Thank you, Mr. Chair.
The proposals in clause 13 of the bill operate within the general scheme of the act relating to property transfers on the dissolution of a marriage, the breakdown of a marriage.
In particular, there is already a provision in the “excluded amount” definition that relates to property transferred as a result of the dissolution of a marriage. It refers simply to subsection 160(4) of the act, which is a general rule that applies in respect to property transferred on the dissolution of a marriage. It has within it certain restrictions, and those are consistent with the rules in the general scheme of the act relating to transfers of property on a marriage breakdown.
This amendment would seem to apply where property is acquired directly or indirectly by an individual. Also, it seems to remove the requirement that they be living separate and apart at the end of the taxation year, which is in subsection 160(4).
The general rules in the act are designed to provide flexibility in the appropriate tax consequences on the dissolution of a marriage. There's a scheme, a coherent set of rules, that operates under very similar conditions so that things work well and appropriately together. The proposals in the excluded amount definition are designed to fit within that framework. That's why they specifically reference the general rule in subsection 160(4) on transfers as a result of the dissolution of a marriage, or of a common-law partnership—it's not just marriage.
In addition, another rule was added in response to comments by the joint committee and others relating to the dissolution of a marriage or common-law partnership. Where at the end of the year the two partners are living separate and apart, they would not be considered to be related for the purposes of the tax on split income. That was added after the December 2017 release and before the inclusion of the proposals in this bill. That's another circumstance to ensure that couples who have split are treated appropriately under the split-income rule. If you're not related to somebody, you won't be in a position to split income with them, and then you're appropriately cut under the rules.
There are rules currently in the proposals dealing with the dissolution of a marriage or common-law partnership. They exist within and, in the case of the deemed not-related status, go a bit beyond the current regime and the current set of rules that apply. They were considered to be appropriate to fit within how these events are taxed generally for income tax purposes.