Budget Implementation Act, 2008 (S.C. 2008, c. 28)
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Assented to 2008-06-18
Budget Implementation Act, 2008
S.C. 2008, c. 28
Assented to 2008-06-18
An Act to implement certain provisions of the budget tabled in Parliament on February 26, 2008 and to enact provisions to preserve the fiscal plan set out in that budget
SUMMARY
Part 1 enacts a number of income tax measures proposed in the February 26, 2008 Budget. In particular, it
(a) introduces the new Tax-Free Savings Account, effective for the 2009 and subsequent taxation years;
(b) extends by 10 years the maximum number of years during which a Registered Education Savings Plan may be open and accept contributions and provides a six-month grace period for making educational assistance payments, generally effective for the 2008 and subsequent taxation years;
(c) increases the amount of the Northern Residents Deduction, effective for the 2008 and subsequent taxation years;
(d) extends the application of the Medical Expense Tax Credit to certain devices and expenses and better targets the requirement that eligible medications must require a prescription by an eligible medical practitioner, generally effective for the 2008 and subsequent taxation years;
(e) amends the provisions relating to Registered Disability Savings Plans so that the rule forcing the mandatory collapse of a plan be invoked only where the beneficiary’s condition has factually improved to the extent that the beneficiary no longer qualifies for the disability tax credit, effective for the 2008 and subsequent taxation years;
(f) extends by one year the Mineral Exploration Tax Credit;
(g) extends the capital gains tax exemption for certain gifts of listed securities to also apply in respect of certain exchangeable shares and partnership interests, effective for gifts made on or after February 26, 2008;
(h) adjusts the rate of the Dividend Tax Credit to reflect corporate income tax rate reductions, beginning in 2010;
(i) increases the benefits available under the Scientific Research and Experimental Development Program, generally effective for taxation years that end on or after February 26, 2008;
(j) amends the penalty for failures to remit source deductions when due in order to better reflect the degree to which the remittances are late, and excuses early remittances from the mandatory financial institution remittance rules, effective for remittances due on or after February 26, 2008;
(k) reduces the paper burden associated with dispositions by non-residents of certain treaty-protected property, effective for dispositions that occur after 2008;
(l) ensures that the enhanced tax incentive for Donations of Medicines is properly targeted, effective for gifts made after June, 2008; and
(m) modifies the provincial component of the SIFT tax to better reflect actual provincial tax rates, effective for the 2009 and subsequent taxation years.
Part 1 also implements income tax measures to preserve the fiscal plan as set out in the February 26, 2008 Budget.
Part 2 amends the Excise Act, the Excise Act, 2001 and the Customs Tariff to implement measures aimed at improving tobacco tax enforcement and compliance, adjusting excise duties on tobacco sticks and on tobacco for duty-free markets and equalizing the excise treatment of imitation spirits and other spirits.
Part 3 implements goods and services tax and harmonized sales tax (GST/HST) measures proposed or referenced in the February 26, 2008 Budget. It amends the Excise Tax Act to expand the list of zero-rated medical and assistive devices and to ensure that all supplies of drugs sold to final consumers under prescription are zero-rated. It also amends that Act to exempt all nursing services rendered within a nurse-patient relationship, prescribed health care services ordered by an authorized registered nurse and, if certain conditions are met, a service of training that is specially designed to assist individuals in coping with the effects of their disorder or disability. It further amends that Act to ensure that a variety of professional health services maintain their GST/HST exempt status if those services are rendered by a health professional through a corporation. Additional amendments to that Act clarify the GST/HST treatment of long-term residential care facilities. Those amendments are intended to ensure that the GST New Residential Rental Property Rebate is available, and the GST/HST exempt treatment for residential leases and sales of used residential rental buildings applies, to long-term residential care facilities on a prospective basis and on past transactions if certain circumstances exist. This Part also makes amendments to relieve the GST/HST on most lease payments for land on which wind or solar power equipment used to generate electricity is situated.
Part 4 dissolves the Canada Millennium Scholarship Foundation, provides for the Foundation to fulfill certain obligations and deposit its remaining assets in the Consolidated Revenue Fund, and repeals Part 1 of the Budget Implementation Act, 1998. It also makes consequential amendments to other Acts.
Part 5 amends the Canada Student Financial Assistance Act and the Canada Student Loans Act to implement measures concerning financial assistance for students, including the following:
(a) authorizing the establishment and operation, by regulation, of electronic systems to allow on-line services to be offered to students;
(b) providing for the establishment and operation, by regulation, of a program to provide for the repayment of student loans for classes of borrowers who are encountering financial difficulties;
(c) allowing part-time students to defer their student loan payments for as long as they continue to be students, and providing, by regulation, for other circumstances in which student loan payments may be deferred; and
(d) allowing the Minister of Human Resources and Skills Development to take remedial action if any error is made in the administration of the two Acts and in certain cases, to waive requirements imposed on students to avoid undue hardship to them.
Part 6 amends the Immigration and Refugee Protection Act to authorize the Minister of Citizenship and Immigration to give instructions with respect to the processing of certain applications and requests in order to support the attainment of the immigration goals established by the Government of Canada.
Part 7 enacts the Canada Employment Insurance Financing Board Act. The mandate of the Board is to set the Employment Insurance premium rate and to manage a financial reserve. That Part also amends the Employment Insurance Act and makes consequential amendments to other Acts.
Part 8 authorizes payments to be made out of the Consolidated Revenue Fund for the recruitment of front line police officers, capital investment in public transit infrastructure and carbon capture and storage. It also authorizes Canada Social Transfer transition protection payments.
Part 9 authorizes payments to be made out of the Consolidated Revenue Fund to Genome Canada, the Mental Health Commission of Canada, The Gairdner Foundation and the University of Calgary.
Part 10 amends various Acts.
Preamble
Whereas, when the Government of Canada tables a budget in Parliament, a fiscal plan is an integral part of that budget;
Whereas the Government of Canada is committed to meeting the challenge of global economic uncertainty with a responsible, prudent and effective fiscal plan as reflected in the Budget Plan tabled in Parliament on February 26, 2008;
Whereas it is imperative to preserve the fiscal integrity of that Budget Plan and the integrity of the budget process, and important not to risk the Government of Canada going into deficit;
And whereas it is expedient to implement certain provisions of that Budget Plan;
Now, therefore, 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 Implementation Act, 2008.
PART 1AMENDMENTS RELATED TO INCOME TAX
R.S., c. 1 (5th Supp.)Income Tax Act
2. (1) Paragraph 18(1)(u) of the Income Tax Act is replaced by the following:
Marginal note:Fees — individual saving plans
(u) any amount paid or payable by the taxpayer for services in respect of a retirement savings plan, retirement income fund or TFSA under or of which the taxpayer is the annuitant or holder; and
(2) Subsection 18(11) of the Act is amended by striking out the word “or” at the end of paragraph (h), by adding the word “or” at the end of paragraph (i) and by adding the following after paragraph (i):
(j) making a contribution under a TFSA,
(3) Subsections (1) and (2) apply to the 2009 and subsequent taxation years.
3. (1) Section 37 of the Act is amended by adding the following after subsection (1.3):
Marginal note:Salary or wages for SR&ED outside Canada
(1.4) For the purposes of this section, section 127 and Part XXIX of the Income Tax Regulations, the amount of a taxpayer’s expenditure for a taxation year determined under subsection (1.5) is deemed to be made in the taxation year in respect of scientific research and experimental development carried on in Canada by the taxpayer.
Marginal note:Salary or wages outside Canada — limit determined
(1.5) The amount of a taxpayer’s expenditure for a taxation year determined under this subsection is the lesser of
(a) the amount that is the total of all expenditures each of which is an expenditure made by the taxpayer, in the taxation year and after February 25, 2008, in respect of an expense incurred in the taxation year for salary or wages paid to the taxpayer’s employee who was resident in Canada at the time the expense was incurred in respect of scientific research and experimental development,
(i) that was carried on outside Canada,
(ii) that was directly undertaken by the taxpayer,
(iii) that related to a business of the taxpayer, and
(iv) that was solely in support of scientific research and experimental development carried on in Canada by the taxpayer, and
(b) the amount that is 10 per cent of the total of all expenditures, made by the taxpayer in the year, each of which would, if this Act were read without reference to subsection (1.4), be an expenditure made in respect of an expense incurred in the year for salary or wages paid to an employee in respect of scientific research and experimental development that was carried on in Canada, that was directly undertaken by the taxpayer and that related to a business of the taxpayer.
(2) Paragraph 37(2)(a) of the Act is replaced by the following:
(a) on scientific research and experimental development carried on outside Canada, directly undertaken by or on behalf of the taxpayer, and related to the business (except to the extent that subsection (1.4) deems the expenditures to have been made in Canada); or
(3) Subsection 37(9) of the Act is replaced by the following:
Marginal note:Salary or wages
(9) An expenditure of a taxpayer
(a) does not include, for the purposes of clauses (8)(a)(ii)(A) and (B), remuneration based on profits or a bonus, where the remuneration or bonus, as the case may be, is in respect of a specified employee of the taxpayer, and
(b) includes, for the purpose of paragraph (1.5)(a), an amount paid in respect of an expense incurred for salary or wages paid to an employee only if the taxpayer reasonably believes that the salary or wages is not subject to an income or profits tax imposed, because of the employee’s presence or activity in a country other than Canada, by a government of that other country.
(4) Subsections (1) to (3) apply in respect of taxation years that end on or after February 26, 2008, except that in respect of taxation years that include February 26, 2008, the reference in paragraph 37(1.5)(b) of the Act, as enacted by subsection (1), to “10 per cent” shall be read as a reference to the percentage determined by the formula
10% × A/B
where
- A
- is the number of days in the taxation year that are after February 25, 2008; and
- B
- is the number of days in the taxation year.
4. (1) Paragraph 38(a) of the Act is replaced by the following:
(a) subject to paragraphs (a.1) to (a.3), a taxpayer’s taxable capital gain for a taxation year from the disposition of any property is ½ of the taxpayer’s capital gain for the year from the disposition of the property;
(2) Paragraph 38(a.1) of the Act is amended by striking out the word “or” at the end of subparagraph (i), by adding the word “or” at the end of subparagraph (ii) and by adding the following after subparagraph (ii):
(iii) the disposition is the exchange, for a security described in subparagraph (i), of a share of the capital stock of a corporation, which share included, at the time it was issued and at the time of the disposition, a condition allowing the holder to exchange it for the security, and the taxpayer
(A) receives no consideration on the exchange other than the security, and
(B) makes a gift of the security to a qualified donee not more than 30 days after the exchange;
(3) Section 38 of the Act is amended by adding the following after paragraph (a.2):
(a.3) a taxpayer’s taxable capital gain for a taxation year, from the disposition of an interest in a partnership (other than a prescribed interest in a partnership) that would be an exchange described in subparagraph (a.1)(iii) if the interest were a share in the capital stock of a corporation, is equal to the lesser of
(i) that taxable capital gain determined without reference to this paragraph, and
(ii) ½ of the amount, if any, by which
(A) the total of
(I) the cost to the taxpayer of the partnership interest, and
(II) each amount required by subparagraph 53(1)(e)(iv) or (x) to be added in determining the taxpayer’s adjusted cost base of the partnership interest,
exceeds
(B) the adjusted cost base to the taxpayer of the partnership interest (determined without reference to subparagraphs 53(2)(c)(iv) and (v));
(4) Subsections (1) to (3) apply in respect of gifts made on or after February 26, 2008.
5. (1) Clause 40(2)(g)(iv)(A) of the Act is replaced by the following:
(A) a trust governed by a deferred profit sharing plan, an employees profit sharing plan, a registered disability savings plan, a registered retirement income fund or a TFSA under which the taxpayer is a beneficiary or immediately after the disposition becomes a beneficiary, or
(2) Subsection (1) applies to the 2009 and subsequent taxation years.
6. (1) Subsection 74.5(12) of the Act is amended by striking out the word “or” at the end of paragraph (a.2), by adding the word “or” at the end of paragraph (b) and by adding the following after paragraph (b):
(c) to the individual’s spouse or common-law partner,
(i) while the property, or property substituted for it, is held under a TFSA of which the spouse or common-law partner is the holder, and
(ii) to the extent that the spouse or common-law partner does not, at the time of the contribution of the property under the TFSA, have an excess TFSA amount (as defined in subsection 207.01(1)).
(2) Subsection (1) applies to the 2009 and subsequent taxation years.
7. (1) Paragraph 75(3)(a) of the Act is replaced by the following:
(a) by a trust governed by a deferred profit sharing plan, an employee benefit plan, an employees profit sharing plan, a registered disability savings plan, a registered education savings plan, a registered pension plan, a registered retirement income fund, a registered retirement savings plan, a registered supplementary unemployment benefit plan, a retirement compensation arrangement or a TFSA;
(2) Subsection (1) applies to the 2009 and subsequent taxation years.
8. (1) Subparagraph 82(1)(b)(ii) of the Act is replaced by the following:
(ii) the product of the amount determined under paragraph (a.1) in respect of the taxpayer for the taxation year multiplied by
(A) for the 2009 taxation year, 45%,
(B) for the 2010 taxation year, 44%,
(C) for the 2011 taxation year, 41%, and
(D) for taxation years after 2011, 38%;
(2) Subsection (1) applies to the 2009 and subsequent taxation years.
9. (1) The portion of subsection 87(10) of the Act after paragraph (f) is replaced by the following:
the new share is deemed, for the purposes of subsection 116(6), the definitions “qualified investment” in subsections 146(1), 146.1(1) and 146.3(1), in section 204 and in subsections 205(1) and 207.01(1), and the definition “taxable Canadian property” in subsection 248(1), to be listed on the exchange until the earliest time at which it is so redeemed, acquired or cancelled.
(2) Subsection (1) applies to the 2009 and subsequent taxation years.
10. (1) Paragraph 107.4(1)(j) of the Act is replaced by the following:
(j) if the contributor is an amateur athlete trust, a cemetery care trust, an employee trust, an inter vivos trust deemed by subsection 143(1) to exist in respect of a congregation that is a constituent part of a religious organization, a related segregated fund trust (as defined by section 138.1), a trust described in paragraph 149(1)(o.4) or a trust governed by an eligible funeral arrangement, an employees profit sharing plan, a registered disability savings plan, a registered education savings plan, a registered supplementary unemployment benefit plan or a TFSA, the particular trust is the same type of trust; and
(2) Subsection (1) applies to the 2009 and subsequent taxation years.
- Date modified: