As mentioned, part 1 of the bill relates to the income tax. I'll go through each of the measures in the order in which they appear in the bill, although some of the measures can affect a number of clauses and do not appear sequentially.
The first measure relates to the pension for life program, as was previously announced. As noted, the benefits for pain and suffering and additional pain and suffering would be tax free. This ensures the appropriate tax treatment. It also ensures the appropriate tax treatment of the income replacement benefit. It also ensures that the memorial grant program for first responders is tax free. This grant starts in 2018-19 and will support families of first responders such as police officers, firefighters, and paramedics who have fallen in the line of duty.
It also implements measures reducing the small business tax rate: first from 10.5% to 10%, effective January 1, 2018; then to 9% effective January 1, 2019.
It also contains amendments to the holding of passive investments within a private corporation. The first of these limits the ability of Canadian-controlled private corporations to access the small business deduction, where they have significant amounts of passive income within the corporation.
The second measure provides that corporations will no longer be able to obtain refunds of taxes paid on investment income while paying dividends eligible for the enhanced dividend tax credit, which are presumed to have come out of active business income.
It also contains a measure relating to income sprinkling, which prevents the ability of higher-income individuals to lower their personal taxes by diverting income to lower-income family members.
Another measure provides additional tax relief for members of the Canadian Armed Forces. Currently an exemption is available based upon the risk score for certain designated international operational missions. This would extend it so the benefit is available regardless of the particular risk score assigned to a mission. It would increase the level of exempt pay up to the level of lieutenant colonel.
The bill would introduce the Canada workers benefit, a refundable tax credit that supplements the earnings of lower-income workers to replace the former working income tax benefit.
It would also expand the list of eligible expenses in the medical expense tax credit to include costs associated with service animals for persons with severe mental impairments. A good example of that would be service dogs for individuals with post-traumatic stress disorder.
It accelerates the indexation of the Canada child benefit by two years, so the indexation begins in July 2018.
It extends by one year the mineral exploration tax credit, which is a 15% tax credit designed to promote the exploration for mineral resources in Canada and to help companies engaged in that activity to raise money.
It also extends to the end of 2023 a temporary measure that permits a qualifying family member—a parent, spouse, or a common-law partner—to become a plan-holder of a registered disability savings plan for an adult beneficiary whose capacity to enter into a contract is in doubt.
It has a couple of measures relating to charities. The first relates to the qualification of municipalities as eligible donees for the purpose of reducing a charity whose registration has been revoked. This has to do with exposure to the 100% revocation tax. In qualifying circumstances, if the donation has been approved, the charity that's had its charitable status revoked would be able to make a donation to a municipality and avoid the 100% revocation tax.
It also eliminates duplication in the procedure for a university outside Canada to become a qualified donee for charitable tax donation purposes. Currently it's required that a university outside Canada become a prescribed university and also be registered with the Canada Revenue Agency. This would eliminate the requirement that it be prescribed. It would just be required to be registered with the CRA.
It would provide legislative authority for the government to share data relating to the Canada child benefit with provinces solely for the purpose of administering their social assistance payment regimes. It would retroactively change the previous system of child benefits— the Canada child tax benefit, the national child benefit supplement, and the universal child care benefit— so that individuals who are “Indians” under the Indian Act and who legally reside in Canada and have Canadian-born children are eligible for those benefits as of 2005, to bring it in line with their eligibility for the new Canada child benefit.
Last, it would extend eligibility for class 43.2. That's a class of assets that's eligible for capital cost allowance or tax depreciation and provides an accelerated 50% capital cost allowance rate for certain clean energy generation and conservation equipment. That would be extended to be available in respect of property acquired before 2025.
That's it. Those are the measures contained in part 1 of the bill.
