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Canada Seeks To Make Income Tax Act More Efficient

by Mike Godfrey, Tax-News.com, Washington

06 July 2007


Jim Flaherty, Canada's Minister of Finance, has announced draft amendments to the Income Tax Act and the Income Tax Regulations that seek to make the tax system more efficient.

The amendments will reduce delays in the preparation and issuance of T3 information slips relating to distributions of publicly traded trusts, and T5013 information slips relating to allocations of publicly traded partnerships.

“Our government is committed to making the tax system as effective and efficient as possible,” stated Flaherty on Wednesday. “The changes I am announcing today will address many of the concerns expressed by taxpayers about the timing of their receipt of tax information slips by helping investment managers to meet filing deadlines.”

The proposed amendments to the Income Tax Act would provide authority for regulations requiring the disclosure by publicly traded trusts and partnerships of information enabling investment managers to prepare the tax information slips that they are required to issue to investors. This disclosure would be made through a posting of the required information on the website for CDS Innovations Inc. (a subsidiary of the Canadian Depository for Securities Limited), a website that is designed to provide this type of information to investment managers. The proposed amendments were developed in conjunction with the investment industry.

The proposed regulations would require publicly traded trusts and partnerships to disclose information concerning distributions and allocations of income and capital made in respect of each of their units, within 60 days after the end of the taxation year or fiscal period for which the information is relevant. For publicly traded trusts and partnerships that invest in other publicly traded trusts, partnerships or corporations, this information would be required to be disclosed within 67 days after the end of the calendar year to which the information relates. This is a new requirement that is expected to make the filing process more efficient.

Investment managers could use this information to prepare the information slips that are required to be issued to their investors within 90 days of the end of the year. The taxation year and fiscal period for publicly traded trusts and partnerships normally end on December 31 of each calendar year. In the case of publicly traded trusts, a December 15 year-end can be used upon election.

These amendments are to be effective for information required to be disclosed in connection with assessments in respect of taxation years (or fiscal periods, in the case of publicly traded partnerships) that ended after July 4.


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