Archived - Department of Finance Consults on Draft Tax Legislative Proposals: 2015-07

July 31, 2015 – Ottawa, Ontario – Department of Finance

The Department of Finance today released for consultation draft legislative proposals that would implement certain tax measures from Economic Action Plan 2015.

These proposals include:

• Amending the repeated failure to report income penalty to apply for a taxation year only if a taxpayer fails to report at least $500 of income in the year and for any of the three preceding taxation years. The penalty is also amended to ensure that it is proportionate in relation to other penalties.

• Providing an exemption from capital gains tax for certain dispositions involving private corporation shares or real estate where the cash proceeds are donated to a registered charity within 30 days.
• Providing rules to enable registered charities to acquire or hold interests in limited partnerships in certain circumstances.

• Modifying the dividend rental arrangement rules to deny the inter-corporate dividend deduction on dividends received by a taxpayer on a Canadian share where there is a synthetic equity arrangement. The draft legislative proposals include adjustments to the effective date of this measure.
• Strengthening an existing anti-avoidance rule that prevents corporations from converting their capital gains into tax-deductible inter-corporate dividends.

• Providing an exception to the withholding requirements for payments by qualifying non-resident employers to qualifying non-resident employees. The draft legislative proposals reflect comments received since the announcement of this measure in Economic Action Plan 2015.
• Amending an existing anti-avoidance rule in Canada's foreign accrual property income rules to ensure that profits of a Canadian taxpayer derived from the insurance of Canadian risks remain taxable in Canada.

The draft legislative proposals also include the following income tax measure that was announced on March 1, 2015 and referenced in Economic Action Plan 2015:

• Ensuring that the costs associated with undertaking environmental studies and community consultations that are required in order to obtain an exploration permit will be eligible for treatment as Canadian Exploration Expenses.

References to "Announcement Date" in the draft legislative proposals refer to today's date. Explanatory notes are included with the draft legislative proposals.

Interested parties are invited to provide comments on the draft legislative proposals by September 30, 2015. Please send your comments to legislation-taxation@fin.gc.ca or to:

Tax Policy Branch
Department of Finance
90 Elgin Street
Ottawa, Ontario
K1A 0G5

• Legislative Proposals Relating to the Income Tax Act and Regulations
• Explanatory Notes Relating to the Income Tax Act and Regulations

Economic Action Plan 2015

Stéphanie Rubec
Media Relations
Department of Finance
613-369-4000