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 nstitution 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.
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