Finance Minister Dwight Duncan has announced that the government intends to make the transfer tax exemption permanent for transfers of electricity property within the public sector. For these purposes, the public sector means those purchasers who currently benefit from the temporary exemption which expired on October 17 2009 - being Hydro One, municipal corporations and municipal electricity utilities. This amendment will be of significant interest both to LDCs considering mergers and acquisitions, or transferring electricity property within the corporate group in situations where the transfer tax regulations do not currently provide an exemption.

There was some speculation that the new electricity transfer tax regulation would be extended on a limited basis to the private sector. At the moment, the only type of transactions that will minimize transfer tax costs involving a private sector purchaser are those that involve the use of the PIL credit (against transfer tax), and long term leasing transactions that qualify under the leasing exemption in the transfer tax regulations, provided certain prescribed conditions are met. In this regard, BLG has completed the only lease structure to date involving the private sector.

Click here to link to the Information Bulletin announcing the change.

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