Changes to Pension Income Credit Emerge In New Tax Proposals

Finance Canada proposed changes to the $2000 Pension Income Amount in the September 20 release of sixty-four changes to the Income Tax Act and Regulations.  

The far-reaching document also describes new rules relating to life insurance policies and exempt policies and a retroactive provision relating to the deductibility of medical marihuana.

Specifically relating to the pension income credit, a Retirement Income Security Benefit (RISB),  payable to Canadian forces members and veterans will qualify for the credit and for pension income splitting back to the 2015 and subsequent tax years.

For those claiming medical marihuana as an eligible medical expense the rules have been tightened retroactively to June 19, 2013.  Taxpayers who made such a claim will want to ensure the product was purchased first of all for a patient authorized to possess it for medical purposes.  Second, it must be proven that it was purchased from:

• a licensed producer  
• a health care practitioner
• a hospital, under subsection 65(2.1) of the Narcotics Control Regulations, or
• an individual who possesses an exemption for cultivation or production under section 56 of the Controlled Drugs and Substances Act.

Amongst some of the other changes in these proposals are the following corporate and partnership tax changes:

• benefits conferred on shareholder
• restrictive covenants
• capital dividend accounts
• dividends from non-resident corporations
• depreciable property – leasehold interests and options
• stock options deductions on situations of death
• dividends paid to bankrupt controlling corporation
• partnership stop-loss rules
• reverse takeover of partnership by loss corporation
• deferred recognition of debtor’s gain on settlement of debt
• interest in partnership-cost reduction
• AMT and limited partnership losses

For investment and retirement planning:

• scientific research and experimental development
• Pooled registered pension plans
• RDSP Transfers
• Excess transfers to SPP and PRPP
• Undeducted RRSP premiums
• Character conversion
• Trust attribution
• Trust CGE flow through
• Financial institute definition
• Federal credit union allocation

For foreign transactions:

• Rollovers on foreign mergers
• Parked debt
• Stub period FAPI
• Non-resident trusts
• Foreign affiliates
• Foreign affiliate dumping
• Functional currency reporting
• International organizations and agencies

Many of these provisions will be covered in more depth in the Knowledge Bureau’s Year End Investment and Business Planning Workshop.

Refer a Friend	Research	Calculators	Course Trials