Ottawa, September 13, 2013
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- Legislative Proposals Relating to the Income Tax Act, the Excise Tax Act, and the Income Tax Regulations
The Department of Finance today released for consultation draft legislative proposals that would implement a number of tax measures from Economic Action Plan 2013.
The draft legislative proposals include the following tax measures:
Personal Income Tax
- Increasing the Lifetime Capital Gains Exemption to $800,000 and indexing the new limit to inflation.
- Streamlining the process for pension plan administrators to refund a contribution made to a Registered Pension Plan as a result of a reasonable error.
- Extending the reassessment period for reportable tax avoidance transactions and tax shelters when information returns are not filed properly and on time.
- Phasing out the federal Labour-Sponsored Venture Capital Corporations tax credit. (These proposals do not include any additional amendments to the tax rules governing Labour-Sponsored Venture Capital Corporations to assist with an orderly phase-out of the tax credit. These tax rules are the subject of a public consultation undertaken by the Government.)
- Ensuring that derivative transactions cannot be used to convert fully taxable ordinary income into capital gains taxed at a lower rate.
- Ensuring that the tax consequences of disposing of a property cannot be avoided by entering into transactions that are economically equivalent to a disposition of the property, but where legal ownership of the property is retained.
- Ensuring that the tax attributes of trusts cannot be inappropriately transferred among arm’s length persons. (These proposals remain subject to the 180-day consultation, launched on March 21, 2013 in Economic Action Plan 2013, on their application to personal trusts.)
- Responding to the Federal Court of Appeal decision in the Sommerer case to restore the intended tax policy result in relation to non-resident trusts.
Business Income Tax
- Expanding eligibility for the accelerated capital cost allowance for clean energy generation equipment to include a broader range of biogas production equipment and equipment used to treat gases from waste.
- Imposing a penalty in instances where information on tax preparers and billing arrangements is missing, incomplete or inaccurate on Scientific Research and Experimental Development program claim forms.
- Phasing out the accelerated capital cost allowance for capital assets used in new mines and certain mine expansions, and reducing the deduction rate for pre-production mine development expenses.
- Adjusting the five-year phase-out of the additional deduction for credit unions.
- Eliminating the unintended tax benefits of leveraged life insurance arrangements.
- Clarifying the restricted farm loss rules and increasing the restricted farm loss deduction limit.
- Enhancing corporate anti-loss trading rules to address planning that avoids those rules.
- Extending the reassessment period for taxpayers who have failed to correctly report income from a specified foreign property on their annual income tax return, if the Foreign Income Verification Statement (Form T1135) was not filed on time or a specified foreign property was not identified or was improperly identified on the Form T1135.
- Further extending the application of Canada’s thin capitalization rules to Canadian resident trusts and non-resident entities.
- Clarifying that the Goods and Services Tax/Harmonized Sales Tax provision, exempting supplies by a public sector body (PSB) of a property or a service if all or substantially all of the supplies of the property or service by the PSB are made for free, does not apply to supplies of paid parking.
- Introducing new administrative monetary penalties and criminal offences to deter the use, possession, sale and development of electronic suppression of sales software that is designed to falsify records for the purpose of tax evasion.
References to “Announcement Date” in the draft legislative proposals are to be read as references to today’s date. Explanatory notes are included with the draft legislative proposals.
Interested parties are invited to provide comments on the draft legislative proposals by October 15, 2013. Please send your comments to
EAP-PAE2013.email@example.com or to:
Tax Policy Branch
Department of Finance
140 O’Connor Street
For further information, media may contact:
Office of the Minister of Finance
Department of Finance