Department of Finance Canada Consulting Canadians on Draft Tax Legislative Proposals

July 27, 2018 – Ottawa, Ontario – Department of Finance Canada

Ensuring that Canada's tax system is fair and efficient is an important part of building an economy that works for everyone. In keeping with this commitment, the Government of Canada is seeking public feedback on potential changes to the tax system.

The Department of Finance Canada today released a set of draft legislative proposals, relating to sales, excise, and income tax measures announced in Budget 2018 that have not yet been legislated, as well as one other previously announced tax measure.

Draft Sales and Excise Tax Legislative and Regulatory Proposals

Proposals related to sales and excise taxes would implement measures respecting:

• The excise refund in respect of diesel fuel used for certain purposes;
• The GST/HST holding corporation rules;
• The GST/HST rebate for printed books for qualifying public service bodies;
• Reassessment periods – requirements for information and compliance orders; and
• The sharing of information relating to criminal matters.

Canadians are invited to provide comments on these proposals by September 10, 2018. Please send your comments to fin.gsthst2018-tpstvh2018.fin@canada.ca.

In addition, as announced in Budget 2018, the Government is initiating consultations on two other aspects of the GST/HST holding corporation rules. The accompanying consultation paper contains information on proposed changes to these rules. Canadians are invited to submit their comments to fin.gsthst2018-tpstvh2018.fin@canada.ca by September 28, 2018.

Draft Income Tax Legislative Proposals

The Department is releasing for public consultation draft income tax legislative proposals announced in Budget 2018. These proposals would implement measures respecting:

• Improving access to the Canada Workers Benefit;
• The deductibility of employee contributions to the enhanced portion of the Quebec Pension Plan;
• The reporting requirements for trusts;
• Artificial losses using equity-based financial arrangements;
• The stop-loss rule on share repurchase transactions;
• The at-risk rules for tiered partnerships;
• Cross-border surplus stripping using partnerships and trusts;
• Foreign affiliate proposals relating to investment businesses, controlled foreign affiliate status, trading or dealing in indebtedness, reassessments and reporting requirements;
• Passive income – the allocation rule for losses applied against Part IV taxes;
• Reassessment periods - requirements for information and compliance orders;
• Reassessment periods - non-resident non-arm's length persons; and
• The sharing of information relating to criminal matters.

The draft legislative proposals relating to sharing information for criminal matters also include proposed amendments to the Mutual Legal Assistance in Criminal Matters Act and the Criminal Code.

The draft income tax legislative proposals include revised technical income tax amendments relating to a division of a corporation under foreign laws, which were referenced in Budget 2018 as "Previously Announced Measures".

Canadians are invited to provide comments on these draft income tax legislative proposals by September 10, 2018. Please send your comments to fin.legislation-taxation-legislation-taxation.fin@canada.ca.

Note that references to "Announcement Date" in the draft legislative sales, excise and income tax proposals, and the accompanying explanatory notes included with this release, refer to today's date. These proposals may be included in a bill to be tabled in Parliament following the consultation period.

Written 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