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These amendments implement certain measures announced in the
Budget of February 16, 1999. Also included are income tax
amendments to implement a measure relating to taxation agreements
with Aboriginal governments included in a Notice of Ways and Means
Motion tabled in the House of Commons on December 2, 1998 and
income tax amendments relating to the demutualization of insurance
corporations that were released on December 15, 1998. These measures
are summarized below:
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(1) Tax Credits for Individuals: increases the basic and spousal
amounts by up to $675 and expands the list of eligible medical expenses
to include certain training expenses.
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(2) Individual Surtax: eliminates the 3% individual surtax.
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(3) Income-splitting Tax: introduces a tax on certain passive
income of minors.
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(4) Lump-sum Payments: provides tax relief in respect of certain
lump-sum amounts received in respect of prior years.
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(5) Communal Organizations: allows the income of certain
religious colonies to be allocated for income tax purposes among all the
adult members of the colony.
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(6) Civil Penalties: creates civil penalties that apply to third parties
who make false statements or omissions in relation to the tax matters of
others.
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(7) RRSP/RRIF Proceeds on Death: expands existing rules that
permit the deferral of the recognition of the value of RRSP/RRIF assets
on the death of an individual where there is a distribution from an RRSP
or RRIF to a qualifying dependant of the individual.
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(8) Part VI Capital Tax: extends by one year the application of the
additional Part VI capital tax on banks and other deposit-taking
institutions.
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(9) Manufacturing and Processing Tax Rate Reduction: extends
the M&P tax rate reduction to the generation of electrical energy for sale
or the production of steam for use in the generation of electrical energy
for sale.
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(10) Offset of Interest: introduces a mechanism for the offsetting of
interest owed to a corporation on the overpayment of income taxes and
concurrent interest owed by the corporation on the underpayment of
income taxes.
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(11) Non-resident Investment Funds that Engage Canadian
Service Providers: clarifies that non-resident investment and pension
funds are not considered to be carrying on business in Canada solely by
reason of engaging Canadian firms to provide certain investment
management and administration services.
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(12) Labour-sponsored Venture Capital Corporations
(LSVCCs): enhances incentives for LSVCCs to invest in smaller
corporations and aligns the rules for federally incorporated LSVCCs
more closely to those applicable to provincially incorporated LSVCCs.
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(13) Tax Co-ordination with First Nations: integrates the federal
income tax system with personal income tax imposed by an Aboriginal
government in Canada.
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(14) Demutualization of Insurance Corporations: provides
income tax rules for the demutualization of insurance corporations.
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(15) Hepatitis C Trust: excludes from income for income tax
purposes the income earned by the trust established to provide
compensation to a number of Canadians infected with the hepatitis C
virus through the blood distribution system.
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