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These amendments implement a variety of draft income tax
measures that have previously been announced. The measures of
greater significance are summarized below.
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(1) Taxpayer Migration: enhances Canada's ability to tax the gains
accrued by emigrants while they were resident in Canada.
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(2) Trusts: addresses the tax treatment of property distributed from
a Canadian trust to a non-resident beneficiary and introduces new
measures dealing with the tax treatment of bare, protective and similar
trusts as well as health and welfare trusts and trusts governed by
registered retirement savings plans and registered retirement income
funds.
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(3) Advertising Expenses: implements the income tax aspects of the
June 1999 agreement between Canada and the United States
concerning periodicals.
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(4) Simultaneous Control: confirms that in a chain of corporations,
a corporation is controlled by its immediate parent even where the
parent is itself controlled by a third corporation.
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(5) Foreign Affiliates Held by Partnerships: ensures that Canadian
corporations that are members of a partnership that holds shares of
non-resident corporations are provided relief from double taxation on
the income derived from those shares and receive the same tax
treatment in respect of the disposition of those shares as if they held the
shares directly.
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(6) Foreign Affiliate Losses: provides that foreign accrual property
losses of a foreign affiliate may be carried back three years and forward
seven years for the purpose of determining the affiliate's foreign accrual
property income for a particular taxation year.
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(7) Capital Tax: extends for two years the additional capital tax on
life insurance corporations.
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(8) Foreign Share-for-Share Exchange: provides a tax-deferred
rollover on the exchange of shares of one foreign corporation for shares
of another foreign corporation.
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(9) Resource Expenditures: clarifies the tax treatment of resource
expenditures.
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(10) Amount Owing by Non-Resident: removes certain loans and
transfers of property from the scope of the ``back-to-back loans'' rule
in section 17 of the Income Tax Act.
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(11) Canadian-Controlled Private Corporations: ensures that a
subsidiary of a Canadian resident corporation that has shares listed on
a foreign prescribed stock exchange does not qualify as a
Canadian-controlled private corporation.
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(12) Stop-Loss Rule: extends the rule that suspends recognition of
a loss when a corporation, trust or partnership transfers depreciable
property to transferees who are affiliated persons to include transfers by
natural persons.
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(13) Types of Property: amends the corporate butterfly rules to no
longer require that each transferee corporation receive its pro-rata share
of each type of property in the case of certain public corporation
butterflies.
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(14) Investment Tax Credit: amends the definition ``investment tax
credit'' in subsection 127(9) of the Income Tax Act to ensure that a
taxpayer that is exempt from tax, and becomes taxable, cannot claim
investment tax credits in respect of expenditures incurred while the
taxpayer was exempt from tax.
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(15) Ecological Lands: clarifies rules for calculating a gain or loss
upon the gift of an easement, covenant or servitude in respect of
ecologically sensitive land.
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(16) Replacement Property Rules: provides that the replacement
property rules do not apply to shares of the capital stock of corporations.
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(17) Limited Liability Partnerships: ensures that a member of a
``limited liability partnership'' (under provincial law) is not
automatically a ``limited partner'' for the purposes of the Income Tax
Act.
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