{"id":3185,"date":"2025-07-28T08:00:33","date_gmt":"2025-07-28T08:00:33","guid":{"rendered":"https:\/\/advisor.wellington-altus.ca\/evansfamilywealth\/?p=3185"},"modified":"2025-07-25T13:43:19","modified_gmt":"2025-07-25T13:43:19","slug":"canadian-companies-moving-to-us-obbb-investing-impact","status":"publish","type":"post","link":"https:\/\/advisor.wellington-altus.ca\/evansfamilywealth\/canadian-companies-moving-to-us-obbb-investing-impact\/","title":{"rendered":"Good News! The Smart Money Moves South"},"content":{"rendered":"

Carney quietly set the bar when Brookfield Asset Management shifted south. Trump’s One Big Better Bill Act just raised it. From Shopify to CP Rail, the math now favours relocating to America. Canada can either compete on tax or prepare for the largest head\u2011office drain in a generation.<\/em><\/p>\n

Carney’s Brookfield Move Was Just the Beginning<\/b><\/span><\/h2>\n

Mark Carney is a patriot and the embodiment of careful, mainstream finance. So when the firm he chaired (Brookfield Asset Management) restructured to take fuller advantage of U.S. tax rules before he became prime minister, and before Trump\u2019s \u201cOne Big Beautiful Bill\u201d (OBBB) even existed, it sent a clear message: smart corporate boards go where the math works. If it was prudent then, it\u2019s almost mandatory to at least consider it now. That\u2019s not disloyalty; it\u2019s fiduciary duty.<\/p>\n

\"Prudence>Patriotism<\/p>\n

OBBB: America’s New Tax Playbook Changes Everything<\/strong><\/span><\/h2>\n

Think of OBBB as the U.S. saying: \u201cInvest here. Spend here. We\u2019ll let you keep more of the profit\u2014right away.\u201d Let’s consider how this might work for Canada’s largest tech company, Shopify.<\/p>\n

    \n
  • Deduct it all in year one. <\/strong>Shopify spent about $1.37B on R&D in 2024. In Canada, most of that gets written off over several years. In the U.S. under OBBB, it\u2019s 100% immediate. That can wipe out roughly $300\u2013350M of first\u2011year tax (\u224823\u201325 percentage\u2011point swing on that spend).<\/li>\n
  • Extra break on overseas customers. <\/strong>Roughly 30% of Shopify\u2019s revenue now comes from outside North America, and it\u2019s growing. In the U.S., that slice can be taxed around 13-15% instead of ~26% here: a ~11-13 point saving on those profits.<\/li>\n
  • Less double tax on global profits. <\/strong>Friendlier rules for using foreign tax credits typically shave another ~2\u20134 points off the blended rate by avoiding \u201ctax on tax.\u201d<\/li>\n<\/ul>\n

    Bottom line:<\/strong> You don\u2019t need a smokestack. OBBB rewards where you park your people, your code, and your profits\u2014not where you pour concrete. Net-net, an IP-heavy firm like Shopify, can drop an effective rate from ~26% to the mid-teens and near zero in the first year of heavy spending.<\/em><\/p>\n

    \"Prudence<\/p>\n

    Why Shopify and CP Rail Might Be Next<\/strong><\/span><\/h2>\n

    Now apply the same logic to a capital-heavy name like\u00a0Canadian Pacific Kansas City<\/strong>:<\/p>\n

      \n
    • Locomotives, track tech, automation, AI logistics platforms\u2014all can be expensed immediately in the U.S.<\/li>\n
    • CP is now a North American rail. If moving the legal home base drops taxes by hundreds of millions, the board has to examine it.<\/li>\n<\/ul>\n

      The same argument fits\u00a0Magna, Nutrien, TC Energy, Couche-Tard, Thomson Reuters, CGI, Constellation Software\u2014<\/strong>any company with big U.S. investment plans or large overseas sales.<\/p>\n

      TSX Companies Most Likely to Move South<\/strong><\/span><\/h2>\n

      As investors, we need to understand that every board of every company in Canada has a fiduciary duty to at least run the numbers. At Evans Family Wealth, we’re not tax or trade experts so we relied on ChatGPT o3 Deep Research to run the numbers and identify the most at risk companies in the TSX 60.<\/p>\n

      Imagine if we lost even a fraction of these great companies?<\/p>\n

      \"top<\/p>\n

      The Hidden Bill for Canada’s Economy<\/strong><\/span><\/h2>\n

      Add up the profits of the obvious \u201cflight\u2011risk\u201d names (your Top 10) and the next tier. Consider these estimates:<\/p>\n

        \n
      • $30- 40 billion <\/strong>in pre\u2011tax profit currently taxed here is \u201cin play.\u201d<\/li>\n
      • At roughly 26% <\/strong>combined federal\/provincial rates, that\u2019s\u00a0 $7-10 billion per year <\/strong>in corporate tax.<\/li>\n
      • Even if only\u00a040% <\/strong>of that shifts south, Canada still loses\u00a0$3-4 billion each year<\/strong>\u2014recurring.<\/li>\n<\/ul>\n

        That\u2019s before you count lost head\u2011office jobs, legal\/accounting work, charitable giving, and the wider related businesses that come with a headquarters.<\/p>\n

        Canada has a choice: match U.S. tax breaks or risk losing some of our best companies<\/strong><\/span><\/h2>\n

        Carney now faces another difficult decision. Match (or better) OBBB tax rules or hope that patriotism wins the day. Matching OBBB would hurt in the short term: Ottawa would give up billions in revenue up front. However, it keeps head offices, high-paid talent, and future tax dollars here at home.<\/p>\n

        Carney’s own actions with Brookfield confirms that Prudence > Patriotism. Just as he did at Brookfield Asset, boards are obligated to follow the math, not the flag. If the U.S. keeps offering a sweeter deal, more Canadian champions will quietly shift south, and we\u2019ll watch billions in corporate tax revenue drift away year after year.<\/p>\n

        Investors Aren’t Passengers\u2014Here’s How to Pivot<\/strong><\/span><\/h2>\n

        Last week we looked at Carney\u2019s own portfolio holdings (more capital outside Canada than in it) and what that meant for investors. This week we\u2019ve been honest about the risk: Ottawa hesitates, the U.S. doesn\u2019t, and boards follow the math.<\/p>\n

        Here\u2019s the good news, as investors, we\u2019re not stuck watching from the bleachers. We can tilt portfolios toward the winners of these policy shifts, diversify by jurisdiction, and use tax-smart structures ourselves. We can own the companies (and assets) that benefit from OBBB\u2019s generosity and be ready to pivot if Canada smartens up and levels the field.<\/p>\n

        Next week, we move from risk to opportunity. The GENIUS Act has effectively blessed the new rails of finance\u2014blockchain, Bitcoin, Ethereum. We\u2019ll map how to participate thoughtfully, size positions sanely, and turn a policy shift into portfolio advantage. We’re not victims; just like Carney repositioned for maximum gain, we can too.<\/p>\n

        Watch the Video: Billions Rolling South?<\/h3>\n

        Want to hear Glen\u2019s take in more detail? Check out our latest video on YouTube and subscribe to stay up to date.<\/p>\n