Government of Canada Moves to
Implement Outstanding Tax Measures
The Honourable Jim Flaherty, Minister of Finance, released draft legislative
proposals to implement the remaining tax measures from Budget 2008 along with
several previously announced tax initiatives for consultation. "Our government
is not only reducing the tax burden on all Canadians, many of the measures
contained in this second Budget Implementation Bill will modernize our tax
system and make it more efficient," said Minister Flaherty.
The proposals released include draft legislation to: Clarify the application
of the excess corporate holdings rules for private foundations; Increase the
amount that corporations will be able in future to pay as "eligible dividends",
to reflect lower corporate income tax rates and in keeping with the Budget 2008
modification of the dividend tax credit; Reduce the paper burden on businesses
by allowing a larger number of government entities to share Business
Number-related information in connection with government programs and services;
Enact several regulatory amendments that complement and complete measures
enacted in the Budget Implementation Act, 2008; and Introduce minor adjustments
to the Tax Free Savings Account rules and the scientific research and
experimental development investment tax credit rules, further to post-Budget
consultation with affected taxpayers.
The draft legislative proposals also include other measures including: New
income tax rules to facilitate the conversion of specified investment flow
through (SIFT) trusts (often referred to as "income trusts") into corporations.
The rules reflect the Government’s commitment to ensure that existing SIFTs can
choose to reorganize as corporations without undue tax effects; Revised draft
amendments to take into account financial institution accounting changes; The
extension of the general treatment of capital gains and losses on an acquisition
of control of a corporation to gains and losses that result from fluctuations in
foreign exchange rates in respect of debt denominated in foreign currency; An
enhanced carry-forward for investment tax credits; Updated prescribed amounts
for automobile expenses and benefits; Revised draft amendments relating to the
computation of income, gains and losses of a foreign affiliate; and Revised
draft regulations that modify the tax treatment of foreign affiliate active
business income earned in a jurisdiction with which Canada has concluded a tax
information exchange agreement. |