Annex 9
Tax Measures: Supplementary Information and Notice of Ways and Means Motion (cont'd)

Excise Tax Measures

Excise Tax Exemption for Bio-Diesel and E-Diesel Fuel

Renewable fuels, such as ethanol and methanol produced from biomass sources, and bio-diesel of a biological non-fossil fuel origin, can offer a number of important environmental benefits for Canada.

Ethanol is a commercial alcohol that, at present, is chiefly made from grain but that can also be manufactured from cellulose fibres (for example, straw). Ethanol can be blended into fuels like gasoline to help reduce harmful emissions from vehicles. Since 1992 the portion of blended gasoline that is ethanol or methanol, produced from biomass, has been exempted from the 10-cent-per-litre federal excise tax on gasoline. This treatment has encouraged the production and use of ethanol in Canada.

Consistent with the treatment of ethanol in gasoline, this budget proposes to remove the 4-cent-per-litre federal excise tax on diesel fuel from the biomass-produced ethanol or methanol portion of blended diesel fuel.

Bio-diesel fuel is a diesel fuel that can be made from a variety of vegetable oils and animal fats (including recycled cooking greases). It can be blended with diesel fuel from fossil fuel sources to obtain environmental benefits, such as lower greenhouse gas emissions.

In order to stimulate the production and use of bio-diesel, this budget proposes to remove the 4-cent-per-litre federal excise tax on diesel fuel from bio-diesel fuel and from the bio-diesel portion of blended diesel fuel, where the bio-diesel is of a biological non-fossil fuel origin.

These measures will apply after February 18, 2003.

Fuel Excise Tax Refund Claims

Excise tax is imposed on gasoline and diesel fuel manufactured or imported for sale or use in Canada. The tax does not apply to fuel products that are exported from Canada by the manufacturer or producer. Where fuel on which excise tax has been paid is subsequently exported from Canada, a rebate of the tax is paid to the exporter.

With respect to fuel taken out of the country in the fuel tank of a vehicle being driven across the border, the Government’s longstanding position has been that the fuel does not qualify as an export and no rebate of the excise tax is available. Similarly, the Government has not considered fuel in the tank of a vehicle being driven into Canada to be imported and has not required tax to be paid on the fuel. This approach simplifies tax accounting and reporting for both taxpayers and the Government and avoids difficulties at border crossings.

A recent court decision ruled that fuel in the fuel tank of a vehicle leaving Canada was exported for purposes of Part VII of the Excise Tax Act and that the person who exported the fuel was entitled to recover the excise tax paid on the fuel. The court did not address the related issue of whether fuel in the fuel tank of a vehicle entering Canada is imported and hence subject to the excise tax.

The budget proposes to amend Part VII of the Excise Tax Act to clarify that fuel taken out of the country in the fuel tank of a vehicle being driven across the border does not qualify as an export and that no rebate of excise tax is payable in respect of that fuel. It is proposed that this amendment apply to rebate applications received by the Canada Customs and Revenue Agency on or after February 18, 2003.

Tobacco Tax

The Government will be introducing legislation amending the Excise Tax Act, the Customs Tariff, and the Excise Act, 2001, to implement tobacco tax increases proposed on June 17, 2002.

These proposals include:

• an increase in the excise tax of $3.50 per carton of cigarettes, $2.50 per 200 tobacco sticks and $2.50 per 200 grams of other manufactured tobacco; and

• increases in the taxes and duties on cigars, exported tobacco products, and tobacco products delivered to duty-free shops, sold as ships’ stores or imported by Canadian residents returning to Canada.

These increases in taxes and duties are effective June 18, 2002, and are part of the Government’s comprehensive strategy to improve the health of Canadians by discouraging tobacco consumption.

The proposed increases in tobacco taxes and duties are set out in more detail in a Notice of Ways and Means Motion to Amend the Customs Tariff, the Excise Tax Act and the Excise Act, 2001, tabled with the budget.

Goods and Services Tax/Harmonized Sales Tax Measures

Public Sector Body Rebates

Under the goods and services tax/harmonized sales tax (GST/HST), most services provided by public sector bodies, which include municipalities, school authorities, universities and public colleges and hospital authorities, are treated as exempt. This means that these entities do not charge tax on their exempt services, but they cannot recover the tax paid in respect of their related purchases by way of input tax credits in the way that businesses making taxable sales recover tax. The public sector body rebate system entitles public sector bodies to claim partial rebates of this otherwise unrecoverable tax on inputs. These rebates were negotiated for each sector at the time of introduction of the GST to recognize the level of tax borne by entities within the sector under the former federal sales tax. This treatment of public sector bodies has been well understood and administered consistently since the inception of the GST.

In a decision rendered in 2001, the Federal Court of Appeal held that, under certain provincial funding arrangements, the supply of student transportation services by school authorities could be subject to the GST/HST rules applicable to taxable activities, instead of the rules applicable to exempt activities. The decision had the effect of allowing those school authorities to obtain 100-per-cent input tax credits for tax paid on their inputs related to the provision of student transportation services, instead of the 68-per-cent public sector body rebate for school authorities.

This result was inconsistent with the policy underlying the GST/HST. Consequently, on December 21, 2001, the Government announced a proposed amendment to ensure that the service of transporting elementary or secondary school students to or from a school operated by a school authority continues to be treated as an exempt service where the service is supplied by a school authority to a person other than another school authority. To ensure consistent exempt treatment regardless of how these services were funded, the Government proposed that the amendment be effective from the date of introduction of the GST, except that the amendment would not affect the cases that had been decided by the Federal Court at the time of the announcement.

A Notice of Ways and Means Motion to implement the proposed GST/HST amendment, as announced on December 21, 2001, is included in the Notice of Ways and Means Motion to amend the Excise Tax Act, tabled with the budget.

Consistent with the GST/HST treatment of public services generally, the supply to municipal residents of basic municipal services is exempt from the GST/HST whether or not the services are delivered directly by the municipality or by private companies with which a municipality contracts to provide the services. However, the charges made by private contractors to municipalities are taxable in the same way as are most of the purchases by municipalities in the course of their activities. Municipalities cannot recover, by way of input tax credits, the GST/HST they pay on their purchases for use in their exempt activities, but are instead entitled to a public sector body rebate equal to 57.14 per cent of the GST they pay on such purchases.

As a result of a recent Quebec Court of Appeal decision relating to similar rules under the Quebec Sales Tax, some municipalities have asserted that certain of their purchases of services from private contractors, such as garbage collection and snow removal services, are exempt for GST/HST purposes and that they are owed GST/HST refunds for past purchases of contracted services. This result is contrary to the policy underlying the GST/HST treatment of municipal services.

The budget therefore proposes to amend the GST/HST legislation to clarify that purchases by municipalities of contracted services continue to be taxable. The amendment is proposed to be effective from the date of introduction of the GST.

Sales Tax Considerations in Institutional Health Care Reform

Under the public sector body rebate system, hospitals may recover 83 per cent of the GST that they pay on their purchases, while charities and certain non-profit organizations may recover 50 per cent.

In recent years, the restructuring of health delivery has resulted in some services formerly provided in hospitals being performed in other non-profit institutions, which are entitled to the lesser rebate of GST. The Department of Finance is undertaking discussions with the provinces and territories to assess and improve the current application of the health care rebate with respect to health care functions that are devolved from hospitals. Consultations will also be held with representatives of the health care sector.

The target date for the coming into force of changes to the application of the rebate is October 1, 2003.

Other Measures

Harmonization of Administrative Provisions (Standardized Accounting)

To simplify tax compliance for businesses, the Government has, for a number of years, been working on an initiative referred to as "Standardized Accounting." The objective of this initiative is to harmonize various accounting, interest and penalty provisions of federal tax laws. The ultimate result of this initiative will be an integrated set of rules for payment due dates, interest and penalties that would simplify the system for both tax filers and government administration.

The budget proposes to begin the implementation of Standardized Accounting by harmonizing a number of accounting, interest, penalty and related administrative and enforcement provisions of the Excise Tax Act (non-GST) and the Income Tax Act. These proposals are part of a larger initiative that will eventually extend to other Acts such as the Excise Tax Act (GST), the Customs Act, the Customs Tariff and the Special Import Measures Act. This larger package of changes is currently under review and will be the subject of a future announcement.

The budget proposes the following changes to the non-GST provisions of the Excise Tax Act (insurance premiums tax and excise taxes on fuel, jewellery, automotive air conditioners and heavy vehicles):

• Calculation of Interest: The rate of interest on amounts owed by persons (taxpayers) will be based on the Government of Canada Treasury bill rate plus 4 per cent. Interest on amounts owed to taxpayers will be based on the Treasury bill rate plus 2 per cent. Currently, interest on amounts owed by taxpayers is based on the Treasury bill rate and an additional 6 per cent penalty. Interest on amounts owed to taxpayers is based on the Treasury bill rate. This measure will apply to all amounts outstanding after June 2003.

• Compounding of Interest on Amounts Owed by and to Taxpayers: Interest will be compounded on a daily basis. Interest is currently calculated monthly in respect of each month or fraction of a month. This measure will apply to amounts outstanding after June 2003.

• Waiver/Cancellation of Interest/Penalty: Currently, the authority of the Minister of National Revenue to waive penalties is limited to penalties that are calculated in the same manner as interest. The budget proposes to allow the Minister of National Revenue, as part of the Canada Customs and Revenue Agency’s fairness initiative, to waive or cancel any interest and penalties after June 2003.

• Date Interest Begins to Accrue on Excess Refunds: Currently, where a taxpayer has been paid or credited with an amount of a refund or rebate to which the taxpayer was not entitled, the amount is required to be repaid no later than the last day of the first month after the month in which the amount was credited. Interest on the amount begins to accrue after that day. The budget proposes that interest begin to accrue on the amount the day after the day the amount was credited. This measure will apply to amounts credited after June 2003.

• Due Date on Holidays: The current legislation provides that where the due date for the remittance of taxes falls on a weekend or holiday, the due date is the day before the weekend or holiday. This legislation will be repealed, effective July 1, 2003, such that the application of the Interpretation Act will permit the remittance to be made on the first business day following the holiday.

• "Coming Into Force" Provisions for Amendments to Regulations: The legislation will provide that a regulation may come into effect earlier than when published in the Canada Gazette if the regulation gives effect to a budgetary or public announcement, has a relieving effect only, corrects an ambiguous or defective provision or is consequential to a previously announced amendment to the legislation. This measure will come into force on Royal Assent.

• Date Interest Begins to Accrue in the Case of an Amendment: The legislation will be amended, effective on Royal Assent, to provide that, if a legislative amendment is proposed and that amendment is to come into force on, or applies as of, a day before it receives Royal Assent, interest will be calculated with respect to the amendment as though it had been assented to on that earlier day.

The budget proposes the following change to the non-GST provisions of the Excise Tax Act except Part I (insurance premiums tax):

• Fiscal Months: The Minister of National Revenue may currently authorize a person to make a return and pay tax in respect of accounting periods, which may range from 21 to 35 days, rather than calendar months. In such cases, the return is to be filed and the tax paid by the end of the following accounting period. These accounting periods will be harmonized with the fiscal months under the goods and services tax, which can range from 28 to 35 days. This measure will apply to accounting periods that, under the current rules, begin after June 2003.

The budget proposes the following changes to the Income Tax Act as well as to the non-GST provisions of the Excise Tax Act:

• Minimal Amounts Owing: Where the total amount owed by the Crown to a person does not exceed $2, it will not be paid but may be applied against an existing liability. If the total amount owed by a person to the Crown is less than $2, the person would not be required to pay that amount. Currently, an amount owing is neither paid nor collected if it is less than one dollar. This measure will apply to amounts that are owing after June 2003.

• Interest Payments on Refunds/Rebates: Under the Income Tax Act, interest on a refund payable to an individual begins to accrue only on the later of the day that is 45 days after the taxpayer’s balance-due day, and the day that is 45 days after the return claiming the refund is filed. This period will be reduced to 30 days. For corporations, interest on a refund begins to accrue on the later of the day that is 120 days after the corporation’s taxation year, and the day on which the return claiming the refund is filed. A 30-day period for which interest does not accrue is proposed in cases where a corporate return is filed late. These amendments will be effective for taxation years that end after June 2003. The budget also proposes that, under the Excise Tax Act, the period before interest on a refund or rebate begins to accrue be reduced from 60 to 30 days. This measure will apply to filing periods that end after June 2003.

• Date Interest Begins to Accrue When Penalty or Interest Amounts Paid are then Cancelled under CCRA’s Fairness Initiative: Currently, under the Income Tax Act, where a taxpayer has paid an amount of interest or a penalty that is subsequently cancelled after the taxpayer has made an application under the CCRA’s Fairness Program, interest on the resultant refund begins to accrue on the day after the day that the Minister of National Revenue received the application. The budget proposes that such interest begin to accrue only 30 days after the application is received. There is no provision under the non-GST portions of the Excise Tax Act allowing for the payment of interest on penalty or interest amounts that are paid and subsequently cancelled. The budget proposes that such interest begin to accrue 30 days after the application for cancellation is received. These measures will apply to applications received after June 2003.

• Interest-Free Grace Period: Consistent with current practice, if the Minister of National Revenue sends a notice to a person specifying an amount owed by them and the person complies with the notice within the period specified by the Minister as a grace period during which additional accrued interest would not be payable, no interest will be payable on that amount in respect of that period. This measure will apply after June 2003.

• Write-off of Small Amounts of Penalty and Interest: Currently, under the Excise Tax Act, no penalty or interest is payable in respect of an amount of tax owing if, at the time the tax is paid, the total of that penalty and interest is $10 or less. Under the Income Tax Act, if interest applicable to instalment payments does not exceed $25 for a taxation year, that interest is not charged. It is proposed that the Minister of National Revenue be authorized to cancel any penalty or interest on an amount owed under either of those Acts if the total amount of penalty and interest is $25 or less. This measure will apply after June 2003.

The budget proposes the following changes to the Income Tax Act:

• Balance-Due Day for Taxes on Corporations: All taxes imposed on corporations under the Income Tax Act will become due on the corporation’s balance-due day. Currently, different due days exist for taxes under various parts of the Act. This measure will apply to taxation years that begin after June 2003.

• Instalment Threshold for Cooperative Corporations and Credit Unions: The instalment threshold provisions for cooperative corporations and credit unions will be harmonized with those for other corporations. Currently, the income tax instalment threshold for cooperative corporations and credit unions differs from that for other corporations. This measure will apply to taxation years beginning after June 2003.

• Effect of Carry-back of Loss: Currently, interest begins to accrue the day an application for a loss carry-back is received. It is proposed that interest accrue starting 30 days after an application is received. This measure will apply to applications received after June 2003.

• Time for Filing Extended: Currently, the Minister of National Revenue may extend the time for the filing of a return. If a person files their return by this extended filing deadline, no penalty for filing a late-filed return is assessed. The budget proposes to clarify that, if a person files their return later than the extended deadline, the penalty will apply based upon the normally required deadline.

First Nations Taxation

In successive budgets since 1997, the Government has expressed its willingness to put into effect taxation arrangements with interested First Nations. To date, the Government has entered into taxation arrangements allowing nine First Nations to levy a tax on sales on their reserves of fuel, tobacco products and alcoholic beverages. Canada and the eight self-governing Yukon First Nations have also entered into personal income tax collection and sharing agreements. Based on this experience, some First Nations have expressed an interest in being able to levy a more broadly based tax, similar to the goods and services tax. The Government is once again expressing its willingness to discuss and put into effect direct taxation arrangements with interested First Nations.

Tax Measures to Support Economic and Social Objectives, Enhance Tax Fairness and Improve the Tax Structure

Tax Measures to Support Economic and Social Objectives, Enhance Tax Fairness and Improve the Tax Structure By Year of Announcement: 1994–2003

Broad-Based Personal Income Tax Relief

• Introduced a supplement to the basic personal, spousal and equivalent-to-spouse amounts by $500 each for low-income Canadians.

• liminated the 3-per-cent general surtax for taxpayers with incomes up to about $50,000 and reduced the amount for those with incomes between $50,000 and $65,000.

1999

• Extended the $500 supplement to the basic personal, spousal and equivalent-to-spouse amounts to all tax filers, and increased each by an additional $175, for a total increase of $675.

• Eliminated the 3-per-cent general surtax for all taxpayers.

• Restored full indexation as of January 2000.

• Reduced all personal income tax rates effective January 2001:

• The 17-per-cent rate was reduced to 16 per cent;
• The 24-per-cent rate—reduced from 26 per cent on July 1, 2000—was reduced further to 22 per cent;
• The 29-per-cent rate was reduced to 26 per cent on income between $61,509 and $100,000; and
• The deficit-reduction surtax—which had been eliminated for income up to about $85,000 on July 1, 2000—was completely eliminated.

• Legislated to provide that by 2004:

• the basic personal amount will be at least $8,000;
• the spousal amount will be at least $6,800;
• the second bracket threshold will be at least $35,000;
• the third bracket threshold will be at least $70,000; and
• the fourth bracket threshold will be at least $113,804.

Families with Children

• Introduced new tax treatment of child support payments, with payments non-deductible for the payer and non-taxable for the recipient.

• Announced a two-step $250-million enrichment of the Working Income Supplement (WIS) of the Child Tax Benefit (CTB).

• Announced a new Canada Child Tax Benefit (CCTB) by simplifying and enriching the current CTB starting July 1998 with an $850-million supplement for low-income families.

• Enriched the WIS from the $125 million announced in the 1996 budget to $195 million and restructured it from a per-family to a per-child basis, increasing the maximum WIS from $500 per family to $605 for the first child, $405 for the second child and $330 for each additional child.

• Increased the child care expense deduction limits to $7,000 for children under age 7 and $4,000 for children age 7 and over.

• Enriched the supplement under the CCTB by another $425 million on July 1, 1999, and a further $425 million on July 1, 2000.

• Set the design for the increase in the CCTB supplement amount announced in the 1998 budget.

• Enriched the CCTB by $300 million in July 2000 to enhance benefits for modest-and middle-income families.

• Ensured that the maximum goods and services tax credit (GSTC) supplement is provided to low-income single-parent families.

• Increased the CCTB base benefit by $70 per child in July 2000.

• Increased the National Child Benefit (NCB) supplement by $300 per child for July 2001.

• Increased the income threshold at which the NCB supplement is fully phased out and the base benefit begins to be phased out to $32,000 in 2001.

• Legislated that by 2004:

• the amount of family net income at which the CCTB phase-out begins will be at least $35,000; and
• the phase-out rate of the base benefit of the CCTB will be reduced from 5 per cent to 4 per cent (from 2.5 per cent to 2 per cent for families with one child).

• Proposing to increase the annual NCB supplement for low-income families by $150 per child in July 2003, an additional $185 in July 2005, and a further $185 in July 2006.

• Proposing to introduce, as a supplement to the CCTB, a new $1,600 Child Disability Benefit for low- and modest-income families with a disabled child.

Tax-Assisted Retirement Saving

1996

• Replaced the seven-year limit with an unlimited carry-forward of unused registered retirement savings plan (RRSP) room.

• Introduced the pension adjustment reversal (PAR) to restore lost RRSP room for those leaving pension plans before retirement.

• Removed contributions to RRSPs and registered pension plans (RPPs) from the base for the alternative minimum tax.

• Allowed greater flexibility to transfer RRSP and registered retirement income fund (RRIF) proceeds to financially dependent children upon the death of the RRSP/RRIF owner.

• Introduced a GST/HST rebate for multi-employer pension plans to provide comparable sales tax treatment relative to single-employer pension plans.

• Proposing to increase the annual RRSP contribution limit to $18,000 by 2006 (with corresponding RPP limit increases).

• Proposing to allow money purchase RPPs to pay pension benefits in the form of the same income stream permitted under a RRIF.

• Proposing to increase the maximum pension accrual rate to 2.33 per cent for fire fighters who are members of defined benefit RPPs that provide benefits integrated with the Canada Pension Plan or the Quebec Pension Plan.

Education and Skills

• Increased the amount used to establish the education credit from $80 per month to $100 per month.

• Raised the annual limit on the transfer of the tuition and education amounts to those who support students from $4,000 to $5,000.

• Increased the annual limit on contributions to registered education savings plans (RESPs) from $1,500 to $2,000, and the lifetime limit from $31,500 to $42,000.

• Broadened eligibility for the child care expense deduction to assist parents who undertake education or retraining.

• Doubled the amount used to establish the education credit over two years to $200 per month.

• Made ancillary fees, such as health services and athletics, eligible for the tuition credit.

• Allowed a carry-forward of unused tuition and education credits.

• Increased annual contribution limits for RESPs from $2,000 to $4,000.

• Allowed transfers of RESP funds to an RRSP or to the contributor.

• Provided a Canada Education Savings Grant of 20 per cent on annual contributions of up to $2,000 to an RESP, along with carry-forward flexibility.

• Introduced a tax credit for interest on student loans.

• Allowed RRSP withdrawals for lifelong learning.

• Enhanced tax support for part-time education through the education credit and the child care expense deduction.

• Increased the partial annual exemption from $500 to $3,000 for scholarship, fellowship or bursary income.

• Doubled the amount used to establish the education credit from $200 per month to $400 per month for full-time students and from $60 per month to $120 per month for part-time students.

• Exempted from income tax government tuition assistance for adult basic education.

• Extended the education tax credit to individuals who receive taxable assistance for post-secondary education under certain government programs, including employment insurance.

• Allowed apprentice vehicle mechanics to deduct a portion of tool expenses incurred as a condition of apprenticeship.

Charities and Public Institutions

• Lowered the threshold at which charitable donations begin to earn the 29-per-cent tax credit from $250 to $200.

1995

• Removed the income limit for tax credits on donations of ecologically sensitive lands.

• Increased the limits on charitable donations eligible for tax credits from 20 per cent to 50 per cent of net income, and to 100 per cent of net income in the year of death and the preceding year.

• Allowed most charitable and public organizations to raise funds without collecting and remitting GST on sales.

• Provided a 100-per-cent GST rebate on books purchased by public libraries, educational institutions and other specified bodies.

• Provided a half-inclusion rate on capital gains arising from donations made before 2002 of certain publicly traded securities.

• Raised the income limit for donations from 50 per cent to 75 per cent.

• Allowed 25 per cent of capital cost allowance (CCA) recapture of donated property to be included in the net income limit.

• Sanctioned a new method of valuation for easements of ecologically sensitive lands.

• Simplified GST accounting, reporting and remittance requirements for charities.

• Increased tax-free allowances for emergency service volunteers.

• Allowed designated charities to treat certain services they supply to business customers as GST/HST taxable, thereby allowing charities to compete on an equal footing with other suppliers.

• Reduced tax on employment benefits in respect of donations of shares acquired through stock option plans to parallel treatment for donations of certain publicly traded securities.

• Extended the charitable donations tax credit to donations of RRSP, RRIF and insurance proceeds that are made as a consequence of direct beneficiary designations.

• Reduced capital gains income inclusion by one-half in respect of gifts of ecologically sensitive land and related easements, covenants and servitudes.

• Made permanent the 1997 measure providing a half-inclusion rate on capital gains arising from donations of certain publicly traded securities to public charities.

Persons With Disabilities and Tax Treatment of Medical Expenses

• Enriched the tax credit for infirm dependants.

• Expanded zero-rating of orthopaedic and orthotic devices under the GST.

• Extended GST relief on purchases of vehicle modifications necessary for people with disabilities.

• Expanded the list of eligible expenses under the medical expense tax credit to include:

• 50 per cent of the cost, up to $1,000, of an air conditioner necessary to help an individual cope with a severe chronic ailment, disease or disorder.
• 20 per cent of the cost, up to $5,000, of a van that is adapted or will be adapted for the transportation of an individual using a wheelchair.
• Sign language interpreter fees.
• Expenses incurred for moving to accessible housing.
• Reasonable expenses relating to alterations to the driveway of the residence of an individual with a severe and prolonged mobility impairment to facilitate that individual’s access to a bus.
• An increase in the part-time attendant care limit from $5,000 to $10,000.

• Removed the limit on the attendant care deduction.

• Introduced a refundable medical expense tax credit supplement for earners.

• Broadened the definition of preferred beneficiary for trusts benefiting persons with disabilities.

• Introduced a new tax credit for caregivers for in-home care of related seniors and persons with disabilities.

• Broadened the Home Buyers’ Plan so that persons with disabilities or their relatives may buy a home that is more accessible for, or better suited for the care of, the disabled individual, even if the purchaser is not a first-time home buyer.

• Added training expenses for caregivers to the list of expenses eligible for the medical expense tax credit.

• Allowed certification for the disability tax credit (DTC) by occupational therapists and psychologists.

• Exempted respite care services from the GST/HST.

1999

• Expanded the list of eligible expenses under the medical expense tax credit to include:

• The care and supervision of persons with severe and prolonged impairments living in a group home.
• Therapy for persons with severe and prolonged impairments where prescribed by a medical doctor, psychologist, or occupational therapist, but not administered by a qualified therapist or medical practitioner.
• Tutoring for persons with learning disabilities (or other mental impairments).

• Extended eligibility for the DTC to individuals requiring extensive therapy.

• Expanded the list of relatives to whom the DTC can be transferred.

• Provided additional tax assistance for families caring for children with severe disabilities by introducing a $2,941 supplement amount for children eligible for the DTC. The amount was then increased to $3,500 for the 2001 tax year.

• Increased the maximum child care expense deduction available in respect of persons eligible for the DTC from $7,000 to $10,000.

• Extended income tax assistance for expenses relating to the costs of adapting a new home to the needs of a disabled person.

• Expanded the attendant care deduction to include the cost of an attendant required by a person with a severe and prolonged impairment in order to attend school.

• Announced an increase in the DTC amount from $4,293 to $6,000 for the 2001 tax year.

• Announced an increase in the caregiver tax credit amount from $2,386 to $3,500 for the 2001 tax year.

• Announced an increase in the infirm dependant tax credit amount from $2,386 to $3,500 for the 2001 tax year.

• Added speech-language pathologists to the list of occupations that can certify individuals for the DTC.

• Proposing to introduce, as a supplement to the CCTB, a new $1,600 Child Disability Benefit for low-and modest-income families with a disabled child.

• Proposing to increase the level of income used to determine financial dependence of an infirm child or grandchild for the purpose of RRSP/RRIF rollovers.

• Proposing to expand the list of eligible expenses for the medical expense tax credit to include real-time captioning, the cost of note-taking services, and the incremental cost of gluten-free food products for individuals with celiac disease who require a gluten-free diet.

• Proposing to set aside $80 million per year to enhance tax measures for persons with disabilities, drawing on a forthcoming evaluation of the DTC and the expert advice of a technical advisory committee.

• Proposing to clarify the DTC eligibility criteria with respect to the activity of "feeding and dressing" oneself to ensure that the DTC continues to be provided to those who need it most.

Jobs, Growth, Entrepreneurship and Innovation

• Reduced the corporate tax rate applying to electrical generating activities.

• Reduced the capital gains inclusion rate from three-quarters to two-thirds, and then to one-half.

• Introduced a rollover of capital gains on the disposition of qualified small business investments.

• Introduced deferral of the income inclusion from exercising qualifying stock options until disposition.

• Reduced the corporate tax rate on income between $200,000 and $300,000 earned by a Canadian-controlled private corporation from an active business carried on in Canada from 28 per cent to 21 per cent.

• Legislated a schedule for reducing the general corporate income tax rate from 28 per cent in 2000 to 21 per cent by 2004.

• Improved the capital cost allowance (CCA) system for certain rail assets; manufacturing and processing equipment; certain electrical generating equipment; and heat/water production and distribution equipment.

• Allowed self-employed individuals to deduct the portion of Canada Pension Plan and Quebec Pension Plan contributions representing the employer’s share, beginning January 2001.

• Introduced a new export distribution centre program to relieve the GST/HST cash-flow burden.

• Introduced a GST rebate, equal to 2.5 percentage points of tax, for newly constructed, substantially renovated or converted residential rental accommodation not eligible for an existing rebate.

• Introduced a temporary 15-per-cent mineral exploration tax credit for flow-through share investors.

• Deferred the January, February and March 2002 corporate tax instalments for small businesses.

• Removed tax-related impediments to venture capital investment in Canada through the use of partnerships by Canadian pension plans and by foreign investors.

• Allowed full deductibility of meals provided at temporary construction work camps.

• Proposing to increase the small business deduction limit from $200,000 to $300,000 over four years.

• Proposing to further enhance the small business capital gains rollover measure introduced in 2000 by removing the original investment and reinvestment limits, and extending the length of time available to make a qualifying reinvestment.

• Proposing to improve the automobile expense and benefit provisions.

• Proposing to phase out the federal capital tax over a period of five years–eliminating it in 2004 for medium-sized corporations with capital up to $50 million.

• Proposing to further remove impediments to the use of qualifying limited partnerships as investment vehicles for Canadian venture capital funds.

• Proposing to improve the tax structure for the resource sector.

• Proposing to extend the temporary mineral exploration tax credit.

• Proposing to enhance the film or video production services tax credit.

Sustainable Development

• Expanded the range of renewable energy and energy conservation equipment eligible for accelerated capital cost allowance to include environmentally positive activities such as electrical energy from geothermal and solar energy and the collection of landfill and digester gas.

• Improved access to financing for the renewable energy and energy conservation sector by relaxing the specified energy property rules and expanding eligibility for flow-through shares.

• Extended the mining reclamation trust rules to environmental trusts for waste disposal and quarries for the extraction of aggregates.

• Expanded the range of renewable energy and energy conservation expenses eligible for full deductibility to include the costs of acquiring and installing test wind turbines.

• Expanded the range of renewable energy and energy conservation equipment eligible for accelerated capital cost allowance to include certain acquisitions of used equipment and a reduced qualification threshold for photovoltaic systems.

• Expanded the range of renewable energy and energy conservation equipment qualifying for accelerated capital cost allowance to encourage the productive use of flare gas.

• Extended the existing intergenerational income-tax-deferred rollover for farm property to commercial woodlots operated in accordance with a prescribed forest management plan.

• Expanded the range of renewable energy and energy conservation equipment eligible for accelerated capital cost allowances to include small hydroelectric facilities.

• Improved the definition of test wind turbines and extended the time period for making eligible expenditures related to flow-through share financing of renewable energy and energy conservation projects.

• Proposing to remove the 4-cent federal excise tax on diesel fuel from bio-diesel fuel and from the bio-diesel portion of blended diesel fuel, where the bio-diesel fuel is of a biological non-fossil fuel origin.

• Proposing to expand the class of renewable energy and energy efficient equipment eligible for accelerated capital cost allowances to encourage the use of renewable fuels (e.g. fuel cells, bio-oil)

Personal Income Tax Measures to Enhance Fairness and Improve the Tax Structure

• Eliminated the $100,000 lifetime capital gains exemption.

• Extended the base for the alternative minimum tax.

• Restricted the use of tax shelters.

• Extended the taxation of employer-paid life insurance premiums to the first $25,000 of coverage.

• Introduced income testing of the age credit.

• Eliminated tax advantages available through trusts.

• Reduced the overcontribution allowance for RRSPs from $8,000 to $2,000.

• Eliminated retiring allowance rollovers for years of service after 1995.

• Eliminated double claims of personal credits in the year of personal bankruptcy.

• Announced new rules on taxpayer migration to ensure that gains that accrue while a taxpayer is a resident of Canada are subject to Canadian tax.

• Further constrained tax shelters relying on a mismatch of income and expenses.

• Introduced a measure to prevent income splitting with minors.

• Introduced special rules for the treatment of retroactive lump-sum payments.

2000

• Removed the $1,000 deemed adjusted cost base and proceeds of disposition for personal-use property acquired as part of an arrangement in which the property is donated.

Business Income Tax Measures to Enhance Fairness and Improve the Tax Structure

• Reduced the deduction for business meals and entertainment expenses from 80 per cent to 50 per cent to better reflect the personal consumption element of these expenditures.

• Increased the rate of tax on corporate dividends received by private investment corporations.

• Implemented measures to ensure that the income of financial institutions is measured appropriately for tax purposes.

• Reduced regional investment tax credits.

• Modified the basis upon which insurance companies may claim reserves for income tax purposes.

• Ensured corporations cannot avoid paying tax when selling assets through "purchase butterfly" transactions.

• Tightened the rules applicable to foreign affiliates.

• Tightened the rules applicable on forgiveness of debt.

• Eliminated the deferral of tax on unincorporated business income.

• Eliminated the deferral advantage for investment income earned by private holding companies.

• Replaced the film tax shelter mechanism for certified Canadian films with a tax credit.

• Tightened the rules relating to non-arm’s-length contract SR&ED.

• Reduced tax assistance for labour-sponsored venture capital corporations (LSVCCs).

• Repealed joint exploration corporation rules.

• Restricted eligibility of various expenses for flow-through share treatment.

• Limited SR&ED benefits for non-arm’s-length salaries and wages.

• Replaced tax shelters used to finance non-Canadian films with a tax credit.

• Allowed deductibility of countervailing duties and anti-dumping charges.

• Prevented unintended benefits under the SR&ED regime.

• Improved a range of international taxation rules.

• Updated rules governing LSVCCs to ensure consistency with provincial programs and address issues relating to corporate restructuring.

• Proposed changes to improve the rules governing the taxation of income earned through investments in foreign-based investment funds and non-resident trusts.

• Clarified status of non-resident funds that retain Canadian service providers.

• Modified the thin capitalization rules to work more effectively.

• Repealed the non-resident-owned investment corporation provisions.

• Modified the treatment of provincial deductions for SR&ED that exceed the actual amount of the expenditure.

• Clarified the treatment of weak currency borrowing as equivalent to a direct borrowing in the currency that is used by the taxpayer to earn income.

• Clarified foreign tax credit rules and rules regarding the deductibility of foreign exploration and development expenses.

• Proposing to extend the tax shelter registration requirements to arrangements involving tax credits.

Sales and Excise Tax Measures to Enhance Fairness and Improve the Tax Structure

• Tightened the GST rules governing the claiming of input tax credits and rebates by large businesses and exempt entities.

• Reinforced the GST rules relating to trusts, estates and partnerships to ensure fair and consistent treatment of similar businesses that are organized differently.

• Tightened the GST real property rules to ensure that all builders of multiple-unit residential buildings are treated equitably.

2000

• Reduced the annual exemption from the excise tax on tobacco exports from 2.5 per cent to 1.5 per cent of production.

• Introduced a new tobacco tax structure, including a two-tiered export tax regime for exported Canadian tobacco products.

Simplifying and Improving Tax Administration and Enforcement

• Strengthened outreach and education programs.

• Enhanced easy-to-understand automatic telephone information systems.

• Met with special tax filer groups such as senior citizens and immigrants to help them comply.

• Established a single Business Number for streamlining registration for GST remitters, employers, corporations and importers/exporters.

• Introduced a "Business Window" initiative to provide one-stop service for small businesses.

• Simplified payroll reporting for small businesses.

• Reduced compliance costs for small and medium-sized businesses by coordinating GST, income tax and excise tax audits.

• Streamlined procedures to simplify and expedite Customs clearance.

• Implemented a new approach to large business audits including audit protocol.

• Reinforced measures to target the underground economy.

• Implemented earlier identification of abusive tax avoidance and tax shelter schemes.

• Continued to improve sophisticated risk models to identify areas of high risk and a sector approach to compliance for small and medium-sized businesses.

• Introduced forgiveness of penalties on voluntary tax disclosures to encourage taxpayers to comply voluntarily.

• Implemented exchange of information provisions to help deal with tax havens.

• Implemented new rules requiring residents of Canada to file an information return when they own foreign assets in excess of $100,000 in value.

• Required adequate documentation of transactions relating to transfer pricing and introduced new penalty provisions related to Revenue Canada reassessments.

• Increased resources for Revenue Canada for transfer pricing audits.

• Increased resources for Revenue Canada to enhance information and compliance from charities.

• Introduced mandatory reporting of federal and construction contracts.

• Allowed corporations to offset interest on corporate tax overpayments and underpayments.

• Provided for civil penalties for misrepresentations of tax matters by third parties.

• Improved tax administration by sharing limited information with provinces.

• Proposed measures to reduce tobacco contraband.

• Authorized the Minister of National Revenue to obtain judicial authorization, in certain circumstances, to take immediate action to protect GST/HST revenues.

• Allowed the Canada Customs and Revenue Agency to provide relevant taxpayer information to the police for investigation purposes.

• Extended tax penalties to persons who interfere with an official performing a collection duty.

• Empowered the Minister of National Revenue to waive or cancel interest, or a penalty calculated in the same manner as interest, that is otherwise payable under the non-GST/HST portions of the Excise Tax Act.

• Refined the rules related to the electronic filing of GST/HST returns by removing the requirement to apply to the Minister of National Revenue for approval, provided established criteria are satisfied.

• Instituted a new procedure to revoke or deny registered charitable status for charities that support terrorist activities.

• Improved the responsiveness of the GST credit effective July 2002.

• Proposed a new legislative and administrative framework for the taxation of spirits, wine and tobacco.

• Proposing to harmonize interest, penalty and related administrative and enforcement provisions of the Excise Tax Act (non-GST), and Income Tax Act.

Notices of Ways and Means Motions

Notice of Ways and Means Motion to Amend the Income Tax Act

That it is expedient to amend the Income Tax Act to provide among other things:

Canada Child Tax Benefit – National Child Benefit Supplement

(1) That the provisions of the Act relating to the 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 18, 2003.

Canada Child Tax Benefit – Child Disability Benefit Supplement

(2) That the provisions of the Act relating to benefits payable under the Canada Child Tax Benefit be modified to add a Child Disability Benefit supplement of $1,600 in accordance with proposals described in the budget documents tabled by the Minister of Finance in the House of Commons on February 18, 2003.

RRSP/RRIF rollover to an infirm child

(3) That an amount of $6,180 (indexed after 2003) be added to the income threshold used for determining the eligibility of a financially dependent infirm individual to receive, on a tax-deferred basis, proceeds from a registered retirement savings plan or registered retirement income fund of the individual’s parent or grandparent who has died after 2002.

Medical Expense Tax Credit

(4) That, for the 2003 and subsequent taxation years, there be added to the list of expenses eligible for the medical expense tax credit,

(a) amounts paid on behalf of an individual with a speech or hearing impairment for real-time captioning services if the payment is made to a person who is in the business of providing such services;

(b) amounts paid, on behalf of an individual with a mental or physical impairment, for note-taking services if

(i) the payment is made to a person who is in the business of providing such services, and

(ii) the individual has been certified by a medical practitioner to be an individual who, because of that impairment, requires those services;

(c) the cost of voice recognition software used by an individual with a physical impairment if the individual has been certified by a medical practitioner to be an individual who, because of that impairment, requires that software; and

(d) the incremental cost, to an individual who suffers from celiac disease, of acquiring gluten-free food products as compared to the cost of comparable non-gluten-free food products, if the individual has been certified by a medical practitioner to be an individual who, because of that disease, requires a gluten-free diet.

Disability Tax Credit

(5) That, for the 2003 and subsequent taxation years, for the purpose of the disability tax credit

(a) the phrase "feeding and dressing" in subparagraphs 118.3(1)(a.2)(iii) and 118.6(3)(b)(iii) of the Act be replaced with the phrase "feeding or dressing", and that the phrase "feeding and dressing oneself " in subparagraph 118.4(1)(c)(ii) of the Act be replaced with the phrase "feeding oneself or dressing oneself";

(b) subsection 118.4(1) of the Act be amended to clarify that the term "feeding oneself" excludes

(i) any of the activities of identifying, finding, shopping for or otherwise procuring food, and

(ii) the activity of preparing food, to the extent that the time associated with the activity would not have been necessary in the absence of a dietary restriction or regime; and

(c) subsection 118.4(1) of the Act be amended to clarify that the term "dressing oneself" excludes any of the activities of identifying, finding, shopping for or otherwise procuring clothing.

Pension and RRSP Limits

(6) That, for the purpose of applying after 2002 the rules relating to registered pension plans, deferred profit sharing plans and registered retirement savings plans,

(a) the money purchase limit be increased

(i) for 2003, to $15,500,

(ii) for 2004, to $16,500,

(iii) for 2005, to $18,000, and

(iv) for each year after 2005, to $18,000 indexed after 2005 in accordance with section 147.1 of the Act; and

(b) the RRSP dollar limit be increased

(i) for 2003, to $14,500, and

(ii) for each year after 2003, to the money purchase limit set out under subparagraph (a) for the preceding year.

Money Purchase RPPs

(7) That, effective after 2003, the provisions of the Act relating to money purchase provisions of registered pension plans (RPPs) and registered retirement income funds (RRIFs) be modified to allow

(a) the payment of retirement income under a money purchase provision of an RPP in the same manner as is permitted under a RRIF; and

(b) the transfer of an amount from the RRIF of a former member of an RPP to a money purchase provision of the RPP for the member’s benefit.

Capital Gains Rollover

(8) That, in respect of dispositions that occur after February 18, 2003, the mechanism in section 44.1 of the Act which allows an individual (other than a trust) to defer the recognition of capital gains in respect of eligible small business investments be amended

(a) to eliminate the $2,000,000 original investment limit for each eligible small business corporation or related group;

(b) to eliminate the $2,000,000 qualifying cost limit for replacement shares in an eligible small business corporation or related group; and

(c) to extend the time for acquiring replacement shares to any time in the year in which the disposition is made or within 120 days after the end of that year.

Standby Charge

(9) That, for the 2003 and subsequent taxation years, the provisions of the Act allowing the standby charge, in respect of the availability for personal use of an employer-provided automobile, to be pro-rated where personal use is less than 1000 kilometres per month and all or substantially all of the use of the automobile is in connection with or in the course of performing the duties of the office or employment be amended to provide that the pro-ration be available where

(a) the automobile is used primarily in connection with or in the course of performing the duties of the office or employment; and

(b) personal use is less than 1,667 kilometres per month (20,004 kilometres per year).

Extended Cab Pick-Up Trucks

(10) That, for taxation years that begin after 2002, the definition "automobile" be amended to exclude extended cab pick-up trucks used primarily for the transportation of goods, equipment or passengers in the course of earning or producing income at one or more worksites that are at least 30 kilometres from the nearest urban community having a population of at least 40,000 persons.

Emergency Police and Fire Vehicles

(11) That, for the 2003 and subsequent taxation years, the definition of "automobile" be amended to exclude clearly marked police and fire emergency-response vehicles.

Small Business Deduction

(12) That the rules in subsections 125(2) to (4) of the Act determining the business limit of a Canadian-controlled private corporation (CCPC) be modified for taxation years that end after 2002 such that

(a) the business limit of a CCPC for a taxation year be, subject to subparagraphs (b) and (c), the total of

(i) that proportion of $200,000 that the number of days in the taxation year that are before 2003 is of the number of days in the taxation year,

(ii) that proportion of $225,000 that the number of days in the taxation year that are in 2003 is of the number of days in the taxation year,

(iii) that proportion of $250,000 that the number of days in the taxation year that are in 2004 is of the number of days in the taxation year,

(iv) that proportion of $275,000 that the number of days in the taxation year that are in 2005 is of the number of days in the taxation year, and

(v) that proportion of $300,000 that the number of days in the taxation year that are after 2005 is of the number of days in the taxation year;

(b) for the purposes of subsection 125(3) of the Act, associated CCPCs allocate the business limit for a taxation year amongst themselves as follows:

(i) designate a percentage or percentages for one or more of the associated CCPCs that total 100%,

(ii) calculate, for each of those associated CCPCs, the amount that would, if it were not associated with any other corporation and if the Act were read without reference to subsections 125(5) and (5.1) of the Act, be its business limit for the taxation year in accordance with subparagraph (a), and

(iii) calculate, for each of those associated CCPCs, its actual business limit for the taxation year by multiplying the percentage designated for it by the amount calculated for it in accordance with clause (ii); and

(c) if the Minister of National Revenue is required to allocate an amount under subsection 125(4) of the Act for a taxation year, of a corporation that is a member of a group of corporations that are associated in the taxation year, that ends in a calendar year, the total of the amounts so allocated to the members of the group for each of their taxation years that end in the calendar year be equal to the amount that would be the business limit in accordance with subparagraph (a) for the member of the group whose taxation year first ends in the calendar year if it were not so associated in the taxation year.

(13) That subsection 123.4(3) of the Act providing for accelerated access to the 21% corporate income tax rate for a CCPC’s active business income in excess of its business limit for a taxation year and not exceeding $300,000 be amended for taxation years that end after 2002 and begin before 2004 to reflect the increases in the business limit set out in Clause (12) of this Motion.

(14) That, in applying subsection 127(10.2) of the Act for taxation years that end after 2002

(a) the formula in subsection 127(10.2) concerning a corporation’s expenditure limit for a particular taxation year be replaced with the formula "($4,000,000 - 10A) x B/C";

(b) C be defined as the corporation’s business limit for the particular taxation year as determined under subparagraph (12)(a) of this Motion or, where applicable, the total of the amounts allocated in accordance with subparagraph (12) (b) or (c) of this Motion in respect of the corporation and one or more other corporations with which the corporation is associated in the taxation year;

(c) the reference to "$4,000,000" in that formula be replaced, for those taxation years that follow taxation years that end after 2002, with a reference to "$5,000,000"; and

(d) the reference to "$200,000" in the description of A in that formula be replaced, for those taxation years that follow taxation years that end after 2002, with a reference to "$300,000".

(15) That the references in the description of M in the definition "specified partnership income" in subsection 125(7) of the Act to $200,000 and $548, respectively, be replaced for fiscal periods of a partnership

(a) that end in 2003, with references to $225,000 and $617, respectively,

(b) that end in 2004, with references to $250,000 and $685, respectively,

(c) that end in 2005, with references to $275,000 and $754, respectively, and

(d) that end after 2005, with references to $300,000 and $822, respectively.

Elimination of the Federal Capital Tax

(16) That

(a) in its application to the 2004 and subsequent taxation years of a corporation, the 0.225% rate of tax specified under subsection 181.1(1) of the Act be read (other than for the purposes of subsection 125(5.1) of the Act and the definition "unused surtax credit" in subsection 181.1(6) of the Act) as the total of

(i) that proportion of 0.225% that the number of days in the taxation year that are before 2004 is of the number of days in the taxation year,

(ii) that proportion of 0.200% that the number of days in the taxation year that are in 2004 is of the number of days in the taxation year,

(iii) that proportion of 0.175% that the number of days in the taxation year that are in 2005 is of the number of days in the taxation year,

(iv) that proportion of 0.125% that the number of days in the taxation year that are in 2006 is of the number of days in the taxation year, and

(v) that proportion of 0.0625% that the number of days in the taxation year that are in 2007 is of the number of days in the taxation year; and

(b) in its application to the 2004 and subsequent taxation years, the capital deduction under section 181.5 of the Act be increased to $50 million, except that for the purposes of applying subsection 125(5.1) of the Act, the definition "unused surtax credit" in subsection 181.1(6) of the Act and subsection 225.1(8) of the Act, a corporation’s capital deduction be considered to be that proportion of $10 million that its capital deduction otherwise determined for the year is of $50 million.

Tax Shelters

(17) That, after February 18, 2003,

(a) in respect of property acquired and representations made, after that date, subparagraph (a)(ii) of the definition "tax shelter" in subsection 237.1(1) of the Act be amended to take into account an amount represented to be deductible in computing tax payable, or to be refundable, under the Act;

(b) in respect of property acquired and representations made, after that date, the definition "tax shelter" in subsection 237.1(1) of the Act apply in respect of an arrangement under which it can reasonably be considered that property acquired pursuant to the arrangement will be the subject of a gift referred to in section 110.1 or 118.1 of the Act or a contribution referred to in subsection 127(4.1) of the Act;

(c) in respect of gifts and contributions, and representations, made after that date, an arrangement in respect of the making of a gift referred to in section 110.1 or 118.1 of the Act or a contribution referred to in subsection 127(4.1) of the Act be deemed to be a tax shelter if it may reasonably be considered that, having regard to representations made concerning the arrangement, a person will incur an indebtedness in respect of which recourse is limited; and

(d) for gifts and contributions made after that date pursuant to an arrangement described in subparagraph (c), the amount of the gift or contribution be reduced by the amount of any associated indebtedness in respect of which recourse is limited, and the value of any repayment of the limited recourse debt be treated as a gift or contribution in the year the repayment is made.

Harmonization of Administrative Provisions (Standardized Accounting)

(18) That the provisions of the Act relating to accounting, interest, penalties and administration and enforcement be modified in accordance with the harmonization proposals described in the budget documents tabled by the Minister of Finance in the House of Commons on February 18, 2003.

Film or Video Production Services Tax Credit

(19) That, for expenditures incurred after February 18, 2003, the reference in subsection 125.5(3) of the Act to "11%" be replaced with a reference to "16%".

Extension of Tax Credit for Flow-through Mining Expenditure

(20) That the definition "flow-through mining expenditure" in subsection 127(9) of the Act be extended to include expenses otherwise described in that definition that are incurred, or deemed by subsection 66(12.66) of the Act to have been incurred, by a corporation in 2004.

Notice of Ways and Means Motion to Amend the Excise Tax Act

That it is expedient to amend the Excise Tax Act to provide among other things:

Bio-diesel and E-diesel

(1) That the excise tax on diesel fuel not apply to bio-diesel fuel produced from waste materials, or feedstocks, of biological, non-fossil-fuel origin.

(2) That the excise tax on diesel fuel not apply to that portion of a blended diesel fuel that is equal to the percentage, by volume, of the blended fuel that constitutes bio-diesel fuel produced from waste materials, or feedstocks, of biological, non-fossil-fuel origin.

(3) That the excise tax on diesel fuel not apply to that portion of an ethanol-diesel or methanol-diesel fuel blend that is equal to the percentage, by volume, of the fuel blend that constitutes ethanol or methanol that is made from biomass or renewable feedstocks and not from petroleum, natural gas or coal.

(4) That any enactment founded on any of paragraphs (1) to (3) be applicable to fuel sold or imported after February 18, 2003.

Fuel Excise Tax Refund Claims

(5) That the rebate of excise tax on goods exported from Canada not apply to fuel transported out of the country in the fuel tank of the vehicle that is used for that transportation.

(6) That any enactment founded on paragraph (5) apply to applications for rebates of excise tax received by the Minister of National Revenue on or after February 18, 2003.

School Transportation Services

(7) That section 5 of Part III of Schedule V to the Act be amended to provide that a supply of a service of transporting elementary or secondary school students to or from a school that is operated by a school authority is an exempt supply under the goods and services tax/harmonized sales tax when the supply is made by a school authority to any person other than another school authority, and that this provision be deemed to have come into force on December 17, 1990.

(8) That, if a school authority’s net tax for a reporting period determined under the Act as amended by any enactment founded on paragraph (7) is different from the amount that would be the authority’s net tax for the period if that amendment were not enacted, and the Minister of National Revenue has assessed the net tax for the period, the Minister may reassess the net tax or an amount payable under section 230.1 of the Act to take into account that difference, on or before the later of the day that is one year after the day on which the enactment is assented to and the last day of the period otherwise allowed under section 298 of the Act for making the reassessment, notwithstanding that section and notwithstanding any decision of a court in respect of that reporting period of the authority that is rendered after December 21, 2001.

Contracted Municipal Services

(9) That section 21 of Part VI of Schedule V to the Act be amended to provide that a supply of a municipal service (other than a service specifically excluded under that section) made by or on behalf of a government or municipality is an exempt supply under the goods and services tax/harmonized sales tax when the supply is made to a recipient who is the owner or occupant of real property situated in a particular geographic area and who is not the municipality or the government, if

(a) the owner or occupant has no option but to receive the service; or

(b) the service is supplied because of a failure by the owner or occupant to comply with an obligation imposed under a law.

(10) That any enactment founded on paragraph (9) be deemed to have come into force on December 17, 1990 except that, in applying section 21 of Part VI of Schedule V to the Act, as amended by that enactment, to supplies for which all of the consideration became due before April 24, 1996 or was paid before that day without having become due, it be read without reference to paragraph (b) thereof.

Harmonization of Administrative Provisions (Standardized Accounting)

(11) That the provisions of the Act relating to accounting, interest, penalties and administration and enforcement be modified in accordance with the harmonization proposals described in the budget documents tabled by the Minister of Finance in the House of Commons on February 18, 2003.

Notice of Ways and Means Motion to Amend the Customs Tariff, the Excise Tax Act and
the Excise Act, 2001

That it is expedient to amend the Customs Tariff, the Excise Tax Act and the Excise Act, 2001 to provide among other things:

Customs Tariff

(1) That the duty under subsection 21(2) of the Customs Tariff be levied at the rate of $0.075 per cigarette, $0.055 per tobacco stick, and $0.05 per gram of manufactured tobacco other than cigarettes and tobacco sticks.

Excise Tax Act

(2) That the excise tax on tobacco products under section 23.11 of the Excise Tax Act be imposed at the following rates:

(a) $0.0475 per cigarette;

(b) $0.03665 per tobacco stick; and

(c) $31.65 per kilogram of manufactured tobacco other than cigarettes and tobacco sticks.

(3) That the excise tax on tobacco products under section 23.12 of the Act be imposed at the following rates:

(a) $0.075 per cigarette;

(b) $0.055 per tobacco stick; and

(c) $0.05 per gram of manufactured tobacco other than cigarettes and tobacco sticks.

(4) That the excise tax on tobacco products under subsection 23.13(1) of the Act be imposed at the following rates:

(a) $0.075 per cigarette;

(b) $0.055 per tobacco stick; and

(c) $50.00 per kilogram of manufactured tobacco other than cigarettes and tobacco sticks.

(5) That the excise tax on tobacco products under subsection 23.13(2) of the Act be imposed at the following rates:

(a) $0.1475 per cigarette;

(b) $0.08165 per tobacco stick; and

(c) $81.65 per kilogram of manufactured tobacco other than cigarettes and tobacco sticks.

(6) That Schedule II to the Act be amended to provide for the following rates of excise tax:

(a) Cigarettes: $0.25888 for each five cigarettes or fraction of five cigarettes contained in any package;

(b) Tobacco sticks: $0.03965 per stick;

(c) Manufactured tobacco other than cigarettes and tobacco sticks: $35.648 per kilogram; and

(d) Cigars: the greater of $0.065 per cigar and 65 per cent.

Excise Act, 2001

(7) That the rate of duty set out in paragraph 1(a) of Schedule 1 to the Excise Act, 2001 be amended to be $0.374875 for each five cigarettes or fraction of five cigarettes contained in any package.

(8) That the rate of duty set out in paragraph 1(b) of Schedule 1 to the Act be amended to be $0.396255 for each five cigarettes or fraction of five cigarettes contained in any package.

(9) That the rate of duty set out in paragraph 2(a) of Schedule 1 to the Act be amended to be $0.054983 per tobacco stick.

(10) That the rate of duty set out in paragraph 2(b) of Schedule 1 to the Act be amended to be $0.057983 per tobacco stick.

(11) That the rate of duty set out in paragraph 3(a) of Schedule 1 to the Act be amended to be $49.983 per kilogram of manufactured tobacco other than cigarettes and tobacco sticks.

(12) That the rate of duty set out in paragraph 3(b) of Schedule 1 to the Act be amended to be $53.981 per kilogram of manufactured tobacco other than cigarettes and tobacco sticks.

(13) That the rate of additional duty on cigars set out in Schedule 2 to the Act be amended to be the greater of

(a) $0.065 per cigar; and

(b) 65%, computed on

(i) the sale price, in the case of cigars manufactured in Canada, or

(ii) the duty-paid value, in the case of imported cigars.

(14) That section 1 of Schedule 3 to the Act be amended to provide for the following rates of special duty:

(a) $0.075 per cigarette, in the case of cigarettes;

(b) $0.055 per stick, in the case of tobacco sticks; and

(c) $0.05 per gram, in the case of manufactured tobacco other than cigarettes and tobacco sticks.

(15) That section 2 of Schedule 3 to the Act be amended to provide for the following rates of special duty:

(a) $0.075 per cigarette, in the case of cigarettes;

(b) $0.055 per stick, in the case of tobacco sticks; and

(c) $0.05 per gram, in the case of manufactured tobacco other than cigarettes and tobacco sticks.

(16) That section 3 of Schedule 3 to the Act be amended to provide for the following rates of special duty:

(a) $0.075 per cigarette, in the case of cigarettes;

(b) $0.055 per stick, in the case of tobacco sticks; and

(c) $50.00 per kilogram, in the case of manufactured tobacco other than cigarettes and tobacco sticks.

(17) That section 4 of Schedule 3 to the Act be amended to provide for the following rates of special duty:

(a) $0.095724 per cigarette, in the case of cigarettes;

(b) $0.042 per stick, in the case of tobacco sticks; and

(c) $46.002 per kilogram, in the case of manufactured tobacco other than cigarettes and tobacco sticks.

(18) That any enactment founded on any of paragraphs (1) to (17) be effective after June 17, 2002.

(19) That, for the purposes of applying the provisions of the Customs Act and the Excise Tax Act that provide for the payment of, or liability to pay, interest in respect of any amount, the amount be determined and interest be computed on it as though any enactment founded on any of paragraphs (1) to (17) were assented to on June 18, 2002.

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