Bill C-10

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 amend the Income Tax Act, including amendments in relation to foreign investment entities and non-resident trusts, and to provide for the bijural expression of the provisions of that Act”.

SUMMARY

Part 1 of the enactment enacts, in accordance with proposals announced in the 1999 budget, amendments to the provisions of the Income Tax Act governing the taxation of non-resident trusts and their beneficiaries and of Canadian taxpayers who hold interests in foreign investment entities.

Part 2 enacts various technical amendments that were included in Part 1 of a discussion draft entitled Legislative Proposals and Draft Regulations Relating to Income Tax released for consultation by the Minister of Finance on February 27, 2004. Most of these amendments are relieving in nature, and others correct technical deficiencies in the Act. For example, Part 2 enacts amendments

–       to implement various technical amendments to qualified investments for deferred income plans,

–       to clarify that certain government payments received in lieu of employment insurance are treated the same as employment insurance for income tax purposes,

–       to extend the existing non-resident withholding tax exemption for aircraft to certain air navigation equipment and related computer software,

–       to allow public corporations to return paid-up-capital arising from transactions outside the ordinary course of business, without generating a deemed dividend,

–       to confirm an income tax exemption for corporations owned by a municipal or public body performing a function of government in Canada, and

–       to provide that input tax credits received under the Quebec Sales Tax system are treated for income tax purposes in the same way as input tax credits received under the GST.

Further, Part 2 enacts provisions to implement announcements made by the Minister of Finance

–       on September 18, 2001, limiting the tax shelter benefits to a taxpayer who acquires the future business income of another person,

–       on October 7, 2003, to ensure that payments received for agreeing not to compete are taxable,

–       on November 14, 2003, to simplify and better target the tax incentives for certified Canadian films,

–       on December 5, 2003, to limit the tax benefits of charitable donations made under certain tax shelter and other gifting arrangements, and

–       on November 17, 2005, relating to the cost of property acquired in certain option and similar transactions.

Part 3 deals with provisions of the Act that are not opened up in Parts 1 and 2 in which the following private law concepts are used: right and interest, real and personal property, life estate and remainder interest, tangible and intangible property and joint and several liability. It enacts amendments to ensure that those provisions are bijural, that is that they reflect both the common law and the civil law in both linguistic versions. Similar amendments are made in Parts 1 and 2 to ensure that any provision of the Act enacted by those Parts are also bijural.