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Finance Releases Draft Legislation for Budget Bill #2

Finance Releases Draft Legislation for Budget Bill #2

The draft legislation and related explanatory notes were released on July 30, 2019

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Finance has released draft legislation to implement outstanding tax measures from the 2019 federal budget. The draft legislation also includes proposed amendments to several recently enacted measures related to the accelerated investment incentive for resource expenditures and depreciable property.

The draft legislation and related explanatory notes were released on July 30, 2019. Finance is accepting comments on the draft legislative proposals until October 7, 2019. These measures are not expected to be included in a bill before the next federal election.

Corporate tax measures

The draft legislation includes corporate tax measures proposed in the 2019 budget regarding:

  • Character conversion transactions
  • Mutual funds — allocation to redeemers methodology
  • Foreign affiliate dumping amendments
  • Cross-border share lending arrangements
  • Transfer pricing measures (ordering of rules and reassessment period)
  • Electronic delivery of requirements for information.

Personal tax measures

The following personal tax measures from the 2019 federal budget are included in the draft legislation, regarding:

  • The change-in-use rules for multi-unit residential properties
  • Permitting additional annuities under registered plans
  • Registered disability plans and eligibility for the disability tax credit
  • Changes to the rules for specified multi-employer pension plans
  • Changes to pensionable services under an individual pension plan.

Accelerated investment incentive changes

The draft legislation also includes modifications intended to clarify legislation that was recently enacted to implement the accelerated investment incentive. Among these clarifications is an amendment to the "first-year rule" in subsection 1100(2) of the Regulations, under which the accelerated CCA deduction may be computed correctly regarding certain Class 43.2 and 53 properties that become available for use after 2024 and 2025, respectively (but that were acquired in an earlier year).

For details on the federal budget measures proposed, see TaxNewsFlash-Canada No. 2019-09, "2019 Federal Budget Highlights".
For more information, contact your KPMG adviser.

Information is current to August 6, 2019. 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

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