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Canada To Implement Outstanding Tax Measures

Monday, October 29, 2012

Canadian Finance Minister Jim Flaherty has taken steps to implement a number of outstanding technical tax amendments to the Income Tax Act, Excise Tax Act and other related legislation.

Announcing his tabling of a detailed Notice of Ways and Means Motion in parliament, Flaherty said that the last comprehensive package of technical income tax legislation was passed in 2001. "This has led to a significant backlog of outstanding measures", Flaherty added, explaining that the motion will "begin the process of addressing the backlog”.

The majority of proposals to be implemented by the motion have been previously released for public consultation. They include technical income tax amendments relating to the taxation of Canadian multinational corporations with foreign affiliates, and changes to the taxation of non-resident trusts and their beneficiaries and of Canadian taxpayers who hold interests in offshore investment fund property. Amendments will also be made relating to foreign tax credit generators, conversions of specified investment flow-through trusts and partnerships into corporations, and the creation of a regime of information reporting on tax avoidance transactions.

The Atlantic investment tax credit will be modified, as will the Apprenticeship Completion Grant, Employment Insurance for the self-employed, and real estate investment trusts. The motion also relates to the deductibility of contingent amounts, withholding tax applicable to certain interest payments made to non-residents, and certain life insurance corporation reserves.

The more minor technical income tax measures relate to labour-sponsored venture capital corporations and to the allocation, among provinces and territories, of the taxable income of airline corporations. Technical amendments to the Excise Tax Act include relieving the Goods and Services Tax and the Harmonized Sales Tax (GST/HST) on the administrative service of collecting and distributing the levy on blank media imposed under the Copyright Act.