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Annex 1: Update on Federal Tax Reductions
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: 1994–2004

• Increased the basic personal, spousal and equivalent-to-spouse amounts^[1] by $500 each for low-income Canadians.

• Eliminated 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.

• 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 supplement 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.
• 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:^[2]

• the basic personal amount would be at least $8,000.
• the spousal amount1 would be at least $6,800.
• the second bracket threshold would be at least $35,000.
• the third bracket threshold would be at least $70,000.
• the fourth bracket threshold would be at least $113,804.

Tax Measures to Support Economic and Social Objectives, Enhance Tax Fairness and Improve the Tax Structure by Year of Announcement: 1994–2004

• 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 $425 million on July 1, 1999, and a further $425 million on July 1, 2000.

• Set the design for the $850-million 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 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.
• The phase-out rate of the base benefit of the CCTB will be reduced from 5 to 4 per cent (from 2.5 to 2 per cent for families with one child).

• Increased the annual NCB supplement for low-income families by $150 per child in July 2003.

• Legislated that the NCB supplement for low-income families would increase by an additional $185 in July 2005, and a further $185 in July 2006.

• Introduced, effective July 2003, as a supplement to the CCTB, a new $1,600 Child Disability Benefit for low- and modest-income families with a child with a disability.

Tax Measures to Support Economic and Social Objectives, Enhance Tax Fairness and Improve the Tax Structure by Year of Announcement: 1994–2004

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

• Introduced the pension adjustment reversal 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 goods and services tax/harmonized sales tax (GST/HST) rebate for multi-employer pension plans to provide comparable sales tax treatment relative to single-employer pension plans.

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

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

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

Tax Measures to Support Economic and Social Objectives, Enhance Tax Fairness and Improve the Tax Structure by Year of Announcement: 1994–2004

• Increased the amount used to establish the education tax 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 tax 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 tax 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 (CESG) 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 tax 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 tax 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 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.

• Proposing, beginning in 2004, that each child born after 2003 will be eligible for a Canada Learning Bond (CLB) of $500 in the first year their family is entitled to the National Child Benefit (NCB) supplement, as well as CLBs of $100 in each subsequent year the family is entitled to the NCB supplement, up to in the year the child is 15.

• Proposing to increase, starting in 2005, the CESG rate from 20 to 40 per cent for families with income under $35,000 and from 20 to 30 per cent for families with income between $35,000 and $70,000. The enhanced CESG will apply to the first $500 contributed annually.

• Proposing to extend eligibility for the education tax credit to students who pursue post-secondary education related to their current employment, when the costs are not reimbursed by the employer.

Tax Measures to Support Economic and Social Objectives, Enhance Tax Fairness and Improve the Tax Structure by Year of Announcement: 1994–2004

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

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

1996

• Increased the limits on charitable donations eligible for tax credits from 20 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 limit for donations from 50 to 75 per cent of net income.

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

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

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

• Increased tax-free allowances for volunteer firefighters from $500 to $1,000, and extended these allowances to other 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.

• Effective January 1, 2004, enhanced the political contribution tax credit to 75 per cent of the first $400 contributed instead of the first $200.

• Extended the tax shelter registration requirements to arrangements involving tax credits.

• Proposed amendments to limit the tax benefits of charitable donations made under certain tax shelter and other arrangements.

• Responding to the recommendations of the Joint Regulatory Table of the Voluntary Sector Initiative by proposing, for the regulation of registered charities, a new compliance regime, a more accessible appeal regime, and more transparency and accessibility of information.

• Proposing a number of improvements to the disbursement quota rules to give charities greater flexibility to manage the gifts they receive, and to ensure that an appropriate proportion of charities’ tax-assisted gifts and assets are devoted to charitable programs and services.

• Increased the rebate in respect of the goods and services tax and the federal portion of the harmonized sales tax for municipalities to 100 per cent from 57.14 per cent.

Tax Measures to Support Economic and Social Objectives, Enhance Tax Fairness and Improve the Tax Structure by Year of Announcement: 1994–2004

• 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 (e.g. added sign language interpreter fees).

• 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 individual with a disability, 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.

• Expanded the list of eligible expenses under the medical expense tax credit (e.g. 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 person with a disability.

• 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.

• Introduced, as a supplement to the Canada Child Tax Benefit, a new $1,600 Child Disability Benefit for low- and modest-income families with a child with a disability.

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

• Expanded 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.

• Established the Technical Advisory Committee on Tax Measures for Persons with Disabilities.

• Set aside funding beginning in 2004–05 to enhance tax measures for persons with disabilities, drawing on the expert advice of the Technical Advisory Committee and onan evaluation of the DTC.

• Clarified 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.

• Based on the early work of the Technical Advisory Committee, proposing to create a disability supports deduction to recognize the costs of disability-related supports incurred by persons with disabilities for the purposes of employment or education.

• Proposing to improve the tax recognition of medical and disability-related costs incurred by caregivers.

Tax Measures to Support Economic and Social Objectives, Enhance Tax Fairness and Improve the Tax Structure by Year of Announcement: 1994–2004

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

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

• Reduced the capital gains inclusion rate from three-quarters to two-thirds for disposition of property after February 27, 2000, and before October 18, 2000, and then to one-half for disposition of property after October 17, 2000.

• 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.

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

• 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 to 21 per cent effective January 2001.

• Improved the capital cost allowance 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 installments 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.

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

• Enhanced 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.

• Improved the automobile expense and benefit provisions.

• Phased out the federal capital tax over a period of five years—eliminating it in 2004 for smaller corporations.

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

• Reduced the corporate tax rate on resource income from 28 to 21 per cent over five years while making improvements to the tax structure.

• Extended the temporary mineral exploration tax credit for flow-through share investors for one year to the end of 2004.

• Increased the Film or Video Production Services Tax Credit from 11 to 16 per cent.

• Proposed amendments to simplify and better target the tax incentives for certified Canadian films.

• Proposing improvements to the capital cost allowance system for computer equipment and data network infrastructure equipment.

• Proposing to amend the scientific research and experimental development investment tax credit rules so that small Canadian-controlled private corporations that have a common group of shareholders who are not acting together will not have to share the $2-million expenditure limit.

• Proposing to extend the carry-forward periods from 7 to 10 years for certain losses and foreign tax credits.

• Proposing to extend the temporary mineral exploration tax credit for flow-through share investors for one year to the end of 2005.

• Proposing to accelerate the increase in the small business deduction limit to $300,000 by one year to 2005.

Tax Measures to Support Economic and Social Objectives, Enhance Tax Fairness and Improve the Tax Structure by Year of Announcement: 1994–2004

• Expanded the range of renewable energy and energy conservation equipment eligible for accelerated capital cost allowance under new Class 43.1 to include solar and geothermal energy equipment used to generate electricity and equipment used to collect 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 sites and quarries for the extraction of aggregates.

• Expanded the range of renewable energy and energy conservation expenses eligible for full deductibility and flow-through treatment 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 under Class 43.1 by including certain used equipment and reducing the qualification threshold for photovoltaic systems.

• Expanded the range of renewable energy and energy conservation equipment qualifying for accelerated capital cost allowance under Class 43.1 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 allowance under Class 43.1 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.

• Removed 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.

• Expanded the range of renewable energy and energy efficient equipment eligible for accelerated capital cost allowance under Class 43.1 to include certain stationary fuel cells, equipment used to produce bio-oil, and equipment used to produce heat for greenhouses from renewable energy sources.

Tax Measures to Support Economic and Social Objectives, Enhance Tax Fairness and Improve the Tax Structure by Year of Announcement: 1994–2004

• 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.

1996

• 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.

• 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 as a gift to a qualified donee.

• Proposed a deduction to make tax-free the employment income earned (up to prescribed limits) by military or police personnel serving on high-risk deployed operational missions outside Canada.

Tax Measures to Support Economic and Social Objectives, Enhance Tax Fairness and Improve the Tax Structure by Year of Announcement: 1994–2004

• Reduced the deduction for business meals and entertainment expenses from 80 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 to 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 scientific research and experimental development (SR&ED).

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

• Repealed the 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 by implementing a mechanism to ensure that where the product of an SR&ED project is sold, the overall cost of the project is reduced and investment tax credits are provided on the net cost of performing SR&ED.

• Improved a range of international taxation rules, such as the harmonization of the operation of domestic tax rules with bilateral tax treaties, as well as the clarification of the foreign tax credit provisions, residency rules and certain anti-avoidance provisions.

• 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.

• 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.

• Provided a tax deferral to Canadian resident shareholders in respect of certain distributions by foreign corporations of spin-off shares received after 1997.

• Extended the tax shelter registration requirements to arrangements involving tax credits.

• Proposed amendments to ensure that restrictive covenant payments, such as in respect of non-competition agreements, are taxable.

• Proposing to deny the deductibility of statutory fines and penalties.

• Proposing to amend the Income Tax Act to prevent persons, other than cooperatives and credit unions, from deducting patronage dividends paid tonon-arm’s-length persons.

• Proposing to limit investments by registered pension plans in business income trusts.

• Proposing to tax non-resident investors on their gains arising from investments in certain taxable Canadian property through Canadian mutual funds.

• Proposing that Canadian resource property and timber resource property be treated as taxable Canadian property for purposes of the anti-avoidance rule that limits non-resident ownership of mutual funds.

• Proposing to expand the scope of the affiliated persons rules to deal with trusts in a manner consistent with how the affiliated persons rules apply to partnerships.

• Proposing to limit the ability of corporations to carry forward charitable donations after an aquisition of control.

• Proposing to clarify that the general anti-avoidance rule applies to tax regulations andCanada’s tax treaties.

Tax Measures to Support Economic and Social Objectives, Enhance Tax Fairness and Improve the Tax Structure by Year of Announcement: 1994–2004

• 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.

• Reduced the annual exemption from the excise tax on tobacco exports from 2.5 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.

Tax Measures to Support Economic and Social Objectives, Enhance Tax Fairness and Improve the Tax Structure by Year of Announcement: 1994–2004

• 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^[3] 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^[4] 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.

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

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

• Clarified 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 the fuel.

• Proposing to allow any notice or order relating to the administration and enforcement of the Income Tax Act and other federal tax statutes to be served on a federally governed financial institution either (1) at any branch of the institution in question, or (2) at a specific office or branch designated by the institution.

• Proposing to amend the Income Tax Act (and other federal tax statutes) to establish a 10-year limitation period for the collection of tax debts in response to the Supreme Court of Canada’s 2003 decision in Markevich v. Canada.

• Beginning with applications filed after 2005, proposing to limit the period in which taxpayers can request adjustments to 10 years.

¹ The spousal amount is now called the spouse or common-law partner amount, and the equivalent-to-spouse amount is now the amount for an eligible dependant.  [Return]

² Given the restoration of full indexation, the basic personal amount is $8,012 and the spouse or common-law partner amount is $6,803 for 2004.   [Return]

³ Now the Canada Revenue Agency.  [Return]

⁴ Now the Canada Revenue Agency.  [Return]

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