Consolidated tax reporting for corporate groups (i.e., corporations with common direct or indirect ownership) is not permitted in Canada. As a result, losses incurred by a corporation within a corporate group cannot generally be offset against the profits or gains of one or more other corporations within the group. While loss utilization planning within a corporate group is often permitted, without consolidated reporting or a formal system for transferring losses within the group, such loss utilization plans can be costly to structure and implement.
In Budget 2010, the Government announced that it is going to review the taxation of corporate groups, including the virtues of consolidated reporting or a formal system of transferring losses within a corporate group. The Government indicated that stakeholder views will be sought prior to the introduction of any changes.