The Honourable Jim Flaherty, Minister of Finance, today released for consultation draft legislative proposals to implement amendments to the functional currency tax reporting rules in the Income Tax Act.
"Our government is committed to creating a corporate tax system that is both fair and internationally competitive," said Minister Flaherty. "The proposals I am announcing today will improve the tax system and provide an environment in which Canadian businesses can operate more effectively."
Bill C-28, the second Budget 2007 implementation bill, included amendments to the Income Tax Act to implement the Budget 2006 proposal to introduce functional currency tax reporting rules. In response to representations from stakeholders concerning these amendments, in June 2008 (2008-048) the Government proposed several technical revisions including:
In light of these significant revisions, the Government also extended, at that time, the deadline for certain functional currency tax reporting elections to October 31, 2008.
The Government announced on October 29, 2008 (2008-084) that the draft functional currency legislation was expected to be released in November 2008. It also announced that, in order to ensure that taxpayers would have an opportunity to review the details of the new rules prior to making a decision on whether or not to participate in the functional currency regime, the deadline for certain functional currency tax reporting elections would be further extended to December 15, 2008.
The proposals released today include draft legislation to incorporate the revisions announced in June 2008 and to provide for the December 15, 2008 election deadline. As well, the proposals contain additional improvements to the functional currency rules, including provisions to:
Full explanatory notes are included with the legislative proposals.
Interested parties are invited to provide comments on the draft legislative proposals by November 30, 2008. Please send comments to:
Tax Policy Branch
Department of Finance
140 O’Connor Street
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