Mr. Speaker, it gives me great pleasure to begin debate on second reading of Bill C-27.
The bill proposes to implement a number of amendments to the Income Tax Act and related statutes, most of which are technical in nature. The bill also contains draft legislation for a measure announced in the budget of February 1994 related to scientific research and experimental development, the SR and ED expenditures.
With the exception of the one budget item the measures contained in the bill were announced by the previous government. They were included in a package of technical amendments that were released in August 1993 but never tabled in the House. That package consolidated a number of measures that had been released for public consultation in December 1992 with draft legislation issued by press release during 1993. In a December 1993 press release the Minister of Finance confirmed the government's intention to table the legislation.
As the amendments are mostly technical I will just spend a brief moment reviewing them and allowing the House to proceed with its business. It is very important to note that most of these measures are already in effect and have been so for some time. Many were said to be effective immediately when announced.
This is a perfectly legitimate and normal practice in the House, especially for measures of a relieving nature that modify an anomaly under existing tax law. When simplifying the income tax treatment of automobile operating cost benefits, for example, it would be unreasonable to insist that taxpayers wait out the course of full legislative enactment for relief.
Several of the amendments relate to retirement income plans including RRSPs and certain pensions. One set of measures, for example, is designed to ensure that a taxpayer's RRSP limit reflects in a fairer way the taxpayer's retirement savings under certain types of unregistered pension plans such as foreign pension plans.
The legislation also modifies rules for RRSPs on death and enables the legal representative of a deceased person to pay an RRSP premium on that person's behalf up to 60 days after the end of the year of death.
This bill also proposes to simplify or clarify existing tax rules. I have already mentioned the tax treatment of automobile operating cost benefits. The amendments simplify the way in which these benefits are taxed by establishing a formula for calculating them. This is one change that is sure to please taxpayers.
Another amendment will allow taxpayers to deduct interest on money that is borrowed to earn business income or certain types of investment income in situations where the property financed by the borrowing has been disposed of at a loss or become altogether valueless. Without this amendment such interest expenses would not be deductible in spite of their business nature and the hardship that could result.
The legislation also provides relief to producers of calcium chloride and diamonds by treating these substances as minerals for income tax purposes. This gives producers access to income tax incentives for mining.
Not every amendment in the legislation is relieving. One is designed to curtail a tax avoidance mechanism used by certain corporations with non-resident shareholders. This technique, commonly referred to as a cross-border purchase butterfly, is used to avoid tax on the sale of business assets. Our tax laws were not intended to provide special breaks for structuring corporate assets sales in this way and the amendment eliminates such undesirable tax advantages.
There is also a measure which will give legislative force to the special capital tax, the so-called part VI tax, that has been payable by life insurance companies for taxation years ending after February 25, 1992.
Finally, the bill contains a measure announced in the most recent federal budget, namely draft legislation requiring corporations claiming tax credits for scientific research and experimental development to identify expenditures in this area in their tax returns.
In conclusion, the amendments in this bill represent technical improvements to our tax legislation, improvements that follow from the ongoing process of fine tuning the tax system in consultations with taxpayers. Most of the provisions are already in effect and many thousands of Canadians have relied on them in planning their affairs.
In short, this bill should be viewed as a matter of routine but important parliamentary housekeeping. Therefore I urge all members of the House to support it.