Department of Finance Canada Consulting Canadians on Draft Tax Legislative Proposals

September 8, 2017 – Ottawa, Ontario – Department of Finance Canada

Canadians deserve a fair tax system that supports a healthy and growing economy in which businesses can generate well-paying jobs, and where the middle class and those working hard to join it have confidence that they can succeed. The Government of Canada is committed to listening to Canadians on potential changes to the tax system that will help us reach this goal.

In keeping with this commitment, the Department of Finance Canada today released for public consultation draft legislative and regulatory proposals relating to the Goods and Services Tax/Harmonized Sales Tax (GST/HST) and excise duty.

The Department of Finance also released for consultation draft income tax legislative proposals. Included in the release are proposals relating to income tax measures announced in Budget 2017 that have not yet been implemented, as well as certain other previously announced income tax measures.

GST/HST and Excise Duty Draft Legislative and Regulatory Proposals

These proposals consist of new and previously released proposals.

New proposals include amendments to:

• Revise the timing requirements for GST/HST rebate applications by public service bodies to provide them with improved flexibility and administrative simplicity;
• Extend the application of the GST/HST rules applicable to selected listed financial institutions to include investment limited partnerships, and provide GST/HST relief to investment limited partnerships with non-resident investors where certain conditions are met; and
• Revise the federal excise framework to ensure that beer made from concentrate is taxed in a manner that is consistent with other beer products.

Previously released proposals, which have been modified where appropriate to take into account consultations and deliberations since their release, include amendments to:

• Revise the GST/HST rules applicable to pension plans to ensure that they apply fairly and effectively to pension plans that use master trusts or master corporations;
• Improve the clarity and effectiveness of the GST/HST rules applicable to certain pension plans and financial institutions by introducing clarifications and technical improvements to those rules;
• Extend the application of the GST/HST rules applicable to selected listed financial institutions to include group trusts for registered education savings plans;
• Revise and modernize the GST/HST drop shipment rules to enhance the effectiveness of these rules and introduce technical improvements;
• Clarify the application of the GST/HST to supplies of municipal transit services to accommodate the modern ways in which those services are provided and paid for; and
• Introduce housekeeping amendments to improve the accuracy and consistency of the GST/HST legislation and regulations.

Canadians are invited to provide comments on these proposals relating to the GST/HST and the excise duty on beer products by October 10, 2017. Please send your comments to fin.gsthst2017-tpstvh2017.fin@canada.ca.

Draft Income Tax Legislative Proposals

With regard to income tax, the Department is re-releasing draft legislative proposals announced in Budget 2017, along with explanatory notes. These proposals would implement a range of these measures respecting:

• The Ecological Gifts Program;
• Clean energy generation equipment: geothermal energy;
• The Canadian exploration expense: oil and gas discovery wells;
• The reclassification of expenses renounced to flow-through share investors;
• The meaning of factual control; and
• Extending the base erosion rules to foreign branches of life insurers.

The draft income tax proposals also include other Budget 2017 tax measures, which have been revised based on feedback and deliberations since the tabling of Budget 2017, respecting:

• The anti-avoidance rules for registered plans;
• Investment fund mergers;
• The timing of recognition of gains and losses on derivatives;
• Billed-basis accounting; and
• Nurse practitioners.

With respect to billed-basis accounting, the draft legislative proposals released today reflect a revised coming-into-force period, which would have the effect of phasing in the measure over a five-year period.

The draft income tax proposals also include revised technical tax amendments relating to changes to "stub period foreign accrual property income," which were included in measures released by the Department of Finance Canada in September 2016, as well as amendments to a previously announced measure respecting the Canadian Forces personnel and police deduction.

Canadians are invited to provide comments on these draft income tax legislative proposals by October 10, 2017. Please send your comments to fin.legislation-taxation-legislation-taxation.fin@canada.ca.

Note that references to "Announcement Date" in the draft legislative and regulatory proposals and the explanatory notes refer to today's date. The proposed amendments, as well as explanatory notes that describe the proposed amendments in detail, are included with this release. Also, these measures may be included in a bill to be tabled in Parliament following the consultation period.

All correspondence related to the aforementioned consultations can also be mailed to:

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