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Bill C-25

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SUMMARY

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:

(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.

(2) Individual Surtax: eliminates the 3% individual surtax.

(3) Income-splitting Tax: introduces a tax on certain passive income of minors.

(4) Lump-sum Payments: provides tax relief in respect of certain lump-sum amounts received in respect of prior years.

(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.

(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.

(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.

(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.

(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.

(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.

(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.

(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.

(13) Tax Co-ordination with First Nations: integrates the federal income tax system with personal income tax imposed by an Aboriginal government in Canada.

(14) Demutualization of Insurance Corporations: provides income tax rules for the demutualization of insurance corporations.

(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.