Draft Legislation for February Budget – and More!

On August 29, the Department of Finance released draft legislative proposals that would implement various tax measures introduced in the February 11, 2014 budget as well as other measures including the modernization of life insurance policy exemption tests.

In the area of personal income tax, the intergenerational rollover, which allows farmers to transfer farm property, depreciable property, or eligible capital property to a child without incurring capital gains if the farm is transferred without profit (gifted/at cost) will be extended. Also, the lifetime capital gains exemption for farming and fishing businesses will be extended. The tax deferral provision with respect to breeding animals in case of drought was extended to bees and to all types of horses that are over 12 months of age.

Income contributed to an amateur athlete trust will qualify as earned income for Registered Retirement Savings Plan contribution limit purposes, with a three-year retrospective application. Changes pertaining to charities include allowing greater flexibility for recognizing charitable donations made by will or on death.

New rules also ensure that Pooled Registered Pension Plans are subject to the same Goods and Services Tax/Harmonized Sales Tax treatment as Registered Pension Plans.

Legislation for the elimination of graduated rate taxation for trusts and certain estates was also included, with an exception for cases involving testamentary trusts whose beneficiaries include individuals eligible for the Disability Tax Credit.

Several new rules affect foreign affiliates, the foreign accrual property income regimes, and other international taxation rules. Comments on the provisions are welcome until September 28. You may send your comments to EAP-PAE2014.tax-fiscalite@fin.gc.ca or to:

Tax Policy Branch
Department of Finance
90 Elgin Street
Ottawa, Ontario
K1A 0G5