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Bill C-28

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RECOMMENDATION

Her 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 implement certain provisions of the budget tabled in Parliament on February 18, 2003''.

SUMMARY

Part 1 authorizes the Minister of Finance to pay $1.5 billion into a trust, to be provided to provinces for the purposes of acquiring diagnostic and medical equipment and training specialized staff in order to improve access to publicly funded diagnostic and treatment services. The funds will be distributed to the provinces on a per capita basis.

Part 2 amends the Federal-Provincial Fiscal Arrangements Act to implement a $16 billion Health Reform transfer and a $2.5 billion Canada Health and Social Transfer (CHST) supplement, and to create two new transfer mechanisms. The Health Reform transfer will be distributed to the provinces on a per capita basis over a five-year period beginning on April 1, 2003. The Minister is authorized to pay a $2.5 billion CHST supplement into a trust from which these funds will be distributed to the provinces on an equal per capita basis. The new Canada Health Transfer and Canada Social Transfer will replace the CHST on April 1, 2004, and funding levels are set out through to 2007-08. In addition, Part 2 removes the maximum amount payable to provinces under the Equalization program, effective in fiscal year 2002-03.

Part 3 amends the Canada Student Financial Assistance Act to add protected persons within the meaning of the Immigration and Refugee Protection Act to the list of students eligible for a student loan, and to ensure that appropriate compensation continues to be paid to provinces and territories not participating in the Canada Student Loans Program. It also amends the Canada Student Financial Assistance Act and the Canada Student Loans Act to provide for a limitation period of six years for the collection of student loans.

Part 4 amends the Employment Insurance Act and the Employment Insurance (Fishing) Regulations to introduce a new type of special benefits. It amends the Act in order to: provide six weeks of new compassionate benefits for families to share; establish the medical proof required to receive such benefits; establish the period during which such benefits may be paid; provide for one waiting period per family when such benefits are shared; provide for the authority to make new regulations consequential to the introduction of compassionate care benefits; set the annual premium rate for 2004; and make other minor consequential amendments to the Employment Insurance Act and the Employment Insurance (Fishing) Regulations. It also makes related amendments to the Canada Labour Code.

Part 5 amends the Budget Implementation Act, 1997, the Budget Implementation Act, 1998, and the Canada Foundation for Sustainable Development Technology Act to permit repayment of public moneys provided to, respectively, the Canada Foundation for Innovation, the Canada Millennium Scholarship Foundation and the Canada Foundation for Sustainable Development Technology to the Receiver General for credit to the Consolidated Revenue Fund on the winding up or dissolution of those foundations. Secondly, this Part provides for the making of grants to certain organizations. Thirdly, this Part amends the Farm Credit Canada Act to remove the temporal restriction on investments and to increase its capital. Finally, this Part repeals the Debt Servicing and Reduction Account Act and provides that it does not apply to the 2002-2003 or any later fiscal year.

Part 6 amends the Air Travellers Security Charge Act to reduce the air travellers security charge for domestic air travel from $12 to $7 for one-way travel and from $24 to $14 for round-trip travel, applicable to air travel purchased on or after March 1, 2003.

Part 7 amends the Customs Tariff, Excise Act, 2001 and Excise Tax Act to implement tobacco tax increases proposed on June 17, 2002. The proposed amendments include increases in the taxes and duties on cigarettes, tobacco sticks and other manufactured tobacco, cigars, exported tobacco products, and tobacco products delivered to duty-free shops, sold as ships' stores or imported by Canadian residents returning to Canada.

Part 8 amends the Excise Tax Act to implement measures relating to the fuel excise taxes imposed under Part III of that Act and the goods and services tax or harmonized sales tax (GST/HST) imposed under Part IX of that Act. With respect to excise taxes, Part 8 removes the 4-cent-per-litre federal excise tax on diesel fuel from bio-diesel fuel, from the bio-diesel portion of blended diesel fuel, and from the biomass-produced ethanol or methanol portion of blended diesel fuel, effective February 19, 2003. As well, it clarifies that no rebate of the excise tax on fuel is payable in respect of fuel taken out of the country in the fuel tank of a vehicle being driven across the border, applicable to rebate claims received by the Canada Customs and Revenue Agency on or after February 18, 2003. With respect to the GST/HST, it ensures that the supply of school transportation services by school authorities continues to be treated as an exempt activity and that the supply of municipal services by a private contractor to a municipality or government continues to be treated as taxable, in both cases effective from the date of first enactment of the respective provisions on December 17, 1990.

Part 9 enacts the First Nations Goods and Services Tax Act, which provides for the imposition by eligible first nations of a first nations goods and services tax (FNGST) on first nation lands. The FNGST would be payable by both aboriginals and non-aboriginals and would be identical to the 7-per-cent goods and services tax (GST) or the federal component of the harmonized sales tax (HST) that is imposed under Part IX of the Excise Tax Act. A first nation may enact a law that imposes an FNGST either under the authority granted by the First Nations Goods and Services Tax Act or under a power to enact a law that has been recognized or granted under another Act of Parliament or under an agreement that has been given effect by another Act of Parliament.

A key feature of the enactment is that it provides for the seamless operation of the GST/HST and an FNGST imposed by a first nation. Also, the enactment provides for the authority to enter into an administration agreement between the Government of Canada and the authorized body of a first nation respecting the collection and administration of the 7-per-cent first nations goods and services tax imposed under the law of a first nation and for the estimation and sharing of tax revenues between the Government of Canada and the first nation.

Part 10 enacts amendments to the Income Tax Act that

- increase the annual National Child Benefit Supplement through successive increases of $150 per child in July 2003, $185 in July 2005 and $185 in July 2006 (indexed after year of introduction);

- introduce, effective July 2003, a $1600 Child Disability Benefit as a supplement to the Canada Child Tax Benefit (with payments starting March 2004);

- increase, from $7,634 to $13,814 (indexed after 2003), the level of income used to determine the financial dependence of a child or grandchild for the purposes of the rollovers of RRSP and RRIF proceeds on the death of an annuitant;

- clarify the eligibility criteria for the Disability Tax Credit;

- expand the list of expenses eligible for the Medical Expense Tax Credit to include certain expenses for real-time captioning and note-taking services, and voice recognition software, and the incremental cost to individuals with celiac disease of acquiring gluten-free food products;

- increase the limits for tax-assisted retirement saving;

- expand the capital gains rollover for eligible small-business shares by eliminating the original investment limit and the reinvestment limit and allowing an eligible reinvestment to be made in the year of disposition of the original investment shares or within 120 days after the year;

- provide relieving measures concerning the deductibility of automobile expenses and the recognition of taxable benefits relating to automobiles;

- increase, to $300,000 from $200,000, in increments of $25,000 commencing in 2003, the annual amount of active business income of a small business corporation that is eligible for the special 12 per cent federal corporate income tax rate;

- eliminate the federal capital tax on large corporations over a period of 5 years and increase the threshold at which it begins to apply from $10,000,000 to $50,000,000 in 2004;

- extend the Mineral Exploration Tax Credit to the end of 2004;

- improve the application of the tax shelter rules to arrangements representing the deductibility of tax credits; and

- increase the amount of the Film or Video Production Services Tax Credit to 16 per cent from 11 per cent.

Part 10 also amends the Children's Special Allowances Act as a consequence to add, with respect to special allowances payable for months that are after June 2003, a benefit parallel to the new $1600 Child Disability Benefit Supplement to the Canada Child Tax Benefit.

Part 11 amends the Excise Act, 2001, the non-GST/HST parts of the Excise Tax Act and the Income Tax Act to harmonize various accounting, interest, penalty and related administrative and enforcement provisions, generally applicable after June 2003.

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