Bill C-28, the second Budget 2007 implementation bill, provided tax relief for Canadian businesses, including the corporate income tax rate reductions announced in the 2007 Economic Statement. In addition, the bill, which received Royal Assent on 14th December, 2007, implemented a number of amendments to the Income Tax Act relating to foreign affiliates.

Included in the bill were provisions which allow taxpayers to elect retroactive application of some of these foreign affiliate amendments. However, in response to concerns that the deadline for filing these elections is too tight—for example, a taxpayer with a 31st December 2007 year-end must file these elections by 30th June, 2008—the government is proposing to extend the filing deadline for these elections by 18 months.

Bill C-28 also included amendments to the Act that implemented the Budget 2006 proposal to introduce functional currency tax reporting rules. In response to representations from stakeholders concerning the amended rules, the government is proposing several technical revisions. These include: extending the deadline to elect functional currency tax reporting to 31st October, 2008; amending the definition of "functional currency" to address concerns about its practical application to the situations of certain taxpayers; and introducing symmetry in foreign exchange rate calculations used in the reporting of assets and debt obligations.

Flaherty indicated that the government will introduce legislation at an early opportunity to implement these proposed technical changes to the Income Tax Act.