible CCPCs will remain unchanged on up to $3 million of qualified SR&ED expenditures annually.

Reduction in Proxy Rate for SR&ED Overhead Expenditures

Itemized overhead expenditures directly attributable to the conduct of SR&ED are currently eligible for the SR&ED tax incentives.  Instead of itemizing such overhead expenditures, taxpayers have the option of using a simplified proxy method for calculating these expenditures. Under this proxy method, a taxpayer can generally include 65% of the total eligible portion of salaries and wages of the taxpayer's employees directly engaged in the conduct of SR&ED in Canada in the taxpayer's SR&ED qualified expenditure pool for a taxation year. 

The Budget proposes to reduce the prescribed rate that applies to the simplified proxy SR&ED overhead expenditures from 65% to 60% for 2013 and to 55% after 2013.

Exclusion of SR&ED Capital Expenditures

Under the Budget changes, capital expenditures in respect of SR&ED will no longer be eligible for SR&ED deductions and investment tax credits.  Therefore, it is likely that considerably more capital expenditures will be capitalized and amortized over the life of the property. 

This measure will apply to property acquired on or after January 1, 2014, and to amounts paid or payable in respect of the use of, or the right to use, property during any period that is after 2013.

Removal of Profit Element from Arm's Length SR&ED Contract Payments

Where a taxpayer contracts to have SR&ED performed by a non-arm's length contractor, the total qualified expenditures on which either the contractor or the taxpayer can claim SR&ED investment tax credits are currently restricted to the amount of the qualified SR&ED expenditures incurred by the contractor in fulfillment of the contract.

In the case of arm's length SR&ED contract payments, however, the taxpayer is currently entitled to SR&ED investment tax credits in respect of the entire amount of the contract payment, while the amount of the contract payment is netted against the qualifying SR&ED expenditures of the contractor.

The expenditure base for investment tax credits will exclude the profit element of arm's length SR&ED contracts. This will be achieved by limiting the expenditure base, such that only 80% of the contract costs will be eligible for SR&ED investment tax credits. This measure will apply to expenditures incurred on or after January 1, 2013.

In addition, the amount of an arm's length contract payment eligible for SR&ED tax credits for the taxpayer will also exclude any amount paid in respect of a capital expenditure incurred by the contractor in fulfilling the contract.  SR&ED contractors will be required to inform the taxpayers of these amounts. The exclusion with respect to capital expenditures will reduce the amount of the contract payment before the 80% eligibility ratio is applied.

Added Support for Innovation and Business Research and Development

Consistent with recommendations in the Jenkins Report, Budget 2012 proposes expenditures of approximately $1.1 billion over 5 years for direct research and development support, and $500 million for initiatives related to developing venture capital activities in Canada.  These expenditures are largely funded by the proposed reductions in SR&ED tax credits, which are expected to save the government approximately $1.3 billion. 

The Government of Canada will provide $400 million to support the creation of venture capital funds and to spur private sector investments in early-stage risk capital.  A further $100 million will be given to the Business Development Bank of Canada to support its venture capital activities. 

Budget 2012 sets aside an additional $110 million per year starting in 2012–13 for the National Research Council's Industrial Research Assistance Program which supports research and development activities by small and medium-sized businesses. The National Research Council will also help small and medium-sized businesses make effective use of federal innovation programs by creating a concierge service to provide information and assistance.

Mineral Exploration Tax Credit for Flow-Through Share Investors

To support Canada's resource sector, Budget 2012 extends the eligibility for the mineral exploration tax credit for one more year, to flow-through share agreements entered into on or before March 31, 2013.  Further, under the existing "look-back" rule, funds raised in one calendar year under a flow-through offering can be spent on eligible exploration up to the end of the following calendar year. Therefore, funds raised under flow-through share agreements entered into during the first three months of 2013 can support eligible exploration until the end of 2014.

Eligible Dividends

Individual taxpayers in receipt of an eligible dividend are entitled to an enhanced dividend tax credit which reduces the effective rate of tax on such dividends.  However, the rules for designating eligible dividends are very strict.  Budget 2012 proposes to alleviate some of the strictness in the application of these rules. 

Under current rules, a corporation paying an eligible dividend must notify each shareholder in writing, at the time the eligible dividend is paid, that the dividend is designated as an eligible dividend. It is not possible, under the current rules, for a corporation to file a late eligible dividend designation.  As well, the designation can only apply to the full amount of the dividend.  If only part of a dividend would qualify, the corporation is required to declare multiple dividends in order to designate the appropriate portion.

Budget 2012 proposes that the Minister of National Revenue will have a discretion to accept a late designation of an eligible dividend if the late filed designation is filed within three years following the date the designation should have been made. The Minister must be of the opinion that accepting the late filed designation is just and equitable in the circumstances, including to affected shareholders.

The Budget also proposes that a designation may be made in respect of a portion of a dividend, instead of the whole dividend, as currently required.

The new rules will improve tax fairness in situations where a corporation could have designated a dividend as an eligible dividend, but did not. The changes will also simplify the mechanics of declaring, paying and designating eligible dividends.

Clean Energy Generation Equipment

The most significant Canadian income tax incentive for promoting the use and expansion of clean energy generation equipment is the financial benefit of accelerated capital cost allowance.  Qualifying equipment may be depreciated for income tax purposes at a 50 per cent per year on a declining balance basis.  Budget 2012 continues the trend of past Budgets by expanding the scope of qualifying equipment to now include:

  • waste-fuelled thermal energy equipment, by removing the requirement that the heat energy be used in an industrial process and thereby allowing it to be used in a broader range of applications; and
  • equipment of a district energy system, by expanding it to include equipment that distributes thermal energy primarily generated by eligible waste-fuelled thermal energy equipment.

In addition, it is proposed that plant residue (for example, straw, corn cobs, leaves and similar organic waste produced by the agricultural sector) will be added to the list of eligible waste fuels that can be used in waste-fuelled thermal energy equipment or a cogeneration system.  

To deal with the increased risk of pollutants associated with waste fuels, Budget 2012 proposes that equipment using eligible waste fuels must comply with federal, provincial or local environmental laws and regulations at the time it first becomes available for use.

These measures will apply to property acquired on or after March 29, 2012 that have not been used, or acquired for use, before that date.

Retirement Compensation Arrangements

For a number of years, the Government has been concerned that a number of arrangements have been developed to take advantage of the retirement compensation arrangement (RCA) rules, giving rise to unintended income tax benefits.

An RCA is an employer-sponsored funded retirement savings plan that is typically used to fund retirement benefits for higher-income employees in excess of the maximum pension benefits permitted by registered pension plans contribution limits. Under current rules, employer contributions to an RCA are deductible to the employer, but subject to tax in the RCA trust, at the rate of 50%. This 50% tax is refunded on a proportionate basis when the employee draws down funds from the plan in retirement. Income and capital gains in the RCA trust are similarly subject to a 50% refundable tax. There is a special rule that permits a refund of the 50% tax even where the RCA investments have lost some or all of their value.

Some arrangements exploit the fact that the 50% tax is refundable even where  the investments have lost all of their value.  Other arrangements use insurance products that to give rise to deductible expenses inside the RCA and benefits outside the RCA. Non-arm's length investments by the RCA are a common characteristic of most of these arrangements.

Budget 2012 proposes to address the perceived abuses by subjecting RCAs to new prohibited investment and advantage rules similar to the rules that already exist for tax-free savings accounts, registered retirement savings plans and registered retirement income funds. These rules will generally limit the ability of RCAs to engage in non-arm's length transactions by imposing a 50% tax on the RCA on the value of its prohibited investments.  An employee entitled to benefits under the RCA who also has a significant interest in the employer will be jointly and severally liable for this tax.

Budget 2012 proposes a new restriction on tax refunds where the RCA investments have lost value.

"RCA strips" are also addressed by the Budget.  These are defined to include a promissory note issued by a non-arm's length debtor to an RCA in circumstances where the debtor fails to  make commercially reasonable payments of principal or interest. Transitional rules will address advantage arrangements already in place.

Employee Profit Sharing Plans

The Government has been concerned that employee profit sharing plans (EPSPs) have been used by business owners to direct profits to the members of their families in order to reduce or defer the payment of income tax on profits.

EPSPs are trusts that facilitate the sharing of profits with employees. An employer's contribution to an EPSP is deductible in the year it is made. An EPSP is required to make allocations  of all employer contributions, as well as income and capital gains from trust property, to beneficiaries each year  and the beneficiaries are required to include such allocation in income.

Budget 2012 proposes special tax payable by "specified employees" on "excess EPSP amounts.  Employees who have a significant equity interest in the employer or who do not deal at arm's length with the employer will be affected to the extent contributions exceed 20% of the employee's salary for the year.

Expansion of Streamlined GST/HST Accounting

Certain taxpayers are allowed to simplify their GST/HST accounting by not having to track GST/HST paid on inputs, using the Quick Method or Special Quick Method.  Instead, these taxpayers are entitled to keep a percentage of the GST/HST collected on taxable sales.  The Budget proposes to double the thresholds for small businesses that can use the Quick Method of accounting for GST/HST, as well as for public service bodies including charities and non-profit organizations that can use the Special Quick Method. 

Group Sickness or Accident Insurance Plans

Currently, employees who receive wage-loss replacement benefits under a group sickness or accident insurance plan to which an employer has contributed may be taxed on receipt of those benefits.  An employee is taxed if the benefits are payable on a periodic basis, but is not taxed on the benefits if:

  • the benefits are not payable on a periodic basis; or
  • the benefits are payable in respect of a sickness or accident when there is no loss of employment income.

Budget 2012 introduces changes that will include the amount of an employer's contributions to a group sickness or accident insurance plan in an employee's income for the year in which the contributions are made to the extent that the contributions are not in respect of a wage-loss replacement benefit payable on a periodic basis.

The tax treatment of private health services plans and certain other plans are not affected by these changes.

This measure will apply to employer contributions made on or after March 29, 2012 to the extent that the contributions relate to coverage after 2012, except that such contributions made on or after March 29, 2012 and before 2013 will be included in the employee's income for 2013.

Registering Charitable Foreign Organizations as Qualified Donees

Currently, only donations to foreign charities that are registered as qualified donees with the Government of Canada are eligible for the charitable donation tax credit. 

Budget 2012 contains new rules for registering certain foreign charitable organizations as qualified donees.  The proposed rules will not apply until at least January 1, 2013.

Under the proposed rules, a foreign charitable organization will be entitled to apply for qualified donee status if it has received a gift from the Government of Canada, or if it pursues activities:

  • related to disaster relief or urgent humanitarian aid; or
  • in the national interest of Canada.

The Minister of National Revenue will have the discretion to grant qualified donee status to a foreign charitable organization that meets the criteria.  Information regarding foreign charitable organizations that are registered as qualified donees will be made public, and qualified donee status will be granted for 24 months.

Foreign charitable organizations that are currently qualified donees under the existing rules will continue to be qualified donees until the expiration of the period of their current status.

Individual donors or Canadian registered charities that currently make gifts to qualified donees registered under existing rules should take note of the proposed changes, and ensure that the recipient foreign charities continue to qualify as qualified donees.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Michael Bussmann
 
In association with
Related Video
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert
Email Address
Company Name
Password
Confirm Password
Mondaq Topics -- Select your Interests
Accounting and Audit
Anti-trust/Competition Law
Consumer Protection
Corporate/Commercial Law
Criminal Law
Employment and HR
Energy and Natural Resources
Environment
Family and Matrimonial
Finance and Banking
Food, Drugs, Healthcare, Life Sciences
Government, Public Sector
Immigration
Insolvency/Bankruptcy, Re-structuring
Insurance
Intellectual Property
International Law
Litigation, Mediation & Arbitration
Media, Telecoms, IT, Entertainment
Privacy
Real Estate and Construction
Strategy
Tax
Transport
Wealth Management
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.