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Tax Policy Branch

The Tax Policy Branch is responsible for the development and evaluation of federal taxation policies and legislation in the areas of personal income tax, business income tax, and sales and excise tax. The actual collection of taxes and interpretation of tax law are the responsibility of the Canada Revenue Agency.

The Branch consists of five divisions.

Personal Income Tax Division

The Personal Income Tax Division undertakes economic analysis and develops policy proposals and recommendations related to personal income tax and tax-based transfers to individuals and families. It is composed of seven sections.

Strategic Projects

This section focuses on the overall structure of the tax system, including the progressivity of Canada's marginal tax rates and bracket thresholds, levels of tax-free income, definition of the tax base, and the overall tax burden.

Branch Coordination

This section supports the effective management of horizontal issues within the Tax Policy Branch. This includes ensuring that the Branch fulfils its corporate budgeting, planning and reporting obligations.

Social Policy

This section focuses on the areas of children and families, dependent relationships, persons with disabilities and those who care for them, and seniors. This section is also responsible for income tax policy development on issues related to pensions, retirement income and other registered savings plans.

Charities

This section is responsible for the tax treatment of charitable activity. This includes tax measures for individual donations as well as reporting and compliance obligations for charities. The section also has responsibility for the Political Contributions Tax Credit.

Savings and Investment

This section focuses on savings, investment income, real estate, venture capital and unincorporated businesses. Specifically, it develops and evaluates policy proposals relating to the tax treatment of savings, including the Tax-Free Savings Account, and the taxation of capital gains, dividends and interest.

Employment and Education

This section focuses on the tax treatment of employment benefits and expenses (e.g., health benefits and moving expenses), and on tax measures for post-secondary education and training, such as non-taxation of scholarship income, tuition and education credits. It is also responsible for policy issues related to the Working Income Tax Benefit (WITB).

Quantitative Analysis

This section conducts economic and quantitative analysis to support policy analysis and development by other sections. In addition, the section carries out applied research on the economic impact of personal taxes.

Sales Tax Division

The Sales Tax Division is responsible for developing the policies, legislation and regulations associated with federal consumption taxes—the goods and services tax (GST), the harmonized sales tax (HST) and the federal excise duties and taxes—on products such as tobacco, fuel and alcohol. The division consists of seven sections.

Excise Taxation and Legislation

This section is responsible for developing policies and legislation relating to federal excise duties on beer, spirits, wine and tobacco. This section is also responsible for the development of policies and legislation relating to the Air Travellers Security Charge as well as the Green Levy on vehicles, and for federal excise taxes, such as those levied on fuel and certain other goods.

General Operations and Border Issues

This section is responsible for researching and developing GST/HST policy proposals and legislation aimed at ensuring the integrity and responsiveness of the federal sales tax in an evolving global business environment.

Real Property and Financial Institutions

This section is responsible for monitoring, evaluating and recommending improvements to the operation of the GST/HST in the financial services and real property sectors, including GST/HST issues related to housing, banking, investments and pensions.

Public Sector Bodies

This section is responsible for researching, developing and recommending policy changes and the corresponding legislative changes relating to the application of the GST/HST to public sector bodies including governments and municipalities, schools, colleges and universities, hospitals and non-profit organizations and charities.

Strategic Planning

This section is responsible for managing strategic issues relating to the GST/HST including those connected to the federal Harmonized Sales Tax Framework, environmental taxation, sustainable development, and overall tax policy. This section also coordinates sales tax-related material for the annual budget process.

GST Legislation

This section is responsible for overseeing the legislative responsibilities of the Division in the area of the GST/HST and ensuring that government policy in the area of the GST/HST is implemented effectively with appropriate legislative instruments.

Economic Analysis and Revenue Allocation

The section supports policy analysis across the Division with economic, statistical, fiscal and other general quantitative measures.

Business Income Tax Division

The Business Income Tax Division is responsible for conducting analysis and providing advice on all aspects of business taxation. The Division comprises six sections.

Strategic Projects

This section is responsible for developing tax policies and advice relating to the overall structure of the corporate tax system, its international competitiveness, and small businesses. The section also conducts special research projects on a variety of issues related to corporate taxation.

Resource and Environmental Taxation

This section is responsible for analysis and development of corporate income tax policy with respect to the natural resource industries (e.g., oil and gas, and mining) and the use of corporate tax measures to achieve environmental objectives, such as clean energy.

Financial Institutions

This section is responsible for corporate tax policy development pertaining to the financial sector, including institutions such as banks, credit unions, pension funds, insurance companies and their policy holders.

International Taxation

This section is responsible for corporate tax policy developments related to the taxation of foreign affiliates and their shareholders, the taxation of Canadian enterprises carrying on business abroad, the taxation of non-residents carrying on business in Canada, and withholding taxes on cross-border payments.

Economic Development

This section is responsible for a range of business tax issues, including capital cost allowances (CCA), tax credits, scientific research and experimental development (SR&ED) tax incentives, sector-specific issues, and the deductibility of expenses.

Quantitative Analysis

This section is responsible for carrying out studies on a range of policy issues related to business taxation. This includes the development and maintenance of various databases and micro-simulation models used in the assessment of the economic and financial impacts of existing and proposed taxation policies.

Intergovernmental Tax Policy, Evaluation and Research Division

The Intergovernmental Tax Policy, Evaluation and Research Division is responsible for the examination, development and management of issues related to federal-provincial and Aboriginal tax policy matters. The division comprises three sections.

Federal-Provincial Taxation

This section has policy and administrative responsibility for the federal-provincial Tax Collection Agreements and Reciprocal Taxation Agreements. It also provides advice on federal-provincial tax policy issues.

Aboriginal Tax Policy

This section is responsible for developing tax policy related to Aboriginal issues, monitoring Aboriginal tax court cases, negotiating the tax elements of comprehensive land claim and self-government agreements, and negotiating and administering Tax Administration Agreements with Aboriginal governments.

Evaluation and Research

This section evaluates tax measures to determine if existing tax provisions continue to be relevant and if they are having the intended impact in a cost-effective manner. The section also undertakes research relating to all aspects of the tax system.

Tax Legislation Division

The Tax Legislation Division drafts income tax legislation and supports its passage through Parliament, in consultation with the Department of Justice Canada and the Canada Revenue Agency. As well, the Division analyzes tax developments in other countries and is responsible for policy changes to Canadian international taxation rules and the negotiation of tax treaties and Tax Information Exchange Agreements with other countries. The Division is also a key point of contact between the Department of Finance and the private-sector tax profession.

The Tax Legislation Division is currently organized into six sections.

Business, Property and Personal Income

This section is responsible for a broad range of personal, business and certain corporate income tax issues, including those relating to the computation of income for individuals and businesses, and the taxation of capital gains. This section is also responsible for shareholder taxation, charities, cultural issues and tax administration issues.

Deferred Income Plans

This section is responsible for all legislative matters relating to deferred income plans such as pensions, Registered Retirement Savings Plans, Registered Education Savings Plans, and Registered Disability Savings Plans. It is also responsible for the legislation that governs tax-free savings accounts (TFSAs).

Domestic Corporations and Resource Income

This section is responsible for a number of areas relating to the definition and taxation of corporate income taxation and the tax treatment of corporate re-organizations. It is also responsible for legislative issues relating to the taxation of resource income and the scientific research and experimental development (SR&ED) tax incentive regime.

Financial Intermediaries and Trusts

This section is responsible for a range of legislative issues relating to the income taxation of financial institutions (e.g., banks and insurance companies), financial instruments and specialty corporations such as co-operative corporations. It is also responsible for matters relating to the income taxation of both resident and non-resident trusts, and of investors in foreign investment entities.

International Corporations And Foreign Income

This section is responsible for foreign tax credits, foreign affiliates, and all other matters relating to the taxation of income earned outside Canada. It is also responsible for legislative matters relating to the taxation of non-residents, changes in residents, and transfer pricing for cross-border related party transactions.

Tax Treaties

This section is responsible for all matters relating to the negotiation and the implementation of Canada's international tax treaties and Tax Information Exchange Agreements. The members of this section also contribute, through their participation in the relevant OECD bodies, to the formulation of international policy with respect to tax treaties.