Budget Implementation Act, 2018, No. 2 (S.C. 2018, c. 27)

• Published date: 12 March 2019
• Section: Part III - Acts of Parliament
• Gazette Issue: 2 - [object Object]

S.C. 2018, c. 27

Assented to 2018-12-13

A second Act to implement certain provisions of the budget tabled in Parliament on February 27, 2018 and other measures

RECOMMENDATION

Her Excellency the Governor General recommends to the House of Commons the appropriation of public revenue under the circumstances, in the manner and for the purposes set out in a measure entitled “A second Act to implement certain provisions of the budget tabled in Parliament on February 27, 2018 and other measures”.

SUMMARY

Part 1 implements certain income tax and related measures by

• (a) introducing rules intended to provide greater certainty with respect to various tax consequences arising from certain foreign divisive reorganizations;

• (b) ensuring that the existing cross-border anti-surplus stripping rule cannot be circumvented through transactions involving the use of partnerships or trusts;

• (c) introducing rules to prevent misuse of the foreign accrual property income regime through the use of tracking interests involving foreign affiliates;

• (d) ensuring consistency between the trading or dealing in indebtedness rules and the investment business rules within the foreign accrual property income regime;

• (e) ensuring that the at-risk rules apply appropriately at each level of a tiered partnership structure;

• (f) providing that the Minister of Public Safety and Emergency Preparedness can determine international operational missions for the purpose of the deduction available for income earned by members of the Canadian Forces or police officers on such missions;

• (g) amending the synthetic equity arrangement rules and securities lending arrangement rules to prevent the artificial generation of losses through the use of equity-based financial instruments;

• (h) ensuring that social assistance payments under certain programs do not preclude individuals from receiving the Canada Child Benefit;

• (i) ensuring that an individual who is eligible to receive the Canada Workers Benefit can receive the benefit without having to claim it;

• (j) introducing a refundable tax credit for the purposes of the climate action incentive;

• (k) providing allocation rules for losses applied against Part IV taxes;

• (l) preventing the creation of artificial losses on shares held as mark-to-market property by financial institutions;

• (m) revising the rules relating to the non-partisan political activities of charities;

• (n) ensuring that a taxpayer is subject to a three-year extended reassessment period in respect of any income, loss or other amount arising in connection with a foreign affiliate of the taxpayer;

• (o) providing the Canada Revenue Agency with an extended reassessment period of an additional three years, to the extent that the reassessment relates to the adjustment of a loss carryback for transactions involving a taxpayer and non-resident non-arm’s length persons;

• (p) extending the reassessment period of a taxpayer by the period of time during which a requirement for information or compliance order is contested;

• (q) requiring that information returns in respect of a taxpayer’s foreign affiliates be filed within 10 months after the end of the taxpayer’s taxation year;

• (r) enabling the disclosure of taxpayer and other confidential tax information to Canada’s bilateral mutual legal assistance treaty partners for the purposes of non-tax criminal investigations and prosecutions of certain serious crimes; and

• (s) providing a deduction for employee contributions to the enhanced portion of the Quebec Pension Plan.

Part 1 also amends the Mutual Legal Assistance in Criminal Matters Act to, among other things, define the term “agreement” as applying, among other things, to tax information exchange agreements and tax treaties to which Canada is a party, and provide for orders to produce financial information for the purposes of investigation and prosecution of certain offences set out in subsection 462.48(1.1) of the Criminal Code. The enactment also amends paragraph 462.48(2)(c) of the Criminal Code to provide that information may also be gathered under Part IX of the Excise Tax Act and under the Excise Act, 2001.

Part 2 implements certain Goods and Services Tax/Harmonized Sales Tax (GST/HST) measures by

(a) replacing the requirement that GST/HST be collected on a sale of carbon emission allowances with a requirement that the purchaser self-assess that GST/HST;

(b) extending the assessment period for group registered education savings plan trusts that make a special relieving election in respect of their past HST liability;

(c) introducing GST/HST rules in respect of investment limited partnerships;

(d) clarifying the intended tax policy of excluding books that are sold by a public service body from the GST/HST rebate for printed books;

(e) introducing amendments similar to those to the Income Tax Act to extend the assessment period of a person by the period of time during which a requirement for information or compliance order is contested; and

(f) introducing amendments similar to those to the Income Tax Act to enable the disclosure of confidential information to Canada’s bilateral mutual legal assistance treaty partners, or to Canadian police officers, for the purposes of non-tax criminal investigations and prosecution of certain serious crimes.

Part 3 implements certain excise measures by

(a) broadening the refund regime in respect of excise tax on diesel fuel to allow a vendor to apply for a refund where a purchaser will use excise tax-paid diesel fuel to generate electricity, if certain conditions are met;

(b) introducing an anti-avoidance excise measure relating to the taxation of cannabis in respect of the rules establishing the value of a cannabis product on which an ad valorem duty is calculated;

(c) introducing amendments to the Air Travellers Security Charge Act and the Excise Act, 2001 that are similar to those to the Income Tax Act to extend the assessment period of a person by the period of time during which a requirement for information or compliance order is contested;

(d) introducing amendments to the Excise Act, 2001 that are similar to those to the Income Tax Act to enable the disclosure of confidential information to Canada’s bilateral mutual legal assistance treaty partners, or to Canadian police officers, for the purposes of non-tax criminal investigations and prosecution of certain serious crimes; and

(e) making housekeeping amendments to the Excise Act, 2001 in order to ensure consistency between the English and French version of the legislation.

Part 4 enacts and amends several Acts in order to implement various measures.

Division 1 of Part 4 amends the Customs Tariff in order to simplify it and reduce the administrative burden for Canadian businesses and the Government of Canada by consolidating similar tariff items that have the same tariff rates and removing end-use provisions where appropriate. The amendments also clarify existing tariff provisions and make other technical amendments.

Division 2 of Part 4 amends the Canada Pension Plan to modify the calculation of the amount to be attributed for a year in which a contributor is a family allowance recipient and their first or second additional contributory period begins or ends.

Subdivision A of Division 3 of Part 4 amends the Trust and Loan Companies Act, the Bank Act and the Insurance Companies Act to, among other things,

• (a) establish thresholds below which the acquisition of control of certain entities, or the acquisition or increase of a substantial investment in them, does not require the approval of the Superintendent of Financial Institutions;

• (b) allow financial institutions to invest in the Canadian business growth fund; and

• (c) ensure that customers can provide consent electronically to receive electronic documents.

It also corrects a reference to the Insurance Companies Act in the Budget Implementation Act, 2018, No. 1.

Subdivision B of Division 3 of Part 4 amends the Canada Deposit Insurance Corporation Act to, among other things,

• (a) make technical amendments to clarify the method of calculating insured deposits, to remove outdated references, to repeal certain provisions not yet in force and to clarify that withdrawals made following the amalgamation of two or more member institutions or the continuance as a federal credit union will be considered to be made from pre-existing deposits and that the separation of accounts following the amalgamation is limited to a period of two years;

• (b) exclude amounts borrowed by the Canada Deposit Insurance Corporation under paragraph 60.2(2)(c) of the Financial Administration Act from the calculation of the Corporation’s total principal indebtedness; and

• (c) clarify that the liquidator of a member institution of the Canada Deposit Insurance Corporation must not apply the law of set-off or compensation to a claim related to insured deposits.

It also repeals two sections of the Financial System Review Act.

Subdivision C of Division 3 of Part 4 amends the Office of the Superintendent of Financial Institutions Act, the Trust and Loan Companies Act, the Bank Act and the Insurance Companies Act to, among other things, clarify that providing legally privileged information to the Superintendent of Financial Institutions does not constitute a waiver of the privilege.

Division 4 of Part 4 amends the Proceeds of Crime (Money Laundering) and Terrorist Financing Act to remove the right of persons to decide not to proceed further with importing or exporting currency or monetary instruments that are required to be reported.

Division 5 of Part 4 amends the Canada–Newfoundland and Labrador Atlantic Accord Implementation Act to, among other things, allow for the application, within the offshore area, of the provincial greenhouse gas pricing regime and to confer powers and impose duties and functions on the Canada–Newfoundland and Labrador Offshore Petroleum Board for the application of that regime. It also amends the Greenhouse Gas Pollution Pricing Act to provide that the provincial regime does not apply if...