Department of Finance Canada consulting on draft proposals to improve tax system
To strengthen the fundamental structure of the economy, there was a demand to make Canada’s tax system fair and efficient. Common citizens and business houses have asked for an economic structure that will work for everyone. Each and every Canadian tax consulting service provider is waiting to see when the government will fulfil its commitment.
In the below-mentioned sections, we have discussed some legislative proposals created by the Department of Finance, Canada.
Improved consistency
Owners of multiple and single-unit residential properties will experience improved consistency in tax treatment.
Improved flexibility
Greater flexibility will be provided in managing retirement savings. This will be done with two new types of annuities under the tax rules. However, this facility will be available only for certain registered plans.
Modifying the Income Tax Act
There is a proposal to modify the Income Tax Act so that after a beneficiary becomes ineligible to accept Disability Tax Credit, the time limitation on the period that a Registered Disability Savings Plan may remain open can be removed. Here, a beneficiary doesn’t need to submit a medical certificate to earn eligibility to accept Disability Tax Credit in the future.
Combining some rules
Some specified multi-employer plan rules have been proposed to bring into line with the tax rules. These rules are applied to other utility registered pension plans.
A few restrictions on Individual Pension Plans
A proposal has been placed to prohibit an Individual Pension Plan from providing benefits of retirement in respect of pensionable service in past years under a pre-defined benefit plan of an employer. In this case, an employer or a predecessor employer providing an Individual Pension Plan will not be considered.
Capital Gains & Mutual Funds
There is a commitment to improve the methodology regarding “allocation to redeemers.” Redeeming unit-holders of mutual funds are allocated with capital gains using that methodology.
Improved rules for common taxpayers
There is a proposal to improve the rules meant to prevent taxpayers from using derivative transactions to convert fully taxable common earning into capital gains.
Improved requirement-for-information process
The“requirement-for-information” process will be more efficient. This will be done by allowing the transfer of information to banks and credit unions electronically.
Improved transfer pricing rules
A proposal has been made to improve the transfer pricing rules for transactions performed by persons who are not dealing at arm’s length in the international borders.
Preventing tax erosion
Foreign affiliate dumping rules will be improved to prevent the erosion of the tax base that emerged from transactions in which a corporation resident in Canada is controlled by a non-resident invest in a foreign affiliate.
Also, appropriate tax rules will be surely applied to cross-border share lending arrangements.
At the Accounting & Tax, like an efficient tax consultant in Toronto, we carefully initiate research activities on the above-mentioned proposals to create new strategies to offer our clients cost-effective features.
