Canada: Federal Budget 2010 - A Corporate Tax Practitioner’s Perspective

The 2010 Federal Budget ("Budget 2010") is themed around the Government "Leading the Way on Jobs and Growth" with the fiscal highlight being continued stimulus in 2010-2011 followed by a commitment to rapidly declining deficits in the medium term.

The Government is clear that its medium term deficit reduction is not coming from new taxes. Internationally competitive business tax rates, including already scheduled reductions, remain a key component of the desired "Canadian Economic Advantage". Indeed, as discussed in more detail below, the tax advantage is being extended into the tariff area as the budget proposes to make Canada a tariff-free zone for manufacturers by eliminating all remaining tariffs on machinery and equipment and goods imported for further manufacturing in Canada.

Notwithstanding the overall "stay the course" approach to tax policy from a macro perspective, there are, from a tax practitioner's perspective, many very interesting proposals related to Canada's tax rules contained in Annex 5 of the budget papers. These include proposals:

  1. restricting loss trading in the context of the conversion of income trusts and listed partnerships (the proposals grandfather certain committed and completed transactions);
  2. dropping the complex foreign investment entity rules first announced in 1999 and generally reverting to the existing rule dealing with offshore investment fund property (with a higher imputed return on such investments);
  3. substantially modifying and better targeting the existing proposals around the taxation of non-resident trusts;
  4. revising the taxation of employee stock options in significant ways;
  5. narrowing the types of property ("taxable Canadian property") on which non-residents are taxable to interests which are or derive their value from interests in Canadian real or resource properties;
  6. eliminating so-called "foreign tax generator" transactions;
  7. reforming the disbursement quota for charities; and
  8. introducing mandatory reporting of transactions which include hallmarks of tax avoidance transactions and considering new rules allowing related group tax consolidation.

The proposed tariff modifications and the eight other items listed above are each discussed in more detail below.

Budget 2010 confirms the Government's intention to proceed with a number of previously announced tax measures including previously released draft measures relating to foreign affiliates and previously released income tax technical and bijuralism amendments. Budget 2010 also includes draft legislation relating to the application of GST/HST to financial services initially announced in 2009.

There are other proposals which we are not detailing here on the basis that they are quite narrow or self explanatory (including extending the mineral exploration tax credit for another year, expanding the types of property eligible for accelerated depreciation because they are related to clean energy generation, an amendment to the definition of principal business corporation for flow-through share purposes, a 40% depreciation rate for both satellite and cable set-top boxes, a 2% reduction in the interest paid by the government on overpayments of tax by corporations, proposals relating to GST/HST as they apply to direct sellers and a tightening of the specified leasing property rules) or relate primarily to individuals (including measures related to child care benefits, cosmetic surgery, registered disability savings plans, registered education savings plans, US social security benefits, scholarships and to the education tax credit).

Tariff Reform

Eliminating tariffs on manufacturing inputs and machinery and equipment is part of the Government's economic strategy. The 2009 Budget eliminated tariffs on a broad range of machinery and equipment (over 200 items became tariff-free). Budget 2010 will eliminate all remaining tariffs (1,541 items) on manufacturing inputs and machinery and equipment except for 381 items that will become tariff-free by no later than January 1, 2015. This positions Canada as the first among its G20 partners to allow manufacturers to operate without the cost of tariffs on inputs and machinery and equipment. This will benefit small and medium-sized manufacturers that link to global supply chains.

Income Fund Trust Conversions

Budget 2010 proposes two revisions to the rules governing the tax-deferred conversion of SIFT trusts, SIFT partnerships, and real estate investment trusts (collectively, "SIFTs") into corporations. The first revision is intended to shut down loss-trading in the course of conversions; the second to cure a technical problem with the existing rules relating to the conversion of SIFT trusts.

Loss Trading

Several high-profile SIFT conversions have used an existing arm's length corporation with significant tax attributes ("Lossco") to act as the "SIFT wind up corporation" in a conversion transaction. Typically, these transactions involve the disposition by holders of SIFT units for shares of Lossco. Had the same transaction involved the exchange of corporate shares (rather than SIFT units) for Lossco shares, the acquisition of control rules already in the Income Tax Act would have denied or restricted the post-conversion use by Lossco of the shelter provided by its accumulated tax losses. Budget 2010 proposes to shut down loss trading of this sort by adding a new rule, which will be similar to an existing rule applicable to share for share exchanges, that will deem control of a corporation (i.e. Lossco) to be acquired where two or more persons dispose of SIFT units in exchange for Lossco shares. In the result, control of Lossco (and of each subsidiary corporation controlled by it) will be deemed to have been acquired immediately before the exchange, thus denying or restricting access to Lossco's tax attributes following the conversion. The precise scope and application of the amendment should become clear when draft legislation is introduced.

The amendment will apply to transactions undertaken after 4:00 PM, EST, on March 4, 2010 (the "Effective Time"). Transactions undertaken before the Effective Time are grandfathered, as are transactions that the parties are obligated to complete after the Effective Time under a written agreement entered into by the parties before the Effective Time. No such obligation will be considered to exist if (as is often the case in these types of transactions) a party may be excused from performance because of an amendment to the Income Tax Act.

What of the 20 or so Lossco transactions that have occurred to date? The conventional wisdom is that the Canada Revenue Agency ("CRA") will vigorously pursue an assessment based on the general anti-avoidance rule or perhaps relying on an existing provision that would require demonstrating that the public unitholders form a "group" that has acquired control of Lossco. However, it is worth noting that the Government, in its budget commentary on foreign tax credit generators (see below), stated its belief that foreign tax credit schemes can be successfully challenged under existing rules. The budget papers make no comparable comment in connection with SIFT conversion loss transactions.

No Acquisition Of Control

A number of income trust structures include one or more corporations that are controlled by a SIFT trust. The final windup of the SIFT trust into its new corporate parent ("Newco") will result in control of these corporations passing from the trustees of the SIFT Trust to Newco. The resulting acquisition of control of these subsidiary corporation(s) by Newco can produce inappropriate results, such as deemed year ends, streaming of non-capital losses, and the extinguishment of realized or unrealized capital losses on properties owned by the subsidiary corporation(s.) Budget 2010 proposes amendments so that control of the subsidiary corporation(s) will be deemed not to have been acquired by Newco because of the distribution of its shares to Newco on the windup of the SIFT trust.

The amendment will be effective for transactions undertaken after the Effective Time. Parties may elect to have the amendment apply to earlier transactions, but the election will also cause the loss trading amendment, discussed above, to apply to the earlier transactions.

Foreign Investment Entities And Non-Resident Trusts

Budget 2010 introduces new proposals to address previous draft tax legislation, first announced in the 1999 federal Budget, in respect of foreign investment entities ("FIEs") and non-resident trusts ("NRTs").

Foreign Investment Entities

Budget 2010 signals a new approach to the taxation of FIEs. In general, the Government has decided to abandon the prior draft proposals and, in lieu of sweeping changes, has decided to shore up the existing tax rules with a few notable changes:

  1. The existing modified foreign accrual property regime that applies to certain non-discretionary trusts with Canadian resident beneficiaries or entities that are closely linked to such beneficiaries will be broadened to apply to

    • any resident beneficiary who alone or together with a non arm's length party holds 10 per cent or more of any class of interests (determined by fair market value) in the non-resident trust, and
    • any resident who has contributed "restricted property" (described below) to the non-resident trust.

  2. The prescribed rate applicable in computing the income inclusion for an interest in an offshore investment fund property will be increased by an additional two percent to "better reflect actual long-term investment returns".
  3. More information will be required in the reporting forms relating to "specified foreign property" and the normal reassessment period will be extended by an additional three years. These new approaches to FIEs are proposed to apply for taxations years that end after March 4, 2010.

Taxpayers who have voluntarily complied with the outstanding draft legislation in prior years will have the option of either having those years reassessed or, if they reported more income than they would have reported under the existing rules, be entitled to a deduction in the current year for such excess income.

Non-Resident Trusts

The Government is not abandoning the basic framework embodied in the previously released NRT draft legislation. Instead, the Government has chosen to refine its approach, attempting to simplify the rules and better target specific tax avoidance structures. Key refinements include:

  1. An exemption from resident-contributor and resident-beneficiary status will be added for tax-exempt entities such as pension funds, Crown corporations and registered charities. The exemption will not apply where the tax-exempt entity is used as a conduit for a Canadian resident to make an indirect contribution to a NRT.
  2. The proposals will be clarified to prevent the application of the NRT rules to certain commercial trusts, including the provision of an expanded exemption for commercial trusts in the definition of "exempt foreign trust" and the addition of a rule deeming a commercial trust not to be resident in Canada if certain conditions are met. A new anti-avoidance rule will, however, target structures meant to mimic a genuine commercial trust.
  3. The definition of "restricted property" (which plays a role in causing some trusts to be deemed Canadian residents) will be limited to shares or rights (or property that derives value from such shares or rights) acquired, held, loaned or transferred by a taxpayer as part of a series of transactions or events in which "specified shares" (i.e., shares with fixed entitlement rights) of a closely-held corporation were issued at a tax cost less than fair market value.
  4. A new rule will be added to ensure that loans made by a Canadian financial institution to an NRT will not result in a contribution made by a resident contributor provided that the loan is made in the ordinary course of the institution's business and certain other conditions are met.

Budget 2010 also proposes a number of changes to the taxation of NRTs that are, under the proposed rules, deemed to be resident in Canada. These appear to be in response to complaints about the "all or nothing" nature of the previous proposed rules. The proposal is to generally limit a trust's taxable income for Canadian purposes to income derived from contributions of certain resident and former resident contributors. Under this new regime, a trust's property is divided into a resident portion (i.e., property acquired by way of contributions from certain residents and former residents, or property substituted therefor) and a residual portion. Generally, any income derived from the residual portion (other than income from Canadian sources) will be excluded from the trust's income for Canadian tax purposes, and any income derived from the resident portion will be attributed to the Canadian resident contributors to the trust in proportion to the fair market value of their respective contributions to the trust (relative to those contributions made by all persons). The trust will be entitled to deduct any attributed income and any income distributed to the beneficiaries.

The new proposals also include ordering rules with respect to distributions to beneficiaries, rules permitting a deemed resident trust to claim foreign tax credits, and a proposal to amend the Income Tax Conventions Interpretation Act to provide that a trust deemed resident in Canada under the NRT rules is deemed to be resident in Canada and subject to Canadian income tax for tax treaty purposes.

The new measures regarding NRTs are proposed to apply for the 2007 and subsequent taxation years, except for the new attribution rules applicable to resident contributors which are proposed to apply only to taxation years that end after March 4, 2010.

Additionally, a trust will be permitted to elect to be deemed resident for the 2001 and subsequent taxation years.

On balance, it does not seem that the Government will achieve simplification of the tax rules relevant to NRTs. To the contrary, more complexity arises from the introduction of rules to allocate the income of the NRT between Canadian resident contributors and non-resident contributors. Although the Government's new proposals do address some of the concerns raised by the tax community, there does not seem to be any policy relief for "outbound" trusts (e.g., NRT formed by Canadians to benefit only non-resident beneficiaries). Similarly, the new proposals do not appear to address the complexity and the anomalous results that can flow from the deemed transfer rules and the definition of "contribution" found in the previous NRT draft legislation. Perhaps these issues will be addressed when, subsequent to promised consultations, the legislation to enact these proposals is released.

Employee Stock Options

Budget 2010 proposes several significant changes to the tax treatment of employee stock options.

First, the tax deferral election available for options of a corporation which is not a Canadian-controlled private corporation ("CCPC") has been repealed, effective for options exercised after the Effective Time. Under the former rules, if certain requirements were met, the tax deferral election permitted option holders to defer the inclusion in income of the stock option benefit triggered on exercise of the options until such time as the optioned securities were sold. The amount which could previously be deferred was subject to an annual vesting limit of $100,000, which limit was established by reference to the fair market value of the underlying securities on the date that the option was granted to the employee. The proposals do not affect tax deferral elections made in respect of options exercised prior to the Effective Time.

Second, Budget 2010 specifies that the tax withholding and remitting obligation that arises in connection with the employment benefit triggered on the exercise of non-CCPC options will be the same as the obligation arising on a payment to the employee of an equivalent cash bonus, taking into account any 50% deduction in respect of the employee benefit that may be available to the option holder. To avoid hardship, these measures will not apply to options granted before 2011 under a written agreement entered into before the Effective Time, if the agreement imposes a restriction on the employee's ability to dispose of the securities.

Third, the rules relating to the cashing out of stock option rights have been restricted so as to prevent an employee option holder from receiving a 50% deduction in respect of the employment benefit while the payer (employer) also receives a deduction in respect of the cash payment. Under the proposed rules, the 50% deduction will be denied to the employee (resulting in a full income inclusion of the employee benefit) unless the employer elects that neither the employer, nor any person not dealing at arm's length with the employer, will deduct any amount in respect of the cash payment. A copy of the election must be provided to the employee and filed with the employee's tax return for the year. The proposals will also specify that a disposition of rights under a stock option agreement to a non-arm's length person, including under a cash out arrangement, will trigger the employment benefit at such time.

Lastly, the Budget provides relief for option holders caught in a common, but often unexpected, tax trap that arises where a stock option benefit is deferred. In this situation, the full employment benefit is added to the employee's adjusted cost base of the securities acquired under the option. Any further increase or decrease in the fair market value of the securities between the date of exercise and the date of disposition of the securities will normally be a capital gain or capital loss. However, if the ultimate disposition price is lower than the fair market value of the securities on the date of exercise, the employee would still be taxed on the full employment benefit. Any capital loss could not be used to offset the employment benefit for tax purposes. Where a tax deferral election (now repealed as discussed above) had been made on securities which subsequently significantly decline in value (as has occurred in recent years with a number of high-profile public corporations), affected option holders could face tax bills well in excess of the value of their securities sold. Budget 2010 permits a taxpayer to make an election such that the tax liability arising from the deferred stock option benefit will not exceed the proceeds of disposition of the securities, taking into account any tax benefits received from the use of the associated capital losses against capital gains from other sources. This election is available for past years beginning in 2000, provided the election is filed by the taxpayer's 2010 tax filing deadline. To avail themselves of this relief, taxpayers must dispose of their securities before 2015. It appears that this election is not available for securities on which a deferral was obtained under the rules governing CCPCs.

Taxable Canadian Property

Foreign investors, particularly private equity funds, have long complained about the complexity of dealing with the reporting requirements under section 116 with respect to the disposition of investments which represent taxable Canadian property ("TCP") such as shares of private Canadian companies. Gains on the disposition of shares of private companies would normally be exempt from Canadian taxation under most of Canada's income tax treaties, provided that the value of such shares was not derived principally from real or immovable property situated in Canada, Canadian resource property or timber resource property at any time during the previous 60 months. Notwithstanding such treaty protection, foreign investors disposing of TCP were compelled to undertake an extensive reporting undertaking, and to file Canadian tax returns reporting such gains.

The compliance burden escalated when foreign investors were organized into partnerships, requiring each member of the partnership to obtain a Canadian tax identification number and file a separate Canadian tax return. Further, purchasers of such TCP interests held by foreign investors were required to withhold (and potentially remit) a percentage of the proceeds of disposition payable to the non-resident until such time as the Canadian tax authorities issued a certificate of compliance under section 116 of the Income Tax Act, which was often delayed for months after the disposition.

The 2008 Budget introduced the concept of "treaty protected property" which was intended to provide an exception from these compliance and reporting obligations. However, uncertainty over its application meant that arm's length purchasers of treaty protected TCP such as private company shares still insisted on full compliance in cases of even marginal doubt.

Budget 2010 addresses this issue by streamlining the definition of TCP and excluding from Canadian taxing jurisdiction (and thereby the associated reporting and compliance burdens described above), interests which are shares of private corporations, capital interests in a trust, or a unit of a unit trust, provided that the value of such interest was not derived principally from real or immovable property situated in Canada, Canadian resource property or timber resource property at any time during the previous 60 months.

A second related measure will address a technical issue that prevented taxpayers in certain circumstances from applying for refunds of overpayments of tax withheld under section 116 or under Regulation 105 which imposes a withholding obligation in connection with payments made to non-residents in respect of services rendered in Canada.

Foreign Tax Credit Generator

Foreign tax credits ("FTC") permit a Canadian taxpayer to claim a credit against its Canadian tax liability for foreign taxes imposed on foreign source income. In the context of income attributed to a Canadian taxpayer in respect of the foreign accrual property income ("FAPI") of a controlled foreign affiliate, a deduction is available for foreign taxes paid by the controlled foreign affiliate determined by multiplying foreign accrual tax ("FAT") by a relevant tax factor. Where a dividend is paid by a foreign affiliate of a Canadian corporation out of taxable surplus that dividend is included in the income of the recipient corporation subject to a deduction for an amount which is determined by reference to the corporation's relevant tax factor for the year in which the dividend is received applied to the amount of the foreign tax prescribed to be applicable to that dividend. The foreign tax prescribed for these purposes is based on the definition of underlying foreign tax ("UFT") in the Regulations to the Income Tax Act. The objective of each of these credit and deduction provisions is to prevent the double taxation of foreign income.

Foreign tax generators have been the subject of much scrutiny in the United States over the past several years and the impact of these transactions on tax bases has been a subject of discussion and study by the Joint International Tax Shelter Information Centre ("JITSIC") of which both Canada and the United States are members. JITSIC is an information exchange arrangement under which the US, Canada, the United Kingdom and Australia exchange information on tax avoidance schemes.

A memorandum dated February 19, 2009 issued by the Internal Revenue Service recently indicated the significance which the US IRS attributes to these transactions:

"FTC generators are highly structured transactions that exploit the FTC regime. Some of these transactions are designed to recover the foreign tax claimed as a FTC, so that, in substance, the transaction incurs no foreign tax cost. Other types of transactions are structured to eliminate the income that results in the FTC. Some transactions do both, and in either case, the FTC is inappropriate because the taxpayer claims an FTC where no double taxation occurs. In these situations, the FTC becomes an unintended monetary benefit generated by the transaction, which the parties to the transaction share. The parties adjust interest rates on loans or pay fees to share the US FTC benefit. These transactions are particularly offensive because they are designed strictly to generate credits in any amounts desired by the parties."

The Government has indicated in Budget 2010, in similar terms, its concerns at the use of such transactions by Canadian taxpayers:

"Some Canadian corporations have recently been engaging in schemes, often referred to as 'foreign tax credit generators', that are designed to shelter tax otherwise payable in respect of interest income on loans made, indirectly to foreign corporations. These schemes artificially create foreign taxes that are claimed by the Canadian corporation as a FTC, or a FAT or a UFT deduction, in order to offset Canadian tax otherwise payable.

There are two main categories of these schemes, and many variations within these categories. The first category involves the use of a foreign partnership, the second involves the use of a foreign corporation that is intended to qualify as a foreign affiliate. The main thrust of all of these schemes is to exploit asymmetry, as between the tax laws of Canada and those of a foreign country, in the characterisation of the Canadian corporation's direct or indirect investment in a foreign entity earning the income that is subject to the foreign tax."

To address these perceived abuses, Budget 2010 proposes to exclude from a Canadian taxpayer's business-income tax and non-business-income tax calculation the amount of any income or profits tax paid to a foreign government in respect of income of a partnership for a period in respect of which the Canadian taxpayer's share of income from the partnership under the laws of the foreign jurisdiction imposing the tax is less than that taxpayer's share of income for Canadian tax purposes. Similarly, the amount of FAT for purposes of determining the deduction available to a Canadian corporation in respect of the inclusion in its income of the FAPI of a controlled foreign affiliate and the amount of UFT for purposes of determining the deduction available to a Canadian corporation in respect of dividends it receives from a foreign affiliate from taxable surplus will exclude any income or profits tax paid, or any amount prescribed in respect of the foreign affiliate of the Canadian taxpayer in circumstances:

  1. where the Canadian taxpayer is a member of a partnership and the share of the Canadian taxpayer in the income of the partnership under the laws of a foreign jurisdiction is less than the share that taxpayer for Canadian tax purposes, or
  2. where the Canadian taxpayer is considered under foreign tax laws to own less than all of the shares of the capital stock of (x) a particular foreign affiliate, (y) of another foreign affiliate of the Canadian taxpayer in which the particular foreign affiliate has an ownership interest, or (z) of another foreign affiliate of the Canadian taxpayer that has an ownership interest in the particular foreign affiliate, which is less than the share interest of the Canadian taxpayer as determined for Canadian tax purposes.

This proposal is yet another reflection of the commitment of the Government to addressing cross-border planning which affords Canadian taxpayers unduly advantageous tax treatment as a result of an arbitrage of differences between the Canadian and a foreign tax regime.

Disbursement Quota

Canada's charities have been relieved of what has been characterized as an unduly complex and costly administrative burden. Prior to Budget 2010, a registered charity was generally required to spend on its charitable activities in each year an amount equal to:

  1. 80% of its receipted donations of the previous year; plus
  2. 80% of transfers received from other charities (100% in the case of private foundations) other than a specified gift or enduring property; plus
  3. 3.5% of its assets not used in charitable programs or administration (generally intended to mean investment assets with a slightly different calculation for charitable organizations, public foundations and private foundations) if those assets exceed $25,000.

Failure to expend the required amount could result in the revocation of the charity's registration. In addition to the administrative difficulties, in times of declining donations and reduced investment income, meeting the disbursement quota could pose a significant economic challenge.

Under the new rules, the 80% requirement is completely eliminated and, for charitable organizations other than foundations, the asset limit has been raised to $100,000. This means that smaller charities will be relieved of this burden altogether, while larger organizations will see the problem significantly reduced. The new, simplified and significantly reduced disbursement requirements come with stronger anti-avoidance provisions. Specifically, where previously a charity attempting to avoid or delay its disbursement obligations by making a gift to another registered charity would face a penalty, the revised provisions penalize a charity that enters into any transaction for that purpose. Additionally, in some circumstances, a charity which receives a gift from another charity with which it does not deal at arm's length, could have its registration revoked if the amount of that gift is not spent by the end of the charity's next fiscal year.

Reporting Avoidance Transactions

To preserve the fairness of Canada's tax system, the Government believes it is necessary to have enhanced reporting of tax structures. Following the lead of Quebec, the United States and the United Kingdom, Budget 2010 announced proposals to require the reporting of certain tax avoidance transactions.

Budget 2010 is proposing a regime of mandatory disclosure for "reportable transactions" that feature at least two of three "hallmarks". The mere presence of these "hallmarks" are not necessarily indicative of an abuse of the income tax system. However, the Government contends that their presence "often indicates that underlying transactions are present that carry a higher risk of abuse of the income tax system".

A "reportable transaction" would be an avoidance transaction, as currently defined in the Income Tax Act, that is entered into by a taxpayer that bears at least two of the following three hallmarks:

  1. A promoter or tax advisor in respect to the tax transaction is entitled to fees that are either (i) attributable to an amount of, or contingent on obtaining, a tax benefit or (ii) attributable to the number of taxpayers who participate in the transaction;
  2. A promoter or tax advisor in respect of the transaction requires "confidential protection" about the transaction; and
  3. The taxpayer obtains "contractual protection" in respect of the transaction.

If a "reportable transaction" has not been disclosed on a timely basis, the CRA could deny the tax benefit resulting from the transaction. The tax benefit would not be lost however. To the extent that the benefit sought would otherwise be permitted, a taxpayer may still obtain such tax benefit if the taxpayer provides the required information to the CRA and pays a penalty.

Generally, these proposals would apply to transactions entered into after 2010, as well as those that are part of a series of transactions completed after 2010.

For the time being, no further details are available such as who has the obligation to disclose a "reportable transaction" or what are the penalties that may be applicable. The budget papers promise more details to follow and also promise a public consultation process.

Taxation of Corporate Groups

Budget 2010 suggests the possibility of new rules for the taxation of corporate groups such as a formal system of loss transfers or consolidated reporting. Although this would be welcomed by many, no details were provided, nor was there any indication of a timeline for this initiative.

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Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

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