Bill C-31 received first reading on March 28, 2014, so the included tax measures are considered to be substantively enacted for accounting purposes as of this date.
Interestingly, Bill C-31 also includes a much welcomed tax legislative process measure which requires the Minister of Finance to table in the House of Commons a list of outstanding tax measures annually. This measure was recommended by both Lorne Shillinger and Paul Hickey when they appeared as witnesses in March 2013 before the House of Commons Standing Committee on Finance, which was studying Bill C-48, the large 10-year "catch-up" tax bill.
Included in Bill C-31
The main corporate tax measures included in Bill C-31 are the 2014 budget proposals to reduce the maximum number of required payment on account of source deductions for certain organizations.
The budget proposed to reduce the frequency of remittance of source deductions for certain employers. As a result, Bill C-31 proposes to:
- Increase the threshold level of average monthly withholdings at which employers are required to remit up to two times per month $25,000 (from $15,000)
- Increase the threshold level of average monthly withholdings at which employers are required to remit up to four times per month to $100,000 (from $50,000).
This measure will apply to amounts to be withheld after 2014.
The bill contains the legislation from the 2013 budget that requires certain financial intermediaries to report international electronic funds transfers of $10,000 or more to the CRA. In addition, the bill contains legislation relating to the GST/HST Closely Related Relief Election.
What's not in the bill
Bill C-31 does not contain other tax changes from the 2014 federal budget, such as the loss of graduated rates for certain trusts, elimination of benefits for immigrant trusts, thin-capitalization, captive insurance, donation credits for certain estates, CCA changes for clean energy generation equipment and certain indirect tax changes such as the new joint venture election. Also not included are any comments on the tax areas for which consultations are still ongoing or which have not yet been announced, such as treaty shopping, offshore regulated banks, non-profit status, eligible capital property and tax transparency and BEPS.
Tabling of outstanding tax legislation
Included in the recently released Bill C-31 is a measure that was proposed in the 2014 federal budget to amend the Financial Administration Act (FAA). This provision will require the Minister to table a list of every specific legislative proposal that the government has (since the last general election and before the beginning of the previous fiscal year) publicly announced its intention to implement and that has not yet been enacted, or made, in substantially the same form as the proposal or in a form that reflects consultations and deliberations relating to the proposal.
A list of specific legislative proposals to amend "listed tax law" will need to be tabled by the Minister in the House of Commons on or before the fifth day on which the House of Commons is sitting after October 31, of a particular year (i.e., First week of November). "Listed tax laws" in subsection 162(1) of the FAA include:
- Income Tax Act and the Income Tax Regulations
- Income Tax Conventions Interpretation Act
- Excise Tax Act and any regulations made under that Act
- Excise Act, 2001 and any regulations made under that Act
- Air Travelers Security Charge Act and any regulations made under that Act
- Excise Act and any regulations made under that Act
- Custom Tariff and any regulations made under that Act.
The specific legislative proposals required to be tabled include only proposals released after the last general election and before April 1 of the fiscal year and do not include comfort letters issued by the Department of Finance. As well, where no specific legislative proposals that qualify for inclusion on the list exist, the Minister will not be required to table. The new legislative proposal does not require the Minister to explain why any particular legislative proposal is still outstanding.
For KPMG National Tax's analysis of the 2014 federal budget, see TaxNewsFlash-Canada 2014-08, "2014 Federal Budget Highlights" [PDF 100Kb].
For more information, contact your KPMG adviser.
Information is current to April 01, 2014. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500