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Archived – Annex 7
Tax Measures:
Supplementary Information and Notice of Ways and Means Motion

Archived information

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Table of Contents

Tax Measures: Supplementary Information.

Measures to Enhance Tax Fairness and Achieve Economic and Social Objectives (1994 – 2001).

Notice of Ways and Means Motion.


Tax Measures:  
Supplementary Information

Overview

This annex provides detailed information on each of the tax measures proposed in this budget.

Table A7.1 lists those measures that are proposed to be legislated pursuant to the 2001 budget and provides estimates of their budgetary impact.

This annex also provides a detailed listing of measures that have been introduced since 1994 that enhance tax fairness and achieve economic and social objectives.

Finally, this annex provides a Notice of Ways and Means Motion to amend the Income Tax Act.

Table A7.1
Federal Revenue Impact of Proposed Measures


2001-2002 2002-2003 2003-2004

(millions of dollars)
Personal Income Tax Measures      
  Apprentice Vehicle Mechanics’
  Tools Deduction
-5 -10
  Adult Basic Education – Tax
  Deduction for Tuition Assistance
-10 -5 -5
  Extending the Education Tax
  Credit
-10 -20
  Promoting Sustainable Woodlot
  Management
-5 -10
  Donations of Certain Publicly      
  Traded Securities to Charities1 -70 -70
Business Income Tax Measures      
  Improvements to the Tax
  Incentives
     
  for Renewable Energy and Energy
  Efficiency
-5 -5
  Deferral of Corporate Tax
  Instalments for Small Businesses
-2,000 2,000
  Venture Capital – Partnerships
  Construction Work Camps -10 -10
Total -2,010 1,890 -130

– Small, non-existent or prevents revenue loss.
1 Measure announced prior to the budget.

Personal Income Tax Measures

Apprentice Vehicle Mechanics’ Tools Deduction

Individuals employed as apprentice vehicle mechanics must typically provide their own tools for the on-the-job component of their apprenticeship. The cost of these tools is high in relation to their apprenticeship income and, consequently, can constitute a barrier to entering the trade.

The budget proposes to provide an income tax deduction for the extraordinary portion of the cost of new tools acquired by apprentice vehicle mechanics after 2001. To be eligible for this employee expense deduction, the tools must be acquired while the apprentice is registered with a provincial or territorial body in a program leading to designation as a mechanic licensed to repair automobiles, aircraft, or any other self-propelled motorized vehicles. Also, the apprentice’s employer must certify that the tools are required as a condition of, and for use in, the apprenticeship.

The amount of the deduction will be the total cost of new tools acquired in a taxation year, less the greater of $1,000 and 5 per cent of the individual’s apprenticeship income for the year. Any part of the eligible deduction that is not taken in the year in which the tools are acquired can be carried forward and deducted in subsequent taxation years.

The cost of the individual’s tools for other income tax purposes will be the acquisition cost less the deductible portion of that cost. If an individual (or a non-arm’s-length person) disposes of the tools for proceeds in excess of this reduced cost, the excess amount will be included in income in the year of disposition. However, tools will be eligible for the existing rollovers that apply to transfers of property to a corporation or a partnership.

Example

Alexandra, an apprentice vehicle mechanic, earns $25,000 as an apprentice in a year and spends $5,000 on new tools in the year. Alexandra’s deduction is $3,750 ($5,000 – $1,250 [the greater of $1,000 and 5 per cent of $25,000]), representing a federal income tax savings of $600.

The individual will also be eligible for a rebate of the goods and services tax/harmonized sales tax paid on the portion of the purchase price of the new tools that is deducted in computing employment income.

These measures will apply to the 2002 and subsequent taxation years.

Adult Basic Education – Tax Deduction for Tuition Assistance

Basic education is primary or secondary level education or other forms of training that do not currently qualify for the tuition tax credit. Some adult students who take basic education to upgrade their skills receive direct financial assistance from governments to pay their tuition fees. This tuition assistance must be included in income, and the tuition fees do not qualify for any tax relief.

The budget proposes that individuals May deduct, in computing their taxable income, the amount of tuition assistance received for adult basic education that has been included in their income. In order to be eligible, the tuition assistance must be provided under:

This measure will apply to eligible tuition assistance received after 1996. Administrative procedures will be established over the coming months to enable individuals who received eligible tuition assistance before 2001 to recover the income taxes paid, or to eliminate the income taxes owing, on these amounts.

Extending the Education Tax Credit

The education tax credit helps students defray non-tuition costs of post-secondary education and training, such as textbooks. The education amounts – the amounts used to calculate the education tax credit – were doubled in the October 2000 Economic Statement and Budget Update to $400 per month of full-time study and $120 per month of part-time study.

The education tax credit cannot currently be claimed by students who receive financial assistance for post-secondary education under government training programs. The budget proposes to extend access to the education tax credit to students who receive taxable assistance for post-secondary education under:

This measure will apply to the 2002 and subsequent taxation years.

Promoting Sustainable Woodlot Management

Currently a taxpayer May make an intergenerational transfer of farm property in Canada on an income tax-deferred rollover basis, if the property was principally used in a farming business in which the taxpayer or a family member was actively engaged on a regular and continuous basis. Similar rules apply to intergenerational transfers of shares of family farm corporations and interests in family farm partnerships.

The operation of a commercial woodlot may, in certain circumstances, constitute a farming business. However, the intergenerational rollovers are generally not available for commercial woodlots because, aside from monitoring, the management of a woodlot May not demand regular and continuous activity. As a result, many commercial woodlot owners are currently subject to income tax on intergenerational transfers of their woodlots. This can be detrimental to the sound management of the resource if woodlots are harvested prematurely to pay the tax.

The budget proposes to facilitate intergenerational rollovers of commercial woodlot operations that are farming businesses. Where the regular and continuous activity test set out in the existing rollover rules cannot be met, a new test will be implemented strictly for the purpose of applying those rules to commercial woodlot operations. The new test will allow an intergenerational rollover where the conditions of the existing rollover rules are otherwise met and the transferor or a family member is actively involved in the management of the woodlot to the extent required by a prescribed forest management plan.

Specific criteria for prescribed forest management plans will be developed in consultation with interested parties. For transfers that occur before these criteria are developed and prescribed, it will be required that a plan exist providing for the necessary attention to a woodlot’s growth, health, quality and composition.

This measure will apply to transfers that occur after December 10, 2001.

Donations of Certain Publicly Traded Securities to Charities

On October 12, 2001, the Government announced its intention to make permanent the 1997 budget measure that provides special tax assistance for donations of certain securities to public charities. This measure was originally scheduled to expire on December 31, 2001.

Under the measure, the amount included in the income of a donor for capital gains tax purposes arising from donations of eligible securities to public charities is one-half the amount included for other capital gains. Eligible securities are shares, debt obligations and rights listed on a prescribed stock exchange, shares of the capital stock of mutual fund corporations, units of mutual fund trusts, interests in certain segregated fund trusts, and prescribed debt of, or guaranteed by, Canada or a province. This measure has helped to significantly increase donations of securities over the past five years. Making it permanent will support the important work of charities in meeting the needs of Canadians.

The Government also proposes to make permanent the 2000 budget measure that reduces the tax on employment benefits in respect of donations of eligible securities acquired through stock option plans, to parallel the treatment for donations of eligible securities.

As previously announced, the Government intends to continue to work with the charitable sector to determine whether there is an appropriate and cost-effective basis for broadening this measure beyond its current application.

Goods and Services Tax Credit Responsiveness

The goods and services tax credit (GSTC) helps to offset the impact of the GST on low- and modest-income Canadians. The GSTC is paid quarterly over the 12-month period (the benefit year) beginning each July. Currently the GSTC is calculated on the basis of income and family information provided as of the end of the previous calendar year, six months before the beginning of the benefit year. As a result, the GSTC for a particular benefit year does not respond to changes in family circumstances that occur after the end of the previous calendar year. For GSTC purposes, changes in family circumstances include events such as births, deaths, marriages, reaching the age of 19 years, and becoming or ceasing to be resident in Canada.

The Government announced in the 1999 budget that the Department of Finance and the Canada Customs and Revenue Agency would work together to improve the responsiveness of the GSTC and streamline its administration. This budget confirms that, beginning with benefits payable for July 2002, an individual’s GSTC entitlement for a quarter will be based on the individual’s family circumstances at the end of the preceding quarter.

Business Income Tax Measures

Improvements to the Tax Incentives for Renewable Energy and Energy Efficiency

Under the capital cost allowance (CCA) regime, Class 43.1 describes certain renewable energy and energy efficiency equipment that qualifies for an accelerated CCA rate of 30 per cent. This class provides an incentive for new investments that will help Canada meet its environmental objectives.

Since Class 43.1 was introduced in the 1994 budget, the Government has expanded eligibility for this class on several occasions to further encourage investments in renewable energy and energy conservation projects.

The budget proposes to increase the upper limit on the size of small hydro-electric projects that qualify for Class 43.1 to a maximum annual rated capacity of 50 megawatts (MW), from the current limit of an annual average generating capacity of 15MW. This change will encourage investment in small hydro-electric projects, including new run-of-the-river projects, and complement provincial initiatives that have provided further opportunities for power producers to invest in small hydro-electric projects. The change will apply to property acquired after December 10, 2001.

Class 43.1 also includes property that is part of a system that generates electrical energy and that has a heat rate attributable to fossil fuel of less than 6000 BTU per kilowatt-hour of electrical energy generated by the system. It is proposed that "blast furnace gas", which is a by-product of the steel manufacturing process, be included in the definition of fossil fuel. This change will encourage an energy efficient use of blast furnace gas by steel mills, and will be effective for property acquired after 2000.

Finally, because of rapid changes in technology in this area, the Government intends to consult with industry to determine whether additional improvements are required for this CCA class. In this context, the Government will also explore whether a more streamlined process could be implemented to determine new types of projects that would be eligible for Class 43.1.

Deferral of Corporate Tax Instalments for Small Businesses

Many small businesses are facing additional challenges as the economy has slowed. In order to provide a cash flow benefit to small corporations, the budget proposes to defer payment of their federal corporate tax instalments for the months of January, February and March 2002 for a period of at least six months, without payment of interest or the assessment of penalties.

Corporations will qualify for this instalment deferral if they are resident in Canada and did not have more than $15 million of taxable capital employed in Canada in the previous taxation year. A corporation that is considered for income tax purposes to be associated with other corporations will be eligible only if the taxable capital employed in Canada of all of the associated corporations did not exceed $15 million in the previous year. Both federal income and capital tax instalments will be deferred.

In respect of provinces that have a corporate tax collection agreement with the federal government, eligible corporations will also be able to defer their provincial income tax instalments for the same period. Provincial tax revenues will not be affected as the federal government pays provinces that have entered into tax collection agreements on an assessment basis, rather than on a collections basis.

Corporations must make their final payment of taxes owing for a taxation year two or three months after the end of that year (the balance-due day). To ensure that all small corporations effectively benefit from at least a six-month deferral of their January, February and March 2002 instalments, the balance-due day will be extended in circumstances where it would have otherwise occurred before a deferred instalment payment.

Also, to reduce administrative and compliance complexity, any deferred instalment payment that would otherwise be payable after year-end, but before the balance-due day for the year, will be due only on the balance-due day.

The following table sets out the schedule for the deferral of instalments and the deadline for making balance-due day payments.

Schedule for Deferred Tax Instalments and Balance-Due Day


 Taxation Year-End Instalments Deferred
 Balance-Due Day (BDD)
January 2002 February 2002 March 2002

January 2002 Deferred to BDD See January 2003 taxation year-end See January 2003 taxation year-end Extended to July 2002
February 2002 Deferred to BDD Deferred to BDD See February 2003 taxation year-end Extended to August 2002
March 2002 Deferred to BDD Deferred to BDD Deferred to BDD Extended to September 2002
April 2002 Deferred to BDD Deferred to BDD Deferred to BDD Extended to September 2002
May 2002 Deferred to BDD Deferred to BDD Deferred to BDD Extended to September 2002
June 2002 Deferred to BDD Deferred to BDD Deferred to BDD  Remains or September 2002
July 2002 July 2002 Deferred to BDD Deferred to BDD Remains September or October 2002
August 2002 July 2002 August 2002 Deferred to BDD Remains October or November 2002
September 2002 July 2002 August 2002 September 2002 Remains November or December 2002
October 2002 July 2002 August 2002 September 2002 January 2003 Remains December 2002 or
November 2002 July 2002 August 2002 September 2002 Remains January or February 2003
December 2002 July 2002 August 2002 September 2002 Remains February or March 2003
January 2003 See January 2002 taxation year-end August 2002 September 2002 Remains March or April 2003
February 2003 See February 2002 taxation year-end See February 2002 taxation year-end September 2002 Remains April or May 2003

Farm Credit Canada

Farm Credit Canada (FCC) is a federal Crown corporation that provides specialized financial services to farming operations. It is Canada’s largest term lender to primary producers and small- to medium-sized agribusiness. Currently FCC is prescribed as one of the federal Crown corporations that is subject to federal income tax.

The budget proposes that, for taxation years that begin after December 10, 2001, FCC not be subject to federal income and capital taxes. This change will provide the same tax treatment for FCC as is provided for Export Development Corporation and the Business Development Bank of Canada, two other federal Crown corporations that provide specialized financial services.

Venture Capital – Partnerships

The budget proposes two measures to facilitate the use of limited partnerships by tax-exempt and foreign investors in structuring their venture capital investments.

Qualified Limited Partnerships

Currently a limited partnership structure May be unattractive to pension funds and other tax-exempt investors because interests in limited partnerships are generally treated as foreign property for the purposes of the income tax rules that limit the amount of foreign property that a deferred income plan can hold.

The Income Tax Regulations provide several exceptions to the characterization of limited partnership investments as foreign property, including an exception for qualified limited partnerships (QLPs). One of the conditions for eligibility as a QLP is that no limited partner, or non-arm’s-length group of limited partners, May hold more than a 30-per-cent interest in the partnership. This ownership limitation has been identified as a potential impediment to venture capital investment by tax-exempt entities in Canada.

To remove this potential impediment, the budget proposes to eliminate the 30-per-cent ownership limitation for QLPs. Accordingly, a limited partnership May be a QLP even though a limited partner, either alone or as part of a non-arm’s-length group, has more than a 30-per-cent ownership interest in the partnership. However, for the purpose of the foreign property rules, any limited partner or group that holds more than a 30-per-cent interest in a QLP will be treated as owning a proportionate interest of each property owned by the QLP, including any foreign property. An ownership interest of 30 per cent or less in a QLP will remain exempt from treatment as foreign property.

This measure will apply after 2001.

Use of Canadian Investment Managers

The budget also proposes to make it easier for non-residents who invest through partnerships to retain Canadian investment managers and advisors.

In general, Canada taxes non-residents on their income from sources in Canada, including income from carrying on a business in Canada. Section 115.2 of the Income Tax Act is an interpretive rule which ensures that, provided certain conditions are met, a "qualified non-resident" is not considered to be carrying on business in Canada solely because it engages a Canadian firm to provide certain investment management and administration services.

Currently a partnership is a "qualified non-resident" only if none of its members is resident in Canada. Thus a partnership that has some non-resident members cannot rely upon the assurance that section 115.2 provides. This lack of certainty has been identified as a potential impediment to venture capital investment in Canada.

The budget proposes to clarify how section 115.2 applies to partnerships and their members, and to enable the non-resident members of a partnership to avail themselves of the assurance provided by the section. First, the definition "qualified non-resident" will be changed so that it will no longer include a partnership, but will instead apply separately to each partner. Second, the rule will be changed to provide that a "qualified non-resident" is not considered to carry on business in Canada solely because a Canadian resident provides investment management and administration services to the non-resident or to a partnership of which the non-resident is a member. It should be noted that this assurance extends only to the non-resident partners: a partner who is resident in Canada is not a "qualified non-resident" and cannot benefit from section 115.2.

These changes to section 115.2 will apply to the 2002 and subsequent taxation years.

Construction Work Camps

Generally, only 50 per cent of otherwise deductible business expenses for meals or entertainment are deductible for income tax purposes. This limitation reflects the personal consumption element of these expenses. However, the 1998 budget introduced an exception to this rule to allow full deductibility for the reasonable cost of meals incurred by employers in respect of employees working at certain "semi-remote" work sites. In order to qualify under this exception, a work site must be at least 30 kilometres from the nearest urban area of at least 40,000 people, and the employee cannot be expected to return home daily.

This exception may not address situations where, given the large size and short duration of a construction project, the local infrastructure of an urban area having a population of more than 40,000 is insufficient to support a large temporary workforce. In such a case, employers May establish a temporary work camp to provide meals and accommodation at or near the construction site. The budget proposes to allow full deductibility for the cost of meals provided to an employee housed at a temporary work camp constructed or installed specifically for the purpose of providing meals and accommodation to employees working at a construction site. It will also be required that the employee cannot be expected to return home daily.

The goods and services tax/harmonized sales tax (GST/HST) follows the income tax rules in its treatment of meal expenses. Accordingly, 100 per cent of the GST/HST paid or payable by an employer on the cost of fully deductible meals provided at a qualifying construction work camp will be recoverable by the employer as input tax credits.

This measure will apply to expenses incurred after 2001.

Other Measures

First Nations Taxation

In each budget since 1997, the Government expressed its willingness to put into effect taxation arrangements with interested First Nations. To date, the Government has entered into taxation arrangements allowing seven First Nations to levy a tax on sales on their reserves of fuel, tobacco products and alcoholic beverages. In addition, personal income tax collection and sharing agreements have been entered into with the seven self-governing Yukon First Nations. The Government is once again expressing its willingness to discuss and to put into effect arrangements in respect of direct taxation with interested First Nations.

Measures to Enhance Tax Fairness and Achieve Economic and Social Objectives
(1994 – 2001)

General Tax Relief


1998

1999

2000 Budget

2000 Statement


Families and Seniors


1996

1997

1998

1999

2000 Budget

2000 Statement


Education and Skills


1996

1997

1998

2000 Budget

Increased the partial annual exemption from $500 to $3,000 for scholarship, fellowship or bursary income.

2000 Statement

Other 2000 Announcements

2001


Tax Assistance for Charities and Public Institutions


1994

1995

1996

1997

1998

2000 Budget

2001


Persons With Disabilities


1996

1997

1998

1999

2000 Budget

2000 Statement


Personal Income Tax Measures to
Better Target Tax Preferences


1994

1995

1996

1998

1999

2000 Budget

2000 Statement

2001


Business Income Tax Measures to
Better Target Tax Preferences


1994

1995

1996

1997

1998

1999

2000 Budget

2000 Statement

2001


Sales and Excise Tax Measures to
Better Target Tax Preferences


1996-97

1998

1999

2000 Budget

Other 2000 Announcements

2001


Simplifying and Improving Tax
Administration and Enforcement


1994-97

1998

1999

2000 Budget

Other 2000 Announcements

2001


Notice of Ways and Means Motion

Notice of Ways and Means Motion to Amend the Income Tax Act

That it is expedient to amend the Income Tax Act to provide among other things:

Apprentice Vehicle Mechanics’ Tools

(1) That, for the 2002 and subsequent taxation years,

(a) there may be deducted, in computing the income of an individual from employment in the year as an apprentice mechanic registered in a provincial program leading to designation as a mechanic licensed to repair self-propelled motorized vehicles, an amount not exceeding the lesser of the individual’s deductible tool costs for the year and the amount that would otherwise be determined under section 3 of the Act to be the individual’s income for the year;

(b) where the individual’s deductible tool costs for a taxation year exceed the amount deducted in respect of those costs for the year, the excess be available for deduction in computing the individual’s income from employment for subsequent taxation years; and

(c) for the purposes of this paragraph and paragraph (2), the individual’s deductible tool costs for a taxation year be the amount, if any, by which

(i) the total cost of new tools and ancillary equipment that are acquired by the individual at a time in the year when the individual is under the apprenticeship, and that are certified by the individual’s employer to be required as a condition of, and for use in, the apprenticeship

exceeds

(ii) the greater of $1,000 and five per cent of the individual’s income for the year from the apprenticeship.

(2) That, where the cost of a property is included in computing an individual’s deductible tool costs for a taxation year,

(a) for all other purposes of the Act, the individual’s cost of all such property acquired in the year be reduced pro rata by the individual’s deductible tool costs for the year; and

(b) where the property is disposed of by the individual (or by a person with whom the individual does not deal at arm’s length or that acquired the property from any such person in a transaction to which subsection 85(1) or 97(2) of the Act applied), the amount by which the proceeds of disposition exceed the cost of the property, as adjusted by subparagraph (a), be included in computing the income for the year of disposition of the individual or of the person, as the case may be.

Adult Basic Education

(3) That, for the 1997 and subsequent taxation years, there be deducted in computing an individual’s taxable income for the year an amount that

(a) is received by the individual in the year under a program referred to in subparagraph 56(1)(r)(ii) or (iii) of the Act, a program established under the authority of the Department of Human Resources Development Act or a prescribed program;

(b) is assistance for the payment of tuition fees of the individual that do not qualify for the tuition fee credit;

(c) is included in computing the individual’s income; and

(d) is not otherwise deductible in computing the individual’s taxable income.

Education Tax Credit

(4) That, for the 2002 and subsequent taxation years, financial assistance included in computing an individual’s income and received under a program referred to in subparagraph 56(1)(r)(ii) or (iii) of the Act, a program established under the authority of the Department of Human Resources Development Act or a prescribed program not affect the individual’s eligibility for the education tax credit.

Promoting Sustainable Woodlot Management

(5) That

(a) subsections 70(9) and 73(3) of the Act, which provide rollover treatment for certain inter-generational transfers of farm property, be modified with respect to transfers made after December 10, 2001 of property used principally in a woodlot farming business by requiring, as an alternative to the condition that certain individuals be actively engaged in the business on a regular and continuous basis, that they be engaged in the business to the extent required by a prescribed forest management plan; and

(b) amendments be made to the definitions "interest in a family farm partnership" and "share of the capital stock of a family farm corporation" in subsection 70(10) of the Act to provide comparable treatment under subsections 70(9.2) and 73(4) of the Act.

Donations of Publicly Traded Securities

(6) That

(a) the reduced capital gains inclusion rate provided under paragraph 38(a.1) of the Act in respect of certain donations apply to such donations made after 2001; and

(b) the deduction provided in computing taxable income under paragraph 110(1)(d.01) of the Act in respect of certain donations of securities apply to such donations of securities acquired after 2001.

GSTC Responsiveness

(7) That an eligible individual’s goods and services tax credit payment for a quarter that begins after June 2002 be calculated taking into account the individual’s relevant family circumstances at the end of the preceding quarter.

Deferral of Corporate Tax Instalments for Small Businesses

(8) That the Act be amended to provide

(a) that, where a corporation is an eligible corporation (as described in subparagraph (c)) for a taxation year and the taxation year includes one or more days in January, February or March, 2002 (in this paragraph referred to as the corporation’s "eligible instalment days") on which an instalment on account of the corporation’s tax under any of Parts I, I.3, VI and VI.1 of the Act in respect of the taxation year would otherwise become due, the corporation’s balance-due day for the taxation year be the later of

(i) the day that would otherwise be the corporation’s balance-due day for the taxation year, and

(ii) the day that is six months after the corporation’s last eligible instalment day in the taxation year;

(b) that if an instalment on account of an eligible corporation’s tax under any of Parts I, I.3, VI and VI.1 of the Act, in respect of a particular taxation year of the corporation, would otherwise become due on an eligible instalment day of the corporation, that instalment not become due on that day, but instead become due

(i) if the particular day that is six months after the eligible instalment day is in the particular taxation year, on the particular day, and

(ii) in any other case, on the corporation’s balance-due day (determined in accordance with subparagraph (a)) for the particular taxation year; and

(c) that a corporation be an eligible corporation for a particular taxation year if the corporation is resident in Canada throughout the particular taxation year and the corporation’s taxable capital employed in Canada, within the meaning assigned by Part I.3 of the Act, for its preceding taxation year did not exceed

(i) where the corporation is not associated with any other corporation in the particular taxation year, $15 million, and

(ii) where the corporation is associated with one or more other corporations in the particular taxation year, the amount by which $15 million exceeds the total of the taxable capital employed in Canada of all those other corporations for their last taxation years that ended in the last calendar year that ended before the beginning of the particular taxation year.

Qualified Limited Partnerships

(9) That, in applying the provisions of the Act relating to the foreign property limit after 2001, any person that holds, either alone or as part of a group of persons that do not deal with each other at arm’s length, more than 30 per cent of the limited partnership units in a qualified limited partnership be deemed to hold, instead of those units, a proportion of each property of the partnership that is equal to the proportion of those limited partnership units actually held by that person.

Use of Canadian Investment Managers

(10) That, for the 2002 and subsequent taxation years, section 115.2 of the Act, which ensures that the provision by a Canadian service provider of designated investment services to a qualified non-resident does not, by itself, cause the non-resident to be considered to be carrying on business in Canada, be amended so that the provision of such services to a partnership does not, by itself, cause a non-resident member of the partnership to be considered to be carrying on business in Canada.

Construction Work Camps

(11) That an exception to section 67.1 of the Act be introduced to allow full deductibility of business expenses incurred after 2001 for meals provided to a taxpayer’s employee at a work camp if

(a) the duties of the employee are performed at a site in Canada at which the taxpayer carries on construction activities;

(b) the site is a special work site, described in subparagraph 6(6)(a)(i) of the Act, to the employee;

(c) the employee is lodged at the work camp for the purpose of performing duties at the site; and

(d) the camp is a temporary facility that is constructed or installed for the purpose of providing meals and lodging to employees performing duties at the site.

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