Bill C-28, the final 2007 Budget Bill, was enacted on December 14, 2007. In addition to measures implementing aspects of the March 19 2007 federal Budget, Bill C-28 also contained numerous technical amendments to the foreign affiliate rules in the Income Tax Act (Canada) (the ''Act'') that have been outstanding in comfort letter and draft legislation form for many years. These foreign affiliate amendments are effective as of various retroactive dates going back in many cases to taxation years beginning after 1999.
However, Bill C-28 also provides for seven separate one-time elections, including the ''Global Section 95 Election'' (the only one of the elections that may later be revoked), which would allow a taxpayer to apply different packages of these technical amendments to taxation years of foreign affiliates beginning after 1994. In other words, by making these elections, taxpayers may choose to apply selected packages of foreign affiliate amendments even more retroactively (i.e., to post-1994 taxation years onward) than is required in the default case without any such elections. As a general matter, these particular amendments for the most part may be characterized as relieving or taxpayer-favourable, although in any particular taxpayer's circumstances it is always possible that applying modified versions of the foreign affiliate rules to historical transactions dating from 1995 onwards could potentially result in adverse or unanticipated consequences. There is very little time for taxpayers to assess the desirability of making one or more of these available one-time elections, because each of the elections must be filed by the filing due date for the taxpayer's taxation year that includes the enactment date of Bill C-28, namely December 14, 2007. This means that for corporate taxpayers with calendar taxation years, the filing deadline for these one-time elections is June 30, 2008.
Given this looming deadline, taxpayers may be concerned about properly understanding the implications for making (or not making) one or more of these elections. The elections could significantly impact the calculation of a foreign affiliate's historical foreign accrual property income ("FAPI"), exempt surplus or taxable surplus balances, for example. In this article, I summarize the nature and scope of the technical amendments that are the subject of these elections. Since a large number of existing rules are potentially affected and many of the changes are merely technical, the summary is by necessity very high level, by no means exhaustive, and is intended principally to give the reader a sense of the most significant of the relevant amendments. The article concludes with some suggested practical considerations for taxpayers to bear in mind in making their choices about these elections.
The Global Section 95 Election
Subsection 26(46) of Bill C-28 provides for the elective, retroactive application, to taxation years that begin after 1994, of a collection of foreign affiliate amendments that otherwise are effective at different times, such as for taxation years ending after 1999 or taxation years beginning after December 20, 2002, depending on the particular amendment. This omnibus election is referred to in Finance's explanatory notes as the "Global Section 95 Election", and it covers substantially (but not exactly) the same amendments to the Act and Regulations as initially proposed in the February 27, 2004 package of draft legislation. There is no prescribed form for making the election – the taxpayer is simply required to make the election in writing and file it with the Minister on or before the due date for filing the tax return for the taxpayer's taxation year that includes December 14, 2007. It is an "all or nothing" election in the sense that the taxpayer is forced to accept the post-1994 retroactive application of either all of the amendments covered in the election or none of them, and cannot pick and choose selective amendments.
One unique and helpful feature of the Global Section 95 Election is that, by virtue of subsection 26(47) of Bill C-28, it may be revoked. In particular, if the taxpayer has made a valid Global Section 95 Election and subsequently files a notice in writing to revoke the election on or before the due date for filing the tax return for the taxpayer's taxation year that includes December 14, 2010, the election is deemed never to have been made. The taxpayer therefore has three years to reconsider the merits of making the Global Section 95 Election – a "cooling off period" that is not available with any of the other six one-time foreign affiliate elections included in Bill C-28.
As is the case with the other six foreign affiliate elections, where the taxpayer makes the Global Section 95 Election, it also effectively waives the limitation periods that would otherwise preclude statute-barred reassessments of post-1994 taxation years, at least insofar as the late reassessments follow from the provisions that are retroactively applied due to the election. In particular, subsection 26(48) of Bill C-28 provides that notwithstanding the rules governing normal reassessment periods in subsections 152(4) to (5) of the Act, any assessment of a taxpayer's tax, interest and penalties shall be made that is necessary to take an election into account, or to take into account a revocation of a Global Section 95 Election. The desirability of opening up an old statute-barred taxation years to further reassessments is definitely an aspect to be carefully considered in making these elections.
Three changes to the "excluded property" definition in subsection 95(1) are included in the Global Section 95 Election. Status as "excluded property" is favourable to the taxpayer because a foreign affiliate's gains from dispositions of such property are excluded from FAPI. Previously paragraph (c) of the definition applied only to loans receivable, the interest on which would be deemed to be active business income under subparagraph 95(2)(a)(ii). Paragraph (c) has now been broadened to apply to any property (i.e., not limited to loan receivables), all or substantially all of the income from which is deemed to be active business income by paragraph 95(2)(a) (not limited by subparagraph 95(2)(a)(ii)). In addition, new paragraph (c.1) has been added to include as excluded property certain contractual rights under currency hedging agreements relating to excluded property. These two changes have expanded the scope of excluded property and are therefore clearly beneficial to taxpayers. The third change is the amendment to paragraph (a) of the excluded property definition, which formerly included in excluded property certain assets used or held by a foreign affiliate principally for the purpose of gaining or producing income from an active business. Under the amended definition, the assets must be used or held by the particular foreign affiliate principally for the purpose of gaining or producing income from an active business carried on by it. This additional requirement may in many cases be redundant, but it is possible that it could have the effect of precluding excluded property status for some active business assets (perhaps for instance, assets used by related foreign affiliates in the conduct of their businesses) and could therefore be disadvantageous to taxpayers. These amendments are in any event applicable to taxation years of a foreign affiliate of a taxpayer that begin after December 20, 2002, and will also apply to taxation years beginning after 1994 if the taxpayer makes the Global Section 95 Election.
Investment Business And Related Rules In Paragraphs 95(2)(o) To (t) And 95(2.1)(c)
Paragraph (b) of the definition of ''investment business'' in subsection 95(1) has been amended to clarify in a number of ways the ''more than five employees full time'' requirement for the exemption from investment business. Among other things, changes have been made to broaden somewhat the scope of employees that may be counted for this purpose, to include in some circumstances employees of a ''designated corporation'' or of a corporation that is a ''qualifying shareholder'', or of a ''designated partnership'' or a ''qualifying member'' of a partnership. Corollary rules have been introduced in paragraphs 95(2)(o) to (t) to define those new terms and to provide look-through rules for partnerships for these and other purposes. Again, these changes included in the Global Section 95 Election would generally be considered to be of a relieving nature because they have the effect of broadening the exemption from the investment business definition, thereby reducing the circumstances in which business income of a foreign affiliate may be recharacterized as FAPI. A further amendment in the investment business context is made to paragraph 95(2.1)(c), affecting Canadian financial institutions entering into currency hedging agreements with a regulated foreign affiliate on arm's length terms. This amendment is also relieving because it would consider such arrangements to be arm's length, thus expanding the possible scope of an exemption from investment business available to the affected financial institutions.
Deemed Active Business Income In Paragraph 95(2)(a)
Many technical changes have been made to the relieving rules in paragraph 95(2)(a) that can apply to deem property income otherwise included in FAPI to instead be active business income. A subset of these changes is included in the Global Section 95 Election, among them the following.
First, the scope of the rule is clarified so that it expressly applies both to incomes or losses from property. While this might be thought to be potentially detrimental to the taxpayer, since property losses that are deemed to be active business losses would in many cases erode exempt surplus balances rather than eroding FAPI, this amendment arguably codifies the pre-existing rule. Second, the relieving rule now applies in broader circumstances to a foreign affiliate in which the taxpayer has a qualifying interest or that is a controlled foreign affiliate of the taxpayer. Third, the existing relief in subparagraph 95(2)(a)(i) for treasury activities of a foreign branch of a Canadian multinational life insurer is extended to capture situations in which certain related persons operate the foreign branch treasury activities. Fourth, in clauses 95(2)(a)(ii)(A), (B) and (C), the relief is extended to payments by certain partnerships where there is a foreign affiliate or related non-resident corporation that is a ''qualifying member'', as defined in new paragraphs 95(2)(o) and (r), with the effect of potentially including certain limited partners that were formerly excluded. Fifth, clauses 95(2)(a)(ii)(A), (B) and (C) are also relaxed so that the payment must be deductible by the from its active business income in any taxation year, removing the requirement that the deduction must be in the particular year or a subsequent year. Sixth, the relief in clause 95(2)(a)(ii)(B) is expanded to include payments made by a broader category of partnerships. Seventh, the relief in clause 95(2)(a)(ii)(E) is expanded to include payments made by a broader category of life insurance corprations. Eighth, new subparagraphs 95(2)(a)(v) and (vi) are added to provide relief for income from dispositions of excluded property that is not capital property and for income from certain currency hedging contracts that relate to active business amounts. In addition, new paragraph 95(2)(z) is added to exclude from FAPI certain partnership income or loss that is deemed by paragraph 95(2)(a) to be active business income of another foreign affiliate of the taxpayer in respect of which the taxpayer has a qualifying interest.
While the foregoing is only a brief summary of the relevant changes, it is clear that the general thrust of amendments to paragraph 95(2)(a) is to expand the scope of income that may benefit from deemed active business income treatment if the taxpayer elects to apply these amendments to taxation years commencing after 1994.
Foreign Exchange Gains And Losses — Paragraphs 95(2)(g) and (i)
Formerly, paragraph 95(2)(i) provided relief from FAPI in respect of foreign exchange gains in very simple terms, such that where a gain or loss of a foreign affiliate was realized from the settlement or extinguishment of a debt that related at all times to the acquisition of excluded property, the gain or loss was deemed to be a gain or loss from a disposition of excluded property (and thereby excluded from FAPI). As indicated in the accompanying Finance explanatory notes, this relieving rule has been clarified and expanded in the following ways that may be retroactively applied under the Global Section 95 Election (as well as in some ways that may not be retroactively applied):
- paragraph 95(2)(i) now applies to indebtedness
used to fund active business operations in addition to
indebtedness used to acquire excluded property; and
- the relief now extends to certain foreign currency
hedging agreements related to the indebtedness.
Interestingly, the explanatory notes do not refer to the changes clarifying that paragraph 95(2)(i) applies only to the debtor. The previous more general wording left open the possibility that the relief could also apply to the creditor if the debt related at all times to the acquisition (by the debtor) of excluded property. That position has been foreclosed by amended paragraph 95(2)(i), so that a taxpayer making the Global Section 95 Election to apply the more broadly worded relief in paragraph 95(2)(i) to foreign affiliate taxation years beginning after 1994 must also be aware that the relief will clearly apply only to the debtor, not the creditor.
Paragraph 95(2)(g) also provides relief from FAPI in respect of foreign currency gains (or losses) realized in respect of certain inter-affiliate indebtedness or share dispositions. One of the ways this relief has been broadened is that it now applies not only to a foreign affiliate in respect of which the taxpayer has a qualifying interest throughout the year, but also to a foreign affiliate that is a controlled foreign affiliate of the taxpayer. Notably, the version of paragraph 95(2)(g) that will apply after 2008 has been narrowed in that it will require that the taxpayer have a qualifying interest in the other foreign affiliate, which is not a requirement of the pre-2009 version. However, it is the pre-2009 version of paragraph 95(2)(g) that may be retroactively applied after 1994 under the Global Section 95 Election, so this new restriction will not be relevant in determining whether to make the election.
Related provisions have been introduced in new paragraphs 95(2)(g.01) and (g.02), which would also be applied retroactively under the Global Section 95 Election. Paragraph 95(2)(g.01) provides additional FAPI relief for currency hedging gains (and losses) that relate to paragraph 95(2)(g) amounts. Paragraph 95(2)(g.02) provides a more general rule requiring excluded property gains or losses to be computed separately from non-excluded property gains or losses.
The foregoing rules apply both to gains and losses. Thus, they are relieving if the relevant foreign affiliates realized foreign exchange gains in the post-1994 taxation years. On the other hand, if there were foreign exchange losses that, under the prior versions of paragraphs 95(2)(g) and (i) would have reduced the foreign affiliate's FAPI or given rise to a foreign accrual property loss (FAPL), this aspect of the Global Section 95 Election might not be helpful to the taxpayer.
For completeness, the Global Section 95 Election also covers new subsections 95(2.41) and (2.42), which are relevant to foreign affiliates of Canadian life insurance corporations. These amendments prevent the base erosion rule in paragraph 95(2)(a.3) from applying to such foreign affiliates in certain circumstances and are thus relieving in nature. Paragraph 95(3)(d) is also included — this provision adds a further exception to ''services'' that would otherwise be captured by the base erosion rule in paragraph 95(2)(b) (see the discussion below dealing with the separate election for paragraphs 95(3)(c) and (d)). Finally, the Finance explanatory notes indicate that the Global Section 95 Election will also invoke the early application of certain corollary technical amendments to the Regulations originally released in the February 27, 2004 proposals.
Clause 95(2)(a)(ii)(D) Election — Deemed Active Business Income
Paragraph 26(35)(b) of Bill C-28 provides taxpayers with a separate election opportunity to apply amended clause 95(2)(a)(ii)(D) to taxation years of foreign affiliates beginning after 1994. In the absence of an election, amended clause 95(2)(a)(ii)(D) applies for taxation years ending after 1999. If this election is made, and if the tax-payer has not also made a Global Section 95 Election, then clauses 95(2)(a)(ii)(A) to (C) and (E) must also be read without reference to the changes substituting ''qualifying member of a partnership'' for the previous concept that required the particular foreign affiliate not be a ''specified member'' of the partnership — in other words, the relief in those provisions would not extend to payments made where the foreign affiliate is a limited partner.
Former clause 95(2)(a)(ii)(D) provided limited relief from FAPI for interest paid to a related foreign affiliate on funds borrowed by the payor affiliate to acquire certain shares of a third foreign affiliate in which the taxpayer had a qualifying interest. However, there were a number of overly restrictive conditions for this relief, including that both payor and the third affiliate were ''subject to tax'' in their same country of residence and that the interest payments were ''relevant in computing the liability for income taxes'' of a consolidated group of foreign affiliates all resident in and subject to tax in that country, where the shares of each foreign affiliate in the group constituted excluded property.
The amended version of clause 95(2)(a)(ii)(D) has relaxed the required conditions in several ways and has thus substantially broadened the potential application of this FAPI relief. Among these relieving changes are four of particular significance. First, the category of paying affiliates foreign affiliate that would make the non-resident corpora is broadened to include foreign affiliates in which the taxpayer has a qualifying interest, in addition to foreign affilates to which the taxpayer is related. In a similar vein, the category of purchased foreign affiliates has also been broadened to include related foreign affiliates in addition to foreign affiliates in which the taxpayer has a qualifying interest. Significantly, now only the purchased foreign affiliate shares themselves must qualify as excluded property, instead of requiring the shares of all members of the relevant consolidated group to qualify as excluded property, thus avoiding possible difficulties with consolidated groups that might include companies whose assets for whatever reason did not meet the excluded property test. And fourthly, the ''subject to tax'' test for the payor and purchased affiliates has been replaced with a more lenient requirement that, either they are subject to tax in their residence country, or in the alternative, that their members or shareholders are subject to tax in that country on all or substantially all of the income of the relevant affiliate. This now allows the clause 95(2)(a)(ii)(D) FAPI relief to apply in situations where the payor or purchased affiliate is a pass-through entity such as a U.S. LLC.
The amended version of clause 95(2)(a)(ii)(D) thus addresses the most significant of the technical concerns with the more restrictively applied prior version. The one-time election to apply the substantially more taxpayer-friendly version of clause 95(2)(a)(ii)(D) to taxation years after 1994 is a welcomed opportunity to retroactively reduce the risk of FAPI for taxpayers who have previously relied on this provision.
Paragraph 95(2)(n) Election — Qualifying Interest And Foreign Affiliate Status
Subsection 26(38) of Bill C-28 provides an additional separate election to apply new paragraph 95(2)(n) to taxation years that begin after 1994, rather than to taxation years that end after 1999. This is a new provision that deems a non-resident corporation to be both a foreign affiliate of a particular Canadian-resident corporation, and a foreign affiliate in respect of which the particular Canadian-resident corporation has a qualifying interest, if the non-resident corporation is a foreign affiliate of another Canadian-resident corporation which has a qualifying interest, and the two Canadian corporations are related to each other. For example, where a Canadian parent corporation has a qualifying interest in a directly held foreign affiliate, a related Canadian corporation, such as a sister, parent or subsidiary Canadian corporation in another related chain, can be considered to have a qualifying interest in the affiliate under paragraph 95(2)(n), even if the related Canadian corporation has no direct interest in the foreign affiliate that would make the non-resident corporation a foreign affiliate of that related Canadian corporation. Although paragraph 95(2)(n) does not apply for all purposes of the Act, it does apply for significant limited purposes including the relieving rules in paragraphs 95(2)(a) and (g) and for determining exempt surplus/deficit balances, among others.
Subsection 95(2.2) Election–Qualifying Interest And Related Status
Subsection 95(2.2) is another relieving rule intended to address circumstances in a transitional year when a foreign affiliate either becomes or ceases to be a foreign affiliate in respect of a Canadian taxpayer, or becomes or ceases to be related to the Canadian taxpayer. This can be relevant for the application of the relief in paragraph 95(2)(a), for example, which requires that the qualifying interest status (or formerly the related status) existed throughout the year. Subsection 95(2.2) can deem the qualifying interest or related status to have existed throughout the transitional year in which foreign affiliate shares are acquired or disposed of, if among other things the relevant qualifying interest or related status existed at either the beginning or the end of the transitional taxation year of the foreign affiliate.
Paragraph 26(42)(b) of Bill C-28 provides for a separate one-time election to apply an amended version of subsection 95(2.2) to taxation years commencing after 1994, rather than to taxation years ending after 1999. The amended version in respect of which the election may be made contains two changes. First, the relief would apply for purposes of subsection 95(2), other than paragraph 95(2)(f). Paragraph 95(2)(f) is the capital gain computation rule that among other things would exclude the gain or loss of a foreign affiliate that accrued before the foreign affiliate became a foreign affiliate of the taxpayer. If subsection 95(2.2) applied for purposes of paragraph 95(2)(f ), a taxpayer might be required to take into account the entire accrued gain or loss of a foreign affiliate for the entire taxation year, even if the foreign affiliate was acquired or disposed of part way during the year. The effect of electing to exclude paragraph 95(2)(f) from the application of subsection 95(2.2) could therefore potentially be beneficial, for instance, in the context of a purchase or sale from 1994 through 1999 of a foreign affiliate with an accrued capital gain on non-excluded property or an accrued loss on excluded property (although it could potentially be detrimental in the opposite situations). Second, the amended version of subsection 95(2.2) allows rights described in paragraph 251(5)(b) to be disregarded in determining when a non-resident corporation becomes related to the Canadian taxpayer. This has the effect of allowing the subsection 95(2.2) relief to apply to transitional years when a non-resident corporation becomes related by virtue of the exercise of a right to acquire shares, for example.
Paragraph 95(2)(a.1) And Subsection 95(3.1) Election — Designated Property
Paragraph 95(2)(a.1) is one of the base erosion rules that can apply to deem certain business income of a foreign affiliate to be income from a business other than an active business, and therefore included in FAPI. Paragraph 95(2)(a.1) is targeted at situations in which the foreign affiliate's income is earned from the sale of property where the cost of the property is relevant in computing the Canadian-source income of certain persons (and thus would erode the Canadian tax base if the profits from selling such property were allowed to be shifted offshore). Former paragraph 95(2)(a.1) contained a number of exemptions, including where the property sold for profit was manufactured, produced, grown, extracted or processed in Canada by the relevant taxpayer or related persons, or where the property was manufactured, produced, grown, extracted or processed in the relevant jurisdiction of the foreign affiliate and that country is where the foreign affiliate's business was principally carried on. However, these exemptions were arguably too restrictive, with the result that former paragraph 95(2)(a.1) was too broad and could apply in situations where there was no policy justification for recharacterizing a foreign affiliate's business income as FAPI.
The exemptions from the scope of paragraph 95(2)(a.1) have been expanded with a substantial rewriting of the provision to carve out and extend the concept of ''designated property'' (i.e., property the sale of which is not caught by the rule) into new subsection 95(3.1), and to further exclude the sale of real property or foreign resource properties from the scope of paragraph 95(2)(a.1) if those properties are located in the relevant jurisdiction of the foreign affiliate under whose laws it is governed and exists, was formed or organized, and where its business is principally carried on. Subsection 26(45) of Bill C-28 allows taxpayers to elect to apply the amended version of paragraph 95(2)(a.1), together with new subsection 95(3.1), to taxation years beginning after 1994, rather than to taxation years beginning after December 20, 2002.
Subsection 95(3) Election — Services Excluded From Paragraph 95(2)(b)
Paragraph 95(2)(b) is another of the base erosion rules that applies where a foreign affiliate of a Canadian taxpayer earns business income from the provision of services, and the consideration paid for those services is deductible in computing Canadian-source income of the Canadian taxpayer or certain non-arm's length persons. Subsection 95(3) lists certain services that are excluded from this rule and that can accordingly be provided by a foreign affiliate to its Canadian parent or other persons without resulting in FAPI. Subsection 95(3) has been amended to add to the list of excluded services, new paragraph (c) covering the ''transmission of electronic signals or electricity along a transmission system outside Canada'', and new paragraph (d) covering certain contract manufacturing services provided outside Canada. Subsection 26(44) of Bill C-28 provides for a separate election that would allow the taxpayer to apply both paragraphs 95(3)(c) and (d) to taxation years beginning after 1994. As noted above, the paragraph 95(3)(d) amendment covering contract manufacturing services is also included in the Global Section 95 Election.
Paragraph 95(2)(u) Election — Partnership Look-Through
New paragraph 95(2)(u) provides that, if an entity is a member of a partnership that in turn is a member of another partnership, the entity itself is deemed to be a member of the lower-tier partnership for several specific purposes, including the deemed active business income relieving rules in paragraph 95(2)(a) and also the base erosion rules in paragraphs 95(2)(a.1) to (b), as well as new paragraphs 95(2)(g.03) and (o). In addition, such an entity is deemed to have direct rights to income or capital of the lower-tier partnership for purposes of paragraph 95(2)(g.03), which is an interpretive rule for applying the foreign exchange gain or loss relief in paragraph 95(2)(g) to partners. By virtue of subsection 26(40) of Bill C-28, a taxpayer may elect to apply the new partnership look-through rule in paragraph 95(2)(u) to taxation years of foreign affiliates beginning after 1994, instead of to taxation years that end after 1999.
Summary — Considerations In Making The One-Time Foreign Affiliate Elections
Although the foregoing is at best a high-level summary of the foreign affiliate amendments that are the subject of the available elections, it should be evident that, for the most part, the collections of amendments are generally relieving in nature, with some exceptions. Nonetheless, even generally relieving amendments could potentially have unintended consequences for taxpayers if they are retroactively applied to taxation years of foreign affiliates commencing after 1994 by virtue of the elections. making the elections.
One of the less desirable implications of making any of these foreign affiliate elections is the effective waiver of the normal reassessment period for statute-barred taxation years. The CRA is empowered to make any assessment of tax, interest and penalties for any taxation year ''necessary to take an election . . . into account''. Taxpayers might be concerned that an election to apply one or more of the packages of foreign affiliate amendments to post-1994 tax-years could result in a reopening of those taxation years and consequential reassessments that could potentially extend beyond the limited scope directly implied by Bill C-28. Taxpayers might also be wary of drawing attention to old-and-cold foreign affiliate transactions. Could an adverse inference be drawn from the fact that a taxpayer chooses to avail itself of the opportunity to apply an ostensibly broader set of relieving rules to its historical foreign affiliate transactions? Could the election be a red flag prompting an audit and possible reassessments under the open-ended reassessment period?
It is also interesting that only the Global Section 95 Election may subsequently be revoked, within a three-year period. The other six foreign affiliate elections are one-time opportunities that are final — once the taxpayer elects to apply one or more of the affected provisions to post-1994 taxation years, there is no mechanism to withdraw the election. However, the possibility of revoking the Global Section 95 Election does suggest that the potential downside of making a Global Section 95 Election is substantially reduced, because the taxpayer will have a further three years to fully determine the implications of that election, and if they are found to be undesirable, the election may be revoked and the original tax treatment restored.
One might also consider the merits of electively applying different tax legislation to historical transactions that were presumably, in many cases, implemented on the understanding that they were ''onside'' the then existing rules. If the taxpayer was content with the tax consequences under the previous legislation in force at the relevant time, one could question whether it is necessary now to elect to apply the new rules, even if those new rules would be largely relieving or beneficial.
On the other hand, the election opportunities will be most valuable where there has been some degree of uncertainty or residual risk associated with historical foreign affiliate transactions. One common example is likely to be the election to apply the more lenient version of clause 95(2)(a)(ii)(D) to post-1994 taxation years, since the amended version has clearly removed many of the restrictions that previously may have made the availability of this relief doubtful or uncertain. Where one or more of the elections address specific technical concerns with past transactions, taxpayers will more obviously benefit from making the elections. Finance has provided a considerable degree of flexibility to retroactively apply packages of foreign affiliate technical amendments which are mostly beneficial and relieving. It goes without saying that taxpayers with potentially affected foreign affiliates should at the very least give careful consideration to these one-time opportunities.