I'll provide a brief overview of the bill so that we can get to the questions section. I'll proceed measure by measure, aligning with when they first appear in the bill.
The bill replaces the existing eligible capital property regime in the Income Tax Act with a new class of depreciable property, which is intended to replicate, to the extent possible, the old eligible capital property regime, but in a simpler way, as for any other class of depreciable property. These amendments include simplification measures to, for example, allow taxpayers to eliminate small balances in their eligible capital property pools within the first 10 years after the transition.
It extends what are known as the back-to-back rules of the Income Tax Act in three important ways. These are rules designed to apply wherever certain tax consequences apply when a transaction occurs between two entities that typically are related. It prevents the avoidance of tax consequences when those entities interpose a third party between the two of them. The classic example is using a company in a low-tax treaty jurisdiction to make a loan through that treaty jurisdiction to a Canadian entity and thus obtain a lower rate of withholding tax on interest.
These rules are extended, as I said, in three important ways. The first is to apply to rents, royalties, and similar payments. The second is to prevent their avoidance through the use of character substitution transactions or the introduction of multiple intermediaries, meaning that rather than back-to-back, there might be back-to-back-to-back arrangements. Third, it prevents the avoidance of the shareholder loan rules through the use of the back-to-back techniques I described.
Next, it provides rules for the valuation of derivatives, ensuring that if they're held as inventory, they cannot use the “lower of cost or market” method.
Next, it applies to the sale of linked notes to ensure that the tax consequences arising on a sale before maturity of a linked note align with the tax consequences on maturity.
It introduces tax rules to clarify the tax treatment of emissions allowances under emissions trading regimes.
It prevents the use of so-called “debt parking” techniques to avoid a realization of an accrued foreign exchange gain on the repayment of a debt denominated under a foreign currency.
It closes loopholes relating to the use of life insurance policies to extract income, free of tax, from a corporation.
It provides for the appropriate use of an exception to our existing anti-surplus-stripping regimes, which prevent the use of somewhat artificial structures by foreign multinationals to make use of an exception that is intended only for Canadian companies.
It indexes the Canada child benefit, beginning in the 2020-21 benefit year.
It includes measures that are intended to prevent the multiplication of the small business deduction.
It prevents the tax deferral on switches between classes of shares in what's called a “switch fund” mutual fund corporation.
It would introduce the country-by-country reporting standard for transfer pricing for multinationals.
It contains rules relating to estates donations to provide more flexibility for giving by certain graduated-rate estates.
It refines and improves the trust loss restriction event rules, in particular to ensure that they apply appropriately in the case of investment funds.
It again amends rules relating to spousal and similar trusts to provide more flexibility and to ensure appropriate tax consequences on the death of the primary beneficiary under such a trust.
It allows for alternative arguments to be presented in support of an assessment after the expiry of the normal limitation period, provided the total amount on assessment does not increase.
Last, it introduces the OECD common reporting standard. That's a tax information sharing standard designed to prevent fiscal evasion, and it provides for the sharing of account information between tax authorities.
Those are each of the provisions in part 1 of the bill, with a fairly short bit of detail.