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Flaherty Seeks Implementation Of Canadian Budget Measures

by Mike Godfrey,, Washington

14 November 2007

Canada's Finance Minister Jim Flaherty on Tuesday announced that he has tabled a raft of new tax measures in the House of Commons, as the Conservative government sets about pushing through changes announced in this year's budget.

These tax measures were included in a Notice of Ways and Means Motion tabled in the Commons on November 13. The measures were not included in the Budget Implementation Act, 2007, which received Royal Assent on June 22, 2007.

The motion contains several measures affecting business and investors. These include:

  • Streamlining the process for prescribed stock exchanges.
  • Introducing a new withholding tax exemption with respect to certain cross-border interest payments.
  • Preventing double deductions of interest expense on borrowed money used to finance foreign affiliates (the Anti-Tax-Haven Initiative).
  • Easing tax remittance and filing requirements for small business.
  • Implementing functional currency reporting.
  • Increasing the percentage of available input tax credits for goods and services tax and harmonized sales tax (GST/HST) paid on meal expenses of long-haul truck drivers.
  • Increasing the GST/HST annual filing and annual remittance thresholds.
  • Providing certain tobacco processors that do not manufacture tobacco products with relief from the Tobacco Manufacturers’ Surtax.
  • Providing 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 on a timely basis.
  • Repealing the excise tax exemptions for renewable fuels, including ethanol and bio-diesel.

Additional measures affecting taxpayers include:

  • Introducing a new Working Income Tax Benefit.
  • Eliminating income tax on elementary and secondary school scholarships.
  • Enhancing the child fitness tax credit.
  • Expanding the scope of the public transit tax credit.
  • Increasing the lifetime capital gains exemption to $750,000.
  • Increasing the deductible percentage of meal expenses for long-haul truck drivers.
  • Providing tax relief in respect of the 2010 Winter Olympic and Paralympic Games.
  • Allowing for phased-retirement options for pension plans.
  • Extending the mineral exploration tax credit.
  • Enhancing tax benefits for donations of medicine to the developing world.
  • Introducing an investment tax credit for child care spaces.
  • Introducing the new Registered Disability Savings Plan.
  • Introducing a self-assessment rule in respect of intangible personal property acquired on a zero-rated basis and consumed in furthering domestic activities.

In addition, the Notice includes legislation to eliminate capital gains tax on donations of publicly-listed securities to private foundations. As a result of consultations with private foundations, the government intends to further review the excess corporate holdings rules, in order to provide relief in respect of unlisted securities held on March 19, 2007, and to consider the treatment of corporations wholly-owned by such foundations.

Flaherty indicated that the government is moving ahead with the legislation at this time, in advance of the conclusion of this review, in order to ensure that the new rules providing a capital gains tax exemption on the donation of listed securities to private foundations are enacted as soon as possible, providing the certainty that will encourage donors to support this important part of the charitable sector.

Flaherty commented: "Our government is putting Canadians first, keeping our promises and managing the economy in an effective and responsible way."

He added: "Since coming to office, our Government has taken action that will reduce the overall tax burden for all Canadians and businesses by about C$190 billion over this and the next five fiscal years, bringing taxes to their lowest level in nearly 50 years. Today’s Motion is a significant part of that effort."

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