After four years of discussion, Ottawa appears to be moving on its pledge to make cross-border mergers and acquisitions easier to pull off.

Under current tax rules, share-for-share exchanges — such as a corporate acquisition — can be completed on a tax-deferred basis, in which the corporations involved are either all based in Canada, or all foreign firms. However, the rules do not apply to cross-border deals (in which a Canadian shareholder exchanges shares of a domestic corporation for shares of a foreign corporation).

The government says there are ways to construct these deals so that a share exchange can be carried out on a tax-deferred basis, but these transactions can be complex and costly.

Ottawa first addressed this issue in the October 2000 mini-budget, when it pledged to consult and design a tax-deferral provision that would apply to cross-border share exchanges. The 2003 budget reiterated this plan.

On Tuesday in its new budget, the Martin government said a detailed proposal will be released for public comment in the coming months.