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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, to implement measures that are
consequential on changes to the Canada-U.S. Tax Convention (1980)
and to amend the Income Tax Conventions Interpretation Act, the Old
Age Security Act, the War Veterans Allowance Act and certain Acts
related to the Income Tax Act''.
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These amendments implement the draft income tax measures
announced in the February 1998 budget, as well as several other
announced measures. Those amendments of greater significance are
summarized below.
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(1) Supplementary Personal Tax Credit: introduces a new
non-refundable tax credit for individuals, to an annual maximum of
$500 ($250 for 1998).
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(2) Surtax Reduction for Individuals: decreases the individual
surtax by a maximum of $250 ($125 for 1998).
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(3) Home Buyers' Plan (HBP): modified to allow tax-free
withdrawals from RRSPs to acquire homes for disabled individuals,
whether or not the disabled individual or withdrawing individual is a
first-time homebuyer.
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(4) Tax Credit for Interest on Student Loans: introduces a new
non-refundable tax credit for interest paid on outstanding student loans.
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(5) Registered Education Savings Plans (RESPs): increases to
$50,000 (from $40,000) the lifetime limit on RESP income that can be
transferred on a tax-deductible basis to an RRSP, introduces a $5,000
limit on the amount of educational assistance payments that can be
made during the first three months of a beneficiary's education, and
introduces qualified investment rules for RESPs.
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(6) Lifelong Learning Plan: permits Canadian residents to make
tax-free withdrawals from RRSPs to finance full-time training for
themselves or their spouses.
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(7) Part-Time Education: permits eligible part-time students to
access the education tax credit and the child care expense deduction.
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(8) Child Care Expense Deduction: increases the annual limit to
$7,000 (from $5,000) for eligible young children (under age 7) and for
other eligible children who have a severe and prolonged mental or
physical impairment, and to $4,000 (from $3,000) for other eligible
children (generally those who are 7 to 16 years of age).
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(9) Caregiver Tax Credit: provides a new non-refundable tax credit
of up to $400 to a caregiver for each infirm dependent relative, and for
each parent or grandparent aged 65 or older, with whom the caregiver
resides and provides in-home care.
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(10) Alternative Minimum Tax: modified to exempt non-taxable
rollovers to registered retirement savings plans and registered pension
plans from the minimum tax base.
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(11) Relocation Expenses and Employee Loans: modifies the rules
to require inclusion in income of all reimbursements and compensation
in respect of financing an employee's residence and one-half the
amount in excess of $15,000 in respect of an eligible housing loss
compensated by the employer, and to expand the moving expense
deduction to include the cost of revising certain legal documents to
reflect the new residence and up to $5,000 of carrying costs for a vacant
former residence.
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(12) Emergency Volunteers: replaces the current exclusion from
income for up to $500 of allowances received by volunteer firemen with
a deduction of up to $1,000 to emergency volunteers.
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(13) Meal and Entertainment Expenses: waives the 50% limitation
for meal and entertainment expenses incurred by employers in respect
of employees at semi-remote work sites, and caps the exception to the
50% limitation for amounts incurred to provide meals and
entertainment to all employees at a particular location to six occasional
events per year.
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(14) Private Health Service Plan (PHSP) Premiums: provides for
a deduction to an individual, who carries on a business, of the cost of
certain PHSP premiums paid for the individual, the individual's spouse
and members of the individual's household.
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(15) Scientific Research and Experimental Development (SR &
ED): introduces a mechanism to recapture SR & ED tax credits where
the property that generated the credit is subsequently sold or converted
to commercial use.
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(16) Labour-Sponsored Venture Capital Corporations: increases
the annual investment limit to $5,000 (from $3,500), and eliminates the
three-year ``cooling-off'' period.
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(17) Assessments: ensures that the Minister of National Revenue
may advance alternative arguments in support of an income tax
assessment after the normal reassessment period has expired.
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