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Bill C-72

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RECOMMENDATION

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''.

SUMMARY

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.

(1) Supplementary Personal Tax Credit: introduces a new non-refundable tax credit for individuals, to an annual maximum of $500 ($250 for 1998).

(2) Surtax Reduction for Individuals: decreases the individual surtax by a maximum of $250 ($125 for 1998).

(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.

(4) Tax Credit for Interest on Student Loans: introduces a new non-refundable tax credit for interest paid on outstanding student loans.

(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.

(6) Lifelong Learning Plan: permits Canadian residents to make tax-free withdrawals from RRSPs to finance full-time training for themselves or their spouses.

(7) Part-Time Education: permits eligible part-time students to access the education tax credit and the child care expense deduction.

(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).

(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.

(10) Alternative Minimum Tax: modified to exempt non-taxable rollovers to registered retirement savings plans and registered pension plans from the minimum tax base.

(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.

(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.

(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 entertain ment to all employees at a particular location to six occasional events per year.

(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.

(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.

(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.

(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.