Notice of Ways and Means Introduced

On March 11, the government tabled a Notice of Ways and Means to amend the Income Tax Act. The majority of the content of the Notice is comprised of the detailed changes required to implement the measures announced in the February 26 budget. The changes implemented include:
  • Establishing the Tax-Free Savings Account, effective for the 2009 tax year.
  • Enhancing the flexibility of Registered Education Savings Plans by increasing by 10 years the time they may remain open and accept contributions, effective for the 2008 tax year.
  • Increasing the residency component of the Northern Residents Deduction by 10 per cent, effective for the 2008 tax year.
  • Extending eligibility for the Medical Expense Tax Credit to certain devices, effective for the 2008 tax year.
  • Extending the Mineral Exploration Tax Credit by one year.
  • Extending the capital gains tax exemption for certain donations of listed securities to certain exchangeable shares and partnership interests, for donations made on or after February 26, 2008.
  • Adjusting the rate of gross-up of eligible dividends and the Dividend Tax Credit to reflect corporate income tax reductions, beginning in 2010.
  • Increasing the benefits available to small and medium-sized businesses under the Scientific Research and Experimental Development Program, generally effective for taxation years that end on or after February 26, 2008.
  • Amending the penalty for failure to remit source deductions when due and excusing early remittances from the financial institution remittance rules, effective for remittances on or after February 26, 2008.
  • Reducing the paper burden associated with dispositions by non-residents of certain treaty-protected property, effective for dispositions that occur after 2008.
  • Ensuring that the tax incentive for donations of medicines benefits recipients in developing countries to the greatest extent possible.
  • Modifying the provincial component of the Specified Investment Flow-Through tax to better reflect actual provincial tax rates, generally effective for the 2009 tax year.
  • Amending the Excise Act, the Excise Act 2001, and the Customs Tariff to improve tobacco tax enforcement and compliance, adjusting excise duties on tobacco sticks and tobacco for duty-free markets, and equalizing the excise treatment of imitation spirits and other spirits.
  • Implementing Goods and Services Tax/Harmonized Sales Tax (GST/HST) as detailed in the budget.
In a surprise move, the Notice also includes changes that effectively reverse the changes to Registered Education Savings Plans which were included in Bill C-253, as passed on March 6.  These reversing provisions will be enacted if Bill C-253 receives Royal assent and will become effective retroactive to the day Bill C-253 receives assent, ensuring that there is no time period when RESP contributions are deductible.