Budget and Economic Statement Implementation Act, 2007 (S.C. 2007, c. 35)
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Assented to 2007-12-14
Budget and Economic Statement Implementation Act, 2007
S.C. 2007, c. 35
Assented to 2007-12-14
An Act to implement certain provisions of the budget tabled in Parliament on March 19, 2007 and to implement certain provisions of the economic statement tabled in Parliament on October 30, 2007
SUMMARY
Part 1 implements goods and services tax and harmonized sales tax (GST/HST) measures proposed in the March 19, 2007 Budget but not included in the Budget Implementation Act, 2007, which received Royal Assent on June 22, 2007. Specifically, the Excise Tax Act is amended to
(a) increase the percentage of available input tax credits for GST/HST paid on meal expenses of truck drivers from 50% to 80% over five years beginning with expenses incurred on or after March 19, 2007;
(b) increase the GST/HST annual filing threshold from $500,000 in taxable supplies to $1,500,000 and the annual remittance threshold from $1,500 to $3,000, both effective for fiscal years that begin after 2007;
(c) increase the GST/HST 48-hour travellers’ exemption from $200 to $400 effective in respect of travellers returning to Canada on or after March 20, 2007; and
(d) implement changes to the rules governing self-assessment under Division IV of Part IX of the Excise Tax Act to ensure that GST/HST applies appropriately in respect of intangible personal property acquired on a zero-rated basis and consumed in furthering domestic activities, applicable to supplies made after March 19, 2007.
Part 2 amends the non-GST portion of the Excise Tax Act to implement measures announced in the March 19, 2007 Budget. Specifically, the excise tax exemptions for renewable fuels, including ethanol and bio-diesel, are repealed, effective April 1, 2008.
Part 3 implements income tax measures proposed in the March 19, 2007 Budget but not included in the Budget Implementation Act, 2007, which received Royal Assent on June 22, 2007. In particular, it
(a) introduces a new Working Income Tax Benefit;
(b) eliminates income tax on elementary and secondary school scholarships;
(c) eliminates capital gains tax on donations of publicly-listed securities to private foundations;
(d) enhances the child fitness tax credit;
(e) expands the scope of the public transit tax credit;
(f) increases the lifetime capital gains exemption to $750,000;
(g) increases the deductible percentage of meal expenses for long-haul truck drivers;
(h) provides tax relief in respect of the 2010 Winter Olympic and Paralympic Games;
(i) allows for phased-retirement options for pension plans;
(j) extends the mineral exploration tax credit;
(k) enhances tax benefits for donations of medicine to the developing world;
(l) streamlines the process for prescribed stock exchanges;
(m) introduces an investment tax credit for child care spaces;
(n) introduces a new withholding tax exemption with respect to certain cross-border interest payments;
(o) prevents double deductions of interest expense on borrowed money used to finance foreign affiliates (the Anti-Tax-Haven Initiative);
(p) eases tax remittance and filing requirements for small business;
(q) introduces a mechanism to accommodate functional currency reporting;
(r) provides certain tobacco processors that do not manufacture tobacco products with relief from the Tobacco Manufacturers’ Surtax; and
(s) provides authority for regulations requiring the disclosure by publicly traded trusts and partnerships of information enabling investment managers to prepare the tax information slips that they are required to issue to investors on a timely basis.
Part 4 implements the disability savings measures proposed in the March 19, 2007 Budget. The measures are intended to support long-term savings through registered disability savings plans to provide for the financial security of persons with severe and prolonged impairments in physical or mental functions. Part 4 contains amendments to the Income Tax Act to allow for the creation of registered disability savings plans. It also enacts the Canada Disability Savings Act. That Act provides for the payment of Canada Disability Savings Grants in relation to contributions made to those plans. The amount of grant is increased for persons of lower and middle income. It also provides for the payment of Canada Disability Savings Bonds in respect of persons of low income.
Part 5 implements measures that provide for payments to be made to provinces as a financial incentive for them to eliminate taxes on capital under certain circumstances.
Part 6 enacts the Bank for International Settlements (Immunity) Act.
Part 7 amends the Pension Benefits Standards Act, 1985 to permit phased retirement arrangements in federally regulated pension plans by allowing an employer to simultaneously pay a partial pension to an employee and provide further pension benefit accruals to the employee. These amendments are consistent with amendments to the Income Tax Regulations to permit phased retirement.
Part 8 authorizes payments to be made out of the Consolidated Revenue Fund for the purpose of Canada’s contribution to the Advance Market Commitment.
Part 9 amends the Canada Oil and Gas Operations Act to authorize the National Energy Board to regulate traffic, tolls and tariffs in relation to oil and gas pipelines regulated under that Act.
Part 10 amends the Farm Income Protection Act to allow financial institutions to hold contributions under a net income stabilization account program.
Part 11 amends the Federal-Provincial Fiscal Arrangements Act to provide for an additional fiscal equalization payment that may be paid to Nova Scotia and Newfoundland and Labrador. This Part also specifies the time and manner in which the calculation of fiscal equalization payments will be made and it amends that Act’s regulation-making authority. In addition, this Part makes consequential amendments to other Acts.
Part 12 amends the Canada Education Savings Act to clarify the authority of the Minister of Human Resources and Social Development to collect, on behalf of the Canada Revenue Agency, any information that the Canada Revenue Agency requires for purposes of administering the registered education savings plan tax provisions.
Part 13 authorizes payments to be made out of the Consolidated Revenue Fund to an entity, designated by the Minister of Finance, to facilitate public-private partnership projects.
Part 14 implements tax measures proposed in the October 30, 2007 Economic Statement. With respect to income tax measures, it
(a) reduces the general corporate income tax rate;
(b) accelerates the tax reduction for small businesses;
(c) reduces the lowest personal income tax rate, which automatically reduces the rate used to calculate non-refundable tax credits and the alternative minimum tax; and
(d) increases the basic personal amount and the amount upon which the spouse or common-law partner and wholly dependent relative credits are calculated.
Part 14 also amends the Excise Tax Act to implement, effective January 1, 2008, the reduction in the goods and services tax (GST) and the federal component of the harmonized sales tax (HST) from 6% to 5%. That Act is amended to provide transitional rules for determining the GST/HST rate applicable to transactions that straddle the January 1, 2008, implementation date, including transitional rebates in respect of the sale of residential complexes where transfer of ownership and possession both take place on or after January 1, 2008, pursuant to a written agreement entered into on or before October 30, 2007. The Excise Act, 2001 is also amended to increase excise duties on tobacco products to offset the impact of the GST/HST rate reduction. The Air Travellers Security Charge Act is also amended to ensure that rates for domestic and transborder air travel reflect the impact of the GST/HST rate reduction. Those amendments generally apply as of January 1, 2008.
Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:
SHORT TITLE
Marginal note:Short title
1. This Act may be cited as the Budget and Economic Statement Implementation Act, 2007.
PART 1AMENDMENTS IN RESPECT OF THE GOODS AND SERVICES TAX/HARMONIZED SALES TAX
R.S., c. E-15Excise Tax Act
2. (1) Section 217 of the Excise Tax Act is amended by adding the following after paragraph (c):
(c.1) a taxable supply made in Canada of intangible personal property that is a zero-rated supply only because it is included in section 10 or 10.1 of Part V of Schedule VI, other than
(i) a supply that is made to a consumer of the property, or
(ii) a supply of intangible personal property that is acquired for consumption, use or supply exclusively in the course of commercial activities of the recipient of the supply or activities that are engaged in exclusively outside Canada by the recipient of the supply and that are not part of a business or adventure or concern in the nature of trade engaged in by that recipient in Canada,
(2) Subsection (1) applies to supplies made after March 19, 2007.
Marginal note:2001, c. 15, s. 8(1)
3. (1) Paragraph 218.1(1)(d) of the Act is replaced by the following:
(d) every person who is the recipient of a supply that is included in any of paragraphs 217(c.1), (d) or (e) and that is made in a particular participating province
(2) Subsection (1) applies to supplies made after March 19, 2007.
Marginal note:2000, c. 30, s. 64(1)
4. (1) Paragraph 236(1)(b) of the Act is replaced by the following:
(b) one or both of the following situations apply:
(i) subsection 67.1(1) of the Income Tax Act applies, or would apply, if the person were a taxpayer under that Act, to all of the composite amount or that part of it that is, for the purposes of that Act, an amount (other than an amount to which subsection 67.1(1.1) of that Act applies) paid or payable in respect of the human consumption of food or beverages or the enjoyment of entertainment and section 67.1 of that Act deems the composite amount or that part to be 50% of a particular amount,
(ii) subsection 67.1(1.1) of that Act applies, or would apply, if the person were a taxpayer under that Act, to all of the composite amount or that part of it that is, for the purposes of that Act, an amount paid or payable in respect of the consumption of food or beverages by a long-haul truck driver during the driver’s eligible travel period (as those terms are defined in section 67.1 of that Act), and section 67.1 of that Act deems the composite amount or that part to be a percentage of a specified particular amount, and
Marginal note:2000, c. 30, s. 64(1)
(2) The formula and its descriptions in subsection 236(1) of the Act are replaced by the following:
[50% × (A/B) × C] + [40% × (D/B) × C]
where
- A
- is
(i) in the case where subparagraph (b)(i) applies, the particular amount, and
(ii) in any other case, zero,
- B
- is the composite amount,
- C
- is the input tax credit, and
- D
- is
(i) in the case where subparagraph (b)(ii) applies, the specified particular amount, and
(ii) in any other case, zero.
(3) The formula in subsection 236(1) of the Act, as enacted by subsection (2), is replaced by the following:
[50% × (A/B) × C] + [35% × (D/B) × C]
(4) The formula in subsection 236(1) of the Act, as enacted by subsection (3), is replaced by the following:
[50% × (A/B) × C] + [30% × (D/B) × C]
(5) The formula in subsection 236(1) of the Act, as enacted by subsection (4), is replaced by the following:
[50% × (A/B) × C] + [25% × (D/B) × C]
(6) The formula in subsection 236(1) of the Act, as enacted by subsection (5), is replaced by the following:
[50% × (A/B) × C] + [20% × (D/B) × C]
(7) Subsection (1) applies to
(a) amounts in respect of a supply of food, beverages or entertainment if tax under Part IX of the Act in respect of the supply becomes payable, or is paid without having become payable, after March 19, 2007 and no allowance or reimbursement is paid in respect of the supply; and
(b) amounts paid after March 19, 2007 as an allowance or reimbursement in respect of a supply of food, beverages or entertainment.
(8) Subsection (2) applies to
(a) amounts in respect of a supply of food, beverages or entertainment if tax under Part IX of the Act in respect of the supply becomes payable, or is paid without having become payable, after March 19, 2007 and before 2008 and no allowance or reimbursement is paid in respect of the supply; and
(b) amounts paid after March 19, 2007 and before 2008 as an allowance or reimbursement in respect of a supply of food, beverages or entertainment.
(9) Subsection (3) applies to
(a) amounts in respect of a supply of food, beverages or entertainment if tax under Part IX of the Act in respect of the supply becomes payable, or is paid without having become payable, in 2008 and no allowance or reimbursement is paid in respect of the supply; and
(b) amounts paid in 2008 as an allowance or reimbursement in respect of a supply of food, beverages or entertainment.
(10) Subsection (4) applies to
(a) amounts in respect of a supply of food, beverages or entertainment if tax under Part IX of the Act in respect of the supply becomes payable, or is paid without having become payable, in 2009 and no allowance or reimbursement is paid in respect of the supply; and
(b) amounts paid in 2009 as an allowance or reimbursement in respect of a supply of food, beverages or entertainment.
(11) Subsection (5) applies to
(a) amounts in respect of a supply of food, beverages or entertainment if tax under Part IX of the Act in respect of the supply becomes payable, or is paid without having become payable, in 2010 and no allowance or reimbursement is paid in respect of the supply; and
(b) amounts paid in 2010 as an allowance or reimbursement in respect of a supply of food, beverages or entertainment.
(12) Subsection (6) applies to
(a) amounts in respect of a supply of food, beverages or entertainment if tax under Part IX of the Act in respect of the supply becomes payable, or is paid without having become payable, after 2010 and no allowance or reimbursement is paid in respect of the supply; and
(b) amounts paid after 2010 as an allowance or reimbursement in respect of a supply of food, beverages or entertainment.
Marginal note:1993, c. 27, s. 98(3)
5. (1) Subsection 237(3) of the Act is replaced by the following:
Marginal note:Minimum instalment base
(3) For the purposes of subsection (1), if a registrant’s instalment base for a reporting period is less than $3,000, it is deemed to be nil.
(2) Subsection (1) applies to reporting periods beginning after 2007.
Marginal note:1997, c. 10, s. 57(1)
6. (1) Subsection 248(1) of the Act is replaced by the following:
Marginal note:Election for fiscal years
248. (1) A registrant that is a charity on the first day of a fiscal year of the registrant or whose threshold amount for a fiscal year does not exceed $1,500,000 may make an election to have reporting periods that are fiscal years of the registrant, to take effect on the first day of that fiscal year.
Marginal note:1997, c. 10, s. 57(2)
(2) Paragraphs 248(2)(b) and (c) of the Act are replaced by the following:
(b) if the person is not a charity and the threshold amount of the person for the second or third fiscal quarter of the person in a fiscal year of the person exceeds $1,500,000, the beginning of the first fiscal quarter of the person for which the threshold amount exceeds that amount, and
(c) if the person is not a charity and the threshold amount of the person for a fiscal year of the person exceeds $1,500,000, the beginning of that fiscal year.
(3) Subsections (1) and (2) apply to fiscal years beginning after 2007.
7. (1) Schedule VII to the Act is amended by adding the following after section 1.1:
1.2 For the purposes of section 1, subsection 140(2) of the Customs Tariff does not apply in respect of the reference to heading 98.04.
(2) Subsection (1) is deemed to have come into force on January 1, 1998.
PART 2AMENDMENT RELATING TO EXCISE TAX ON RENEWABLE FUELS
R.S., c. E-15Excise Tax Act
Marginal note:1993, c. 25, s. 56; 2003, c. 15, ss. 61(1) and 62(1)
8. (1) Sections 23.4 and 23.5 of the Excise Tax Act are repealed.
(2) Subsection (1) comes into force, or is deemed to have come into force, on April 1, 2008.
PART 3AMENDMENTS RELATING TO INCOME TAX
R.S., c. 1 (5th Supp.)Income Tax Act
9. (1) Paragraph (a) of the description of B in subsection 12(10.2) of the Income Tax Act is replaced by the following:
(a) the total of all amounts each of which is
(i) deemed by subsection (10.4) or 104(5.1) or (14.1) to have been paid out of the taxpayer’s NISA Fund No. 2 before the particular time, or
(ii) deemed by subsection 70(5.4) or 73(5) to have been paid out of another person’s NISA Fund No. 2 on being transferred to the taxpayer’s NISA Fund No. 2 before the particular time,
(2) Section 12 of the Act is amended by adding the following after subsection (10.3):
Marginal note:Acquisition of control — corporate NISA Fund No. 2
(10.4) For the purpose of subsection (10.2), if at any time there is an acquisition of control of a corporation, the balance of the corporation’s NISA Fund No. 2, if any, at that time is deemed to be paid out to the corporation immediately before that time.
(3) Subsections (1) and (2) apply to the balance in a NISA Fund No. 2 to the extent that that balance consists of contributions made to the fund, and amounts earned on those contributions, in the 2008 and subsequent taxation years.
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