Ottawa, October 15, 2012
Archived - Minister Flaherty Tables Notice of Ways and Means Motion to Implement Tax Provisions in Economic Action Plan 2012 and Other Tax Measures
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The Honourable Jim Flaherty, Minister of Finance, today tabled in the House of Commons a detailed Notice of Ways and Means Motion to implement certain tax provisions in Economic Action Plan 2012, as well as certain previously announced tax measures.
The Notice of Ways and Means Motion includes the following tax measures from Economic Action Plan 2012:
Personal Income Tax
- Improving Registered Disability Savings Plans (RDSPs) following the review of the RDSP program in 2011.
- Including an employer’s contributions to a group sickness or accident insurance plan in an employee’s income in certain circumstances.
- Amending the rules applicable to retirement compensation arrangements to prevent certain schemes designed to inappropriately reduce tax liabilities.
- Amending the rules applicable to Employees Profit Sharing Plans.
Corporate Income Tax
- Expanding the eligibility for the accelerated capital cost allowance for clean energy generation equipment to include a broader range of bioenergy equipment.
- Phasing out the Corporate Mineral Exploration and Development Tax Credit.
- Phasing out the Atlantic investment tax credit for activities related to the oil & gas and mining sectors.
- Providing that qualified property for the purposes of the Atlantic investment tax credit will include certain electricity generation equipment and clean energy generation equipment used primarily in an eligible activity.
- Reducing the general Scientific Research and Experimental Development (SR&ED) investment tax credit rate to 15 per cent from 20 per cent.
- Reducing the prescribed proxy amount, which taxpayers use to claim SR&ED overhead expenditures, from 65 per cent to 55 per cent of the salaries and wages of employees who are engaged in SR&ED activities.
- Removing the profit element from arm’s length third-party contracts for the purpose of the calculation of SR&ED tax credits.
- Removing capital from the base of eligible expenditures for the purpose of the calculation of SR&ED tax incentives.
- Preventing the avoidance of corporate income tax through the use of partnerships to convert income gains into capital gains.
- Ensuring that transfer pricing secondary adjustments will be treated as dividends for Part XIII withholding tax purposes.
- Improving the integrity and fairness of the thin capitalization rules.
- Restricting the ability of foreign-based multinational corporations to transfer, or “dump”, foreign affiliates into their Canadian subsidiaries, while preserving the ability of these subsidiaries to undertake legitimate expansions of their Canadian businesses.
- Phasing out the Overseas Employment Tax Credit.
The Notice of Ways and Means Motion also includes tax measures related to Pooled Registered Pension Plans and retirement compensation arrangements and that implement technical rules applicable to the financial services sector in respect of the Goods and Services Tax and Harmonized Sales Tax.
More details on these measures can be found in the attached Notice of Ways and Means Motion and detailed explanatory notes. References to “Announcement Date” in the explanatory notes refer to today’s date.
For further information, media may contact:
Office of the Minister of Finance
Department of Finance