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His Excellency the Governor General recommends to the House of
Commons the appropriation of public revenue under the circumstances,
in the manner and for the purposes set out in a measure entitled ``An Act
to amend the Income Tax Act, the Income Tax Application Rules and
another Act related to the Income Tax Act''.
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These amendments implement certain measures announced in the
Budget of March 6, 1996 as well as Income Tax Act amendments
released on March 5, 1996 concerning foreign reporting. These
measures are summarized below:
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(1) Tax Credits for Individuals: enriches the education tax credit,
tuition fee tax credit and credit for infirm dependants.
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(2) Charitable Donations: increases the annual income limitation
from 20% to 50% and provides further relief for gifts of capital property
and gifts made in the year of the donor's death.
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(3) Child Care Expense Deduction: raises the maximum age of
children in respect of whom the deduction may be claimed from 14
years to 16 years of age.
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(4) Child Support Payments: eliminates the deduction and
inclusion in income of child support payments paid pursuant to
agreements and court orders made after April 1997.
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(5) Deferred Income Plans: requires that RRSPs mature at 69,
rather than 71 years of age; allows an indefinite carryforward of unused
RRSP deductions; increases limits on contributions to RESPs; and
denies the deduction of fees paid by an annuitant of an RRSP or RRIF.
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(6) Foreign Reporting Rules: requires taxpayers to file information
returns if they own more than $100,000 of foreign investment property,
transfer property to or receive a distribution from a non-resident trust or
have an interest in a foreign affiliate.
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(7) Non-resident Pensioners: ensures that if a non-resident
receiving Canadian pension benefits elects to be taxed at progressive
rates, all of the non-resident's income is taken into account.
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(8) Scientific Research and Experimental Development:
introduces a salary cap for SR&ED treatment of salaries of specified
employees.
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(9) Labour-Sponsored Venture Capital Corporations: reduces
the tax credit rate from 20% of the cost of LSVCC shares to 15% (up to
an annual maximum credit of $525).
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(10) Flow-Through Shares: extends the look-back rule to allow
qualifying expenses incurred at any time in a taxation year (rather than
only the first 60 days of the year) to be treated as if incurred in the
preceding year; allows expenditures in respect of renewable energy and
energy conservation projects to be qualifying expenses.
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(11) Resource Losses: requires an add-back to income of 25% of
prescribed resource losses in recognition of the deduction of 25% of
resource profits.
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(12) Canadian Field Processing: excludes gas plant processing
from activities eligible for manufacturing and processing tax credit,
with the intent that such activities will now result in additional claims
for the resource allowance under regulations made for the purpose of
paragraph 20(1)(v.1) of the Act.
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(13) Joint Exploration Corporations: repeals rules allowing for
the renunciation of resource expenses by joint exploration
corporations.
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(14) Part VI Capital Tax: extends the application of the additional
Part VI tax by one year for banks and other deposit-taking institutions
and by three years for life insurance corporations.
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The Explanatory Notes issued by the Minister of Finance provide a
detailed explanation of these amendments.
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