The government has committed to raising $4 billion in new tax revenue over the next six years and, to accomplish this end, has proposed a number of changes to Canada’s tax laws aimed at closing tax loopholes. Some of these tax loopholes have been with us for a long time, leading one to ask whether the government is addressing omissions or ambiguity in its legislation, or has simply lost faith in its ability to successfully litigate unclear points of law. In addition to reducing the dividend tax credit on non-eligible dividends, the Finance Minister has taken a multi-faceted approach and announced changes that will further constrain the trading of losses between unrelated parties, eliminate certain leveraged insurance arrangements, attack certain derivative based tax planning strategies, and add several more layers of administrative provisions that enhance the CRA’s enforcement tools, particularly in the international tax arena.
To read our full 2013 federal budget tax law alert, please click here. For changes specifically affecting the charity sector, please see pages 6, 8 and 9.