The proposals released 14th July include draft legislation to clarify the application of the excess corporate holdings rules for private foundations and increase the amount that corporations will be able in future to pay as "eligible dividends", to reflect lower corporate income tax rates and in keeping with the Budget 2008 modification of the dividend tax credit.

The proposals also reduce the paper burden on businesses by allowing a larger number of government entities to share Business Number-related information in connection with government programs and services and enact several regulatory amendments relating to the Budget Implementation Act, 2008.

In addition, minor adjustments to the Tax Free Savings Account rules will be introduced, as will the scientific research and experimental development investment tax credit rules, further to post-Budget consultation with affected taxpayers.

The draft legislative proposals also include other previously announced measures including:

• New income tax rules to facilitate the conversion of specified investment flow through (SIFT) trusts (often referred to as "income trusts") into corporations. The rules reflect the Government’s commitment to ensure that existing SIFTs can choose to reorganize as corporations without undue tax effects;
• Revised draft amendments to take into account financial institution accounting changes;
• The extension of the general treatment of capital gains and losses on an acquisition of control of a corporation to gains and losses that result from fluctuations in foreign exchange rates in respect of debt denominated in foreign currency;
• An enhanced carry-forward for investment tax credits;
• Updated prescribed amounts for automobile expenses and benefits;
• Revised draft amendments relating to the computation of income, gains and losses of a foreign affiliate; and
• Revised draft regulations that modify the tax treatment of foreign affiliate active business income earned in a jurisdiction with which Canada has concluded a tax information exchange agreement.

It is expected that these draft amendments will form part of a bill to be introduced into parliament later this year. Flaherty said that this Bill may also include other items.

Interested parties are invited to provide comments on the draft legislative proposals by 15th September, 2008.