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Finance Canada
Budget 2000 - Budget Plan, Annex 7- 7
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That it is expedient to amend the Income Tax Act to provide among other things:
(1) That, for the 2000 and subsequent taxation years, the annual adjustment of dollar amounts which are subject to indexing under the Act by reference to the Consumer Price Index reflect the full increase of the Index for the 12-month period ending on September 30 of the preceding taxation year.
(2) That, for the purpose of indexing amounts for 2000,
(a) the basic personal amount for 1999 be considered to be $7,131 (indexed to $7,231 for 2000),
(b) the spouse and equivalent-to-spouse amounts for 1999 be considered to be $6,055 (indexed to $6,140 for 2000), and
(c) the income threshold for 1999 used in computing the spouse and equivalent-to-spouse tax credits be considered to be $606 (indexed to $614 for 2000).
(3) That the amounts used in computing the goods and services tax credit be modified for payments in respect of specified months that are
(a) after June 2000 and before July 2001,
(i) to increase the income thresholds of $6,456 and $25,921 used for determining such payments to $6,546 and $26,284, respectively, and
(ii) to index, in accordance with paragraph (1), the amounts on which the amounts of $199 and $105 used in computing the credit are based, to $202 and $106 (as rounded), and to provide a one-time supplement to those rounded amounts, such that the amounts used in computing the credit for those months be $205 and $107, and
(b) after June 2001 and before July 2002, to provide, in addition to the indexing adjustment that would otherwise be made to the amounts on which the rounded amounts of $202 and $106 used in computing the credit for the previous twelve-month period are based, a one-time supplement equal to the amount, if any, by which $205 and $107, respectively, exceed the amounts obtained by indexing the amounts on which the rounded amounts of $202 and $106, respectively, are based.
(4) That the calculation of an individual’s tax otherwise payable under Part I of the Act be modified to reduce the 26 per cent tax rate applicable to the portion of the individual’s taxable income in excess of $29,590 and less than $59,180 (those two threshold amounts being indexed) to
(a) 25 per cent for the 2000 taxation year, and
(b) 24 per cent for the 2001 and subsequent taxation years,
such that the tax rate structure for the 2000 taxation year be
(c) 17 per cent of taxable income up to $30,004,
(d) 25 per cent of taxable income between $30,004 and $60,009, and
(e) 29 per cent of taxable income that exceeds $60,009.
(5) That the 5 per cent surtax required to be paid by an individual
(a) be based on the individual’s tax otherwise payable under Part I of the Act in excess of $15,500, for the 2000 taxation year, and
(b) be reduced to 4 per cent of the individual’s tax otherwise payable under Part I of the Act in excess of $18,500, for the 2001 and subsequent taxation years.
(6) That the provisions of the Act relating to the base benefit and National Child Benefit supplement payable under the Canada Child Tax Benefit be modified in accordance with proposals described in the budget documents tabled by the Minister of Finance in the House of Commons on February 28, 2000.
(7) That, for taxation years that end after December 31, 2000 (pro-rated for years that straddle that date),
(a) a deduction be provided from the tax otherwise payable under Part I of the Act for the year by a corporation (other than a corporation that is throughout the year a Canadian-controlled private corporation, an investment corporation, a mortgage investment corporation, a mutual fund corporation, or a non-resident-owned investment corporation), equal to 1 per cent of the amount by which the corporation’s taxable income for the year exceeds the total of
(i) the total of the amounts in respect of which the corporation applied the deductions from tax provided by subsection 125.1(1) or (2) of the Act,
(ii) 3 times the resource allowance deducted under paragraph 20(1)(v.1) of the Act in computing the corporation’s income for the year, and
(iii) if the corporation is a credit union, the amount in respect of which the corporation applied the deduction from tax provided by subsection 137(3) of the Act, and
(b) a deduction be provided from the tax otherwise payable under Part I of the Act for the year by a Canadian-controlled private corporation, equal to 1 per cent of the amount by which the corporation’s taxable income for the year exceeds the total of
(i) the amounts that would, if subparagraph (a) applied to the corporation, be determined under clauses (a)(i) to (iii) in respect of the corporation for the year,
(ii) the least of the amounts determined under paragraphs 125(1)(a) to (c) of the Act in respect of the corporation’s small business deduction for the year,
(iii) the corporation’s aggregate investment income determined under subsection 129(4) of the Act for the year, and
(iv) 100/7 times the amount deducted from the corporation’s tax for the year in accordance with the rules described in paragraph (8).
(8) That, for taxation years that end after December 31, 2000 (pro-rated for years that straddle that date), a deduction be provided from the tax otherwise payable under Part I of the Act for the year by a corporation that is throughout the year a Canadian-controlled private corporation, equal to 7 per cent of the amount by which
(a) the least of
(i) 150 per cent of the corporation’s business limit for the year under paragraph 125(1)(c) of the Act,
(ii) the amount that would be the corporation’s net active business income under paragraph 125(1)(a) of the Act for the year if the references in the definition "specified partnership income" in subsection 125(7) of the Act to $200,000 and $548 were read as references to $300,000 and $822, respectively, and
(iii) the taxable income amount determined under paragraph 125(1)(b) of the Act in respect of the corporation for the year, less the corporation’s aggregate investment income determined under subsection 129(4) of the Act for the year,
exceeds
(b) the total of
(i) the least of the amounts determined under paragraphs 125(1)(a) to (c) of the Act in respect of the corporation’s small business deduction for the year,
(ii) the total of the amounts in respect of which the corporation applied the deductions from tax provided by subsection 125.1(1) or (2) of the Act,
(iii) 3 times the resource allowance deducted under paragraph 20(1)(v.1) of the Act in computing the corporation’s income for the year, and
(iv) if the corporation is a credit union, the amount in respect of which the corporation applied the deduction from tax provided by subsection 137(3) of the Act.
(9) That for the 2000 and subsequent taxation years,
(a) subject to subparagraphs (b) and (c), a taxpayer’s taxable capital gain, allowable capital loss and allowable business investment loss reflect a 3/4 inclusion rate in respect of gains and losses from dispositions of property before February 28, 2000 and a 2/3 inclusion rate in respect of other gains and losses for the year,
(b) a taxpayer’s taxable capital gain in respect of dispositions to which paragraph 38(a.1) of the Act applies reflect a 3/8 inclusion rate for dispositions that occur before February 28, 2000 and a 1/3 inclusion rate for dispositions that occur after February 27, 2000 and before 2002,
(c) the amount included in a taxpayer’s taxable capital gain, in a taxation year that begins after February 27, 2000, in respect of a capital gains reserve reflect a 2/3 inclusion rate,
(d) the deductions permitted in paragraphs 110(1)(d) to (d.3) of the Act in respect of amounts that are included in income for the year (other than amounts that would be included in income for the year if the year had ended on February 27, 2000) be determined as 1/3 of the amounts so included in income rather than as 1/4 of such amounts, and
(e) the rules for determining the capital gains deduction under section 110.6 of the Act and any other rules of determination under the Act take into account, where appropriate, the change in determination of a taxpayer’s taxable capital gain and allowable capital loss from a disposition of a property.
(10) That the provisions of the Act which deem an individual who acquires a security under an option granted to the individual as an employee of a corporation (other than a Canadian-controlled private corporation), or as an employee of a mutual fund trust, to have received an employment benefit under subsection 7(1) of the Act that is required to be included in income be amended to provide
(a) that the income inclusion determined in connection with an individual’s acquisition of a particular security after February 27, 2000 be deferred from the year in which the security is acquired to the earlier of the year in which the security is disposed of and the year in which the individual dies or becomes non-resident,
(b) that, in the case of an option granted to an employee to acquire a share of the capital stock of a corporation, the deferral not be available if, at the time the option was granted, the employee was a specified shareholder of the employer, of the corporation granting the option or of the corporation whose shares could be acquired under the option,
(c) that the deferral not be available in respect of a particular security acquired by an individual unless
(i) the individual would, if there were no deferral, be entitled in the year the security was acquired to deduct an amount under paragraph 110(1)(d) of the Act in respect of the employment benefit, and
(ii) where the security is a share of the capital stock of a corporation, it is of a class of shares that is listed on a stock exchange referred to in section 3200 or 3201 of the Income Tax Regulations,
(d) that the deferral of the income inclusion determined in connection with an individual’s acquisition of a particular security under an option that had been granted to the individual by a particular entity, and that had vested in the individual in a particular year, be available only if the specified value of the particular security does not exceed $100,000 less the total of all amounts each of which is the specified value of a related security and, for this purpose,
(i) the specified value of a security acquired under an option is the fair market value of the security at the time the option was granted,
(ii) a security is a related security if
(A) it was acquired by the individual under an option that had been granted to the individual by the particular entity (or by an entity that was not dealing at arm’s length with the particular entity) and that had vested in the individual in the particular year, and
(B) the income inclusion determined in connection with its acquisition is deferred because of this measure, and
(iii) the provisions of subsection 7(1.4) of the Act, dealing with exchanged options, apply, and
(e) that the deferral of the income inclusion be available only if arrangements have been established, in accordance with the budget documents tabled by the Minister of Finance in the House of Commons on February 28, 2000, to ensure accurate and timely reporting of the employment benefit.
(11) That a mechanism be introduced to allow individuals (other than trusts) to defer the recognition of capital gains in respect of certain small business investments, in accordance with proposals described in the budget documents tabled by the Minister of Finance in the House of Commons on February 28, 2000.
(12) That, for the 2000 and subsequent taxation years, the surtax applicable to an individual’s income not earned in a province be reduced to 48 per cent from 52 per cent.
(13) That the current 20 per cent limit in respect of foreign property that may be held by pension and other deferred income plans be increased to 25 per cent for 2000 and to 30 per cent after 2000.
(14) That, for the 2000 and subsequent taxation years, the disability tax credit be extended to an individual
(a) who has, and has been certified to have, a severe and prolonged mental or physical impairment, and
(b) who has been certified by a medical doctor to be a person whose ability to perform a basic activity of daily living would all or substantially all of the time be markedly restricted but for therapy (other than therapy that can reasonably be expected to be of benefit to persons who are not so impaired) that is
(i) essential to sustain a vital function of the individual, and
(ii) required to be administered at least three times each week for a total period averaging not less than 14 hours a week.
(15) That, for the 2000 and subsequent taxation years,
(a) a $2,941 supplement (indexed after 2000) be added in computing the disability amount that may be claimed in respect of a child who has not attained 18 years of age before the end of the year, and
(b) the amount of the supplement be reduced by the amount by which the total of child care and attendant care expenses claimed for the year in respect of the child exceeds $2,000 (indexed after 2000).
(16) That, for the 2000 and subsequent taxation years, the list of relatives to whom the unused portion of an individual’s disability tax credit may be transferred in certain circumstances for use against Canadian tax payable be expanded to include a person who is a brother, sister, aunt, uncle, nephew or niece of the individual or of the individual’s spouse.
(17) That, for the 2000 and subsequent taxation years, there be added to the list of expenses eligible for the medical expense tax credit the portion of reasonable expenses, relating to the construction of the principal place of residence of an individual who lacks normal physical development or has a severe and prolonged mobility impairment, that can reasonably be considered to be incremental costs incurred to enable the individual to gain access to, or to be mobile or functional within, the individual’s principal place of residence.
(18) That, for the 2000 and subsequent taxation years,
(a) the attendant care expense deduction allowed in computing an individual’s income be extended to an individual who incurs such expenses to attend a designated educational institution or a secondary school at which the individual is enrolled in an educational program, and
(b) the maximum amount of the deduction allowed for the year to such an individual for all eligible attendant care expenses be 2/3 of the total of
(i) the individual’s earned income for the year, and
(ii) the least of
(A) the amount by which the individual’s income otherwise determined for the year exceeds the individual’s earned income for the year,
(B) $15,000, and
(C) $375 multiplied by the number of weeks in the year during which the individual attends the institution or school.
(19) That, for the 2000 and subsequent taxation years, the maximum annual amount deductible for child care expenses be increased from $7,000 to $10,000 for each eligible child in respect of whom a disability tax credit may be claimed.
(20) That the provisions of the Act relating to the deemed proceeds of disposition and adjusted cost base applicable to personal-use property not apply to property of a taxpayer that is acquired by the taxpayer after February 27, 2000 as part of an arrangement under which the property is gifted to a qualified donee.
(21) That the charitable donations tax credit be extended to apply in respect of amounts that are paid directly to a qualified donee as a beneficiary, as a consequence of an individual’s death that occurs after 1998, under
(a) a life insurance policy under which the individual was the policyholder and the individual’s life was insured,
(b) the individual’s coverage under a group life insurance policy under which the individual’s life was insured, or
(c) a registered retirement savings plan or registered retirement income fund under which the individual was the annuitant.
(22) That the provisions of the Act relating to ecological gifts be modified to
(a) halve the income inclusion rate for capital gains from such gifts (other than gifts made to a private foundation) made after February 27, 2000,
(b) require the donor to file with the return of income for the taxation year in which the gift was made a document obtained from the Minister of the Environment certifying, for the purposes of the Act relating to charitable gifts, the fair market value of the gift as determined by that Minister,
(c) provide a donor with a right to appeal to the Tax Court of Canada a redetermination by that Minister of the fair market value of a gift that has been made, and
(d) provide that such a valuation apply for all purposes of the Act relating to charitable gifts for the two-year period following the time of the last determination or redetermination of the value.
(23) That, for individuals other than trusts, the taxable amount of refund interest accruing over any period after 1999 on overpayments of income tax be reduced by the amount of any arrears interest accruing over the same period on unpaid income tax.
(24) That where
(a) an individual acquires, after February 27, 2000 and before 2002, a security under an option that was granted to the individual as an employee of a corporation or mutual fund trust,
(b) the individual disposes of the security, in the year it is acquired and not more than 30 days after its acquisition, by donating it to a qualified donee that is not a private foundation,
(c) the individual is entitled to deduct an amount under paragraph 110(1)(d) of the Act in respect of the employment benefit determined under subsection 7(1) of the Act in connection with the acquisition of the security, and
(d) if there were a capital gain determined in connection with the individual’s disposition of the security, the gain would qualify for the reduced inclusion rate under paragraph 38(a.1) of the Act,
the individual be entitled to deduct, in computing taxable income for the year in which the security is acquired, an additional amount equal to 1/3 of the amount that would be the employment benefit if the fair market value of the security at the time of acquisition were the lesser of that value and the security’s fair market value at the time of donation.
(25) That, for the 2000 and subsequent taxation years, the $500 exemption in respect of the total of all amounts received in the year by an individual on account of scholarships, fellowships, bursaries and certain prizes be increased by $2,500 for scholarships, fellowships and bursaries received by the individual in connection with the individual’s enrolment at a designated educational institution in a program in respect of which the individual may claim the education tax credit.
(26) That, for taxation years that begin after 2000, the provisions of the Act relating to thinly capitalized corporations be modified
(a) to reduce, from 3:1 to 2:1, the ratio of debt to equity for the purposes of the limit on interest deductibility in subsection 18(4) of the Act,
(b) to apply an average ratio of debt to equity for the taxation year in determining the limit on interest deductibility applicable to a corporation under subsection 18(4) of the Act, based on calculations of
(i) the corporation’s retained earnings at the beginning of the year,
(ii) the corporation’s contributed surplus and paid-up capital at the beginning of each month of the year to the extent they are attributable to specified non-residents, and
(iii) the greatest total amount of debt owing by the corporation to specified non-residents at any time in each month of the year,
(c) to expand the anti-avoidance rule in subsection 18(6) of the Act to deem indebtedness of a corporation to a third party that is guaranteed or secured by a specified non-resident to be debt owing by the corporation to the specified non-resident, and
(d) to repeal subsection 18(8) of the Act, which provides an exemption for developers and manufacturers of aircraft and aircraft components.
(27) That,
(a) a corporation that elected before February 28, 2000 to be taxed as a non-resident-owned investment corporation cease to be such a corporation no later than the end of its last taxation year that begins before 2003, and
(b) no election to be taxed as a non-resident-owned investment corporation be permitted after February 27, 2000.
(28) That a "weak currency debt" be defined as indebtedness incurred by a taxpayer at a particular time after February 27, 2000, in respect of a borrowing of money or an acquisition of property, in a currency (the "weak currency") other than Canadian currency, where
(a) at any time (the "exchange date") the taxpayer uses the borrowed money or the acquired property, directly or indirectly, to acquire funds, or settle an obligation, in another currency (the "final currency")
(i) which funds are used for the purpose of earning income from a business or property and are not used to acquire funds in a different currency, or
(ii) which obligation was incurred for the purpose of earning income from a business or property and was not incurred to acquire funds in a different currency,
(b) the amount of the indebtedness (together with any other indebtedness that can reasonably be regarded as having been incurred as part of a series of weak currency debt transactions that includes the incurring of the indebtedness) exceeds $500,000, and
(c) the rate at which interest is payable in the weak currency in respect of the indebtedness exceeds by more than 2 percentage points (200 basis points) the rate at which interest would have been payable in the final currency if at the particular time the taxpayer had incurred an equivalent amount of indebtedness in the final currency on the same terms, with such modifications as the difference in currency requires.
(29) That the following rules apply in respect of a weak currency debt of a taxpayer (other than a corporation described in one or more of paragraphs (a), (b), (c) and (e) of the definition "specified financial institution" in subsection 248(1) of the Act):
(a) no deduction on account of interest that accrues on the indebtedness after the later of June 30, 2000 and the exchange date shall exceed the amount (expressed in Canadian currency) of interest in the final currency that would have accrued after that day if, at the time of incurring the indebtedness, the taxpayer had instead incurred an equivalent amount of indebtedness in the final currency on the same terms, with such modifications as the difference in currency requires;
(b) the taxpayer’s foreign exchange gain or loss
(i) on the settlement or extinguishment of the indebtedness, and
(ii) on the settlement of any hedge in respect of the indebtedness
shall be on income account; and
(c) in computing the taxpayer’s foreign exchange gain or loss on the settlement or extinguishment of the indebtedness, the amount of any interest on the indebtedness that was not deductible because of this paragraph shall be treated as an additional amount paid by the taxpayer to settle or extinguish the indebtedness.
(30) That in applying the rules described in paragraph (29),
(a) a hedge in respect of the indebtedness be defined as any agreement entered into by the taxpayer
(i) that can reasonably be regarded as having been entered into by the taxpayer primarily to reduce the risk to the taxpayer, with respect to payments of principal or interest on the indebtedness, of currency fluctuations, and
(ii) that is identified by the taxpayer as a hedge in respect of the indebtedness in a written notice filed with the Minister on or before the later of July 31, 2000 and the 30th day after the taxpayer agrees to the hedge;
(b) where there is a hedge in respect of any portion of interest in the weak currency paid or payable on the indebtedness, the amount (expressed in Canadian currency) paid or payable in the weak currency for a period on account of interest be deemed to be that amount minus the amount of any foreign exchange gain, or plus the amount of any foreign exchange loss, on the hedge in respect of the interest paid or payable for the period; and
(c) if the amount (expressed in the weak currency) of the indebtedness is decreased before maturity by a repayment of principal, the amount (expressed in the weak currency) repaid be deemed ab initio to have been a separate indebtedness and the amount (expressed in the weak currency) of the original indebtedness be reduced accordingly.
(31) That for taxation years that end after February 2000, where, for the purpose of computing income or taxable income relevant in calculating an income tax payable to a province for a taxation year, a corporation becomes entitled to deduct an amount in computing income or taxable income in respect of an expenditure on scientific research and experimental development and that amount exceeds the amount of the expenditure, the specified percentage of the excess be considered for the purposes of the Act to be government assistance received in the year in respect of scientific research and experimental development, and, for this purpose, the specified percentage is
(a) where the corporation’s expenditure limit for the year, as determined by subsection 127(10.2) of the Act, is nil, the maximum provincial tax rate applicable to active business income earned in the province by a corporation for the year, and
(b) in any other case, the provincial tax rate applicable to small business income earned in the province by a corporation for the year.
(32) That, in applying the foreign tax credit rules in section 126 of the Act in respect of an oil or gas business carried on in a taxation year by a resident of Canada in a country, other than Canada, that imposes an income or profits tax on other business income, there be treated as foreign taxes paid by the taxpayer for the year amounts that
(a) become receivable in the year by a government of that country (or its agent) because of an obligation of the taxpayer in respect of the business,
(b) are computed by reference to the amount or value of oil or gas produced or extracted, net of operating and capital costs,
(c) are not royalties under the foreign country’s law, payments made in a purely commercial capacity or otherwise creditable foreign taxes, and
(d) do not exceed, in total, 40 per cent of the taxpayer’s income from the business for the year, less amounts otherwise creditable as foreign taxes,
and that this provision apply to those taxation years of a taxpayer that begin after the earlier of December 31, 1999 and a date selected by the taxpayer (which date may in no case be earlier than December 31, 1994).
(33) That, in computing a taxpayer’s income for a year from sources in a foreign country for the purposes of the foreign tax credit rules in section 126 of the Act, there be deducted an amount equal to the total of
(a) the greater of
(i) the maximum amount that
(A) would, if the taxpayer’s only foreign resource income for the year (determined under subparagraph 66(4)(b)(ii) of the Act) were from those sources, be deductible under subsection 66(4) of the Act in computing the taxpayer’s income for the year, and
(B) can reasonably be considered to relate to those sources, and to be in respect of foreign exploration and development expenses incurred in a taxation year that begins before 2001, and
(ii) the amount deducted under subsection 66(4) of the Act in computing the taxpayer’s income for the year that can reasonably be considered to relate to those sources and to be in respect of foreign exploration and development expenses incurred in a taxation year that begins before 2001, and
(b) the greater of
(i) the maximum amount that would be deductible in computing the taxpayer’s income for the year in respect of those sources in connection with a balance described in paragraph (35) if the amount determined under paragraph (37) were nil, and
(ii) the amount deducted in computing the taxpayer’s income for the year in respect of those sources in connection with a balance described in paragraph (35),
and that this paragraph apply to taxation years of a taxpayer that begin after the earlier of December 31, 1999 and the date selected by the taxpayer for the application of the rule described in paragraph (32).
(34) That an outlay made after February 27, 2000 by a person or partnership not be treated as a foreign exploration and development expense (FEDE) unless
(a) the outlay was made pursuant to an agreement in writing made by the person or partnership before February 28, 2000,
(b) the outlay was for the acquisition of foreign resource property by the person or partnership, or
(c) the outlay can reasonably be considered to have been incurred for the purpose of enhancing the value of foreign resource property owned or to be owned by the person or partnership.
(35) That, for outlays made in taxation years that begin after 2000, separate FEDE balances for a taxpayer be determined in respect of each country to which the taxpayer’s FEDE relates.
(36) That, for FEDE incurred in a taxation year that begins after 2000, a taxpayer’s FEDE deduction in respect of a country for the year be limited to the total of
(a) the greater of 10 per cent of the taxpayer’s FEDE balance in respect of the country at the end of the year and the lesser of
(i) where the year is the taxpayer’s last taxation year of residence in Canada, that FEDE balance and, in any other case, 30 per cent of that FEDE balance, and
(ii) the lesser of
(A) the amount, if any, by which the taxpayer’s foreign resource income in respect of the country for the year (determined in accordance with subparagraph 66(4)(b)(ii) of the Act) exceeds the taxpayer’s FEDE deduction for the year in respect of the country that relates to FEDE incurred in taxation years that begin before 2001, and
(B) the amount, if any, by which the taxpayer’s total foreign resource income in respect of all countries for the year (determined in accordance with subparagraph 66(4)(b)(ii) of the Act) exceeds the taxpayer’s total FEDE deduction for the year that relates to FEDE incurred in taxation years that begin before 2001, and
(b) the lesser of
(i) the amount, if any, by which that FEDE balance exceeds the amount determined under subparagraph (a), and
(ii) such portion of the taxpayer’s specified foreign resource income as is designated by the taxpayer in respect of the country and no other country.
(37) That a taxpayer’s specified foreign resource income for a taxation year be equal to the lesser of
(a) the amount, if any, by which the taxpayer’s total foreign resource income for the year in respect of all countries (determined in accordance with subparagraph 66(4)(b)(ii) of the Act) exceeds the total of
(i) the maximum total FEDE deductions, in respect of all countries, that would be permitted in computing the taxpayer’s income for the year in respect of FEDE incurred in taxation years that begin after 2000 if the taxpayer’s specified foreign resource income for the year were nil, and
(ii) the amount deducted by the taxpayer for the year under subsection 66(4) of the Act in computing the taxpayer’s income for the year in respect of FEDE incurred in taxation years that begin before 2001, and
(b) the amount, if any, by which
(i) 30 per cent of the taxpayer’s total FEDE balances at the end of the year in respect of all countries in respect of expenses incurred in taxation years that begin after 2000,
exceeds
(ii) the maximum total FEDE deductions, in respect of all countries, that would be permitted in computing the taxpayer’s income for the year in respect of FEDE incurred in taxation years that begin after 2000 if the taxpayer’s specified foreign resource income for the year were nil.
(38) That, where a taxpayer ceases after February 27, 2000 to reside in Canada,
(a) the taxpayer’s FEDE deduction for the taxpayer’s last year of residence in Canada in respect of expenses incurred in taxation years that began before 2001 be limited to the greater of the taxpayer’s foreign resource income for that year and 10 per cent of the taxpayer’s FEDE balance at the end of that year, and
(b) the taxpayer be permitted for each subsequent taxation year of residence outside Canada to deduct up to 10 per cent of the taxpayer’s FEDE balance at the end of that subsequent year in computing the taxpayer’s taxable income earned in Canada.
(39) That, for taxation years that begin after the earlier of December 31, 1999 and the date selected by the taxpayer for the application of the rule described in paragraph (32), all FEDE deductions claimed by a taxpayer be allocated, wherever relevant for the purposes of the Act, on a country-by-country basis.
(40) That, for taxation years that begin after 2000, the successor rules in section 66.7 of the Act reflect the 30 per cent FEDE balance deduction limit.
(41) That section 79.1 of the Act not apply in respect of acquisitions after February 27, 2000 of foreign resource property from a person (other than a person resident in Canada) or a partnership (other than a partnership each member of which is resident in Canada).
(42) That, for the purpose only of applying the manufacturing and processing profits tax rate reduction in subsection 125.1(2) of the Act for the 2000 and subsequent taxation years, the production of steam for sale be considered manufacturing or processing.
(43) That the penalty applying under section 238 of the Act to a person who fails to comply with subsection 231.5(2) of the Act be extended to persons who hinder, molest, interfere with or prevent an official in the performance of a collection function, and to persons who attempt to hinder, molest, interfere with or prevent an official in the performance of a collection function or any other duty to which that subsection currently applies.
(44) That the provisions of the Act relating to the communication of taxpayer information be amended to permit an official to provide
(a) taxpayer information, relating to the 1997 and subsequent taxation years, to any person solely for the purpose of enabling the Chief Statistician, as defined by section 2 of the Statistics Act, to provide to a statistical agency of a province statistical data that is pertinent to activities carried on in the province and that is to be used by the agency solely for research and analysis, if the information relates to
(i) a corporation, or
(ii) an individual, where the information is solely in respect of the computation of income from the individual’s business,
and for the purpose of subsection 17(2) of the Statistics Act, where such information was collected before any measure giving effect to this paragraph is assented to, the information shall be deemed to have been collected at the time at which it is so provided to the provincial statistical agency, and
(b) taxpayer information to a police officer, within the meaning assigned by subsection 462.48(17) of the Criminal Code, where
(i) an official has performed or is performing an act which the Income Tax Act obliges or authorizes the official to perform,
(ii) such information can reasonably be regarded as necessary to ascertain the identity of a person and the circumstances in which an offence under the Criminal Code may have been committed by the person in respect of an official of the Canada Customs and Revenue Agency, or in respect of any person related to that official,
(iii) the offence can reasonably be considered to be related to the official’s act, referred to in clause (i), and
(iv) the information is provided solely for the purpose of the investigation or prosecution of the offence.
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