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Ottawa, March 16, 2001
2001-029

Minister of Finance Tables Detailed Notice of Ways and Means Motion Amending the Income Tax Act

Related documents:

• Backgrounder.
• Notice of Ways and Means to Amend the Income Tax Act
  • Part 1.
  • Part 2.
• Explanatory Notes Relating to Income Tax.

Secretary of State (International Financial Institutions) Jim Peterson, on behalf of Finance Minister Paul Martin, today tabled in the House of Commons a detailed Notice of Ways and Means Motion to amend the Income Tax Act to implement income tax measures outstanding from the previous session of Parliament.

This Notice includes key elements of the Government’s Five-Year Tax Reduction Plan, which was introduced in the February 2000 budget and expanded in the October 2000 Economic Statement and Budget Update. The Five-Year Tax Reduction Plan will provide $100 billion in tax relief by 2004-05, reducing federal personal income tax paid by Canadians by 21 per cent on average. Families with children will receive an even larger tax cut – about 27 per cent on average.

Measures included in the detailed Notice of Ways and Means Motion tabled today:

• reduce tax rates at all income levels. Specifically, the Notice provides for a reduction in the low- and middle-income tax rates to 16 per cent and 22 per cent respectively as of January 2001. The top 29-per-cent rate is reduced to 26 per cent on incomes between about $61,000 and $100,000, which means that the 29-per-cent rate applies only to income in excess of $100,000;

• eliminate the 5-per-cent deficit reduction surtax as of January 2001;
• increase the support for families with children through the Canada Child Tax Benefit;

• reduce the capital gains inclusion rate from three-quarters to two-thirds effective February 28, 2000, and further reduce it to one-half effective October 18, 2000;

• provide a capital gains rollover on investments in shares of certain small- and medium-sized active business corporations;

• make Canada more competitive by reducing the 28-per-cent general corporate tax rate to 21 per cent – starting with a 1-point reduction effective January 1, 2001, followed by a 2-point cut in each of the following three years; and

• defer the taxation of certain stock option benefits, increase the stock option deduction and allow an additional deduction for certain stock option shares donated to charity.

The Notice also includes measures previously introduced in Bill C-43, which had received first reading in the House of Commons during the last session and amendments related to foreign branch banking, which were released in draft form on August 8, 2000.

Also included are measures that have not been previously announced. These additional measures respond to issues raised by interested parties since the release of the draft legislation on December 21, 2000. The attached backgrounder provides a brief description of amendments that are included in the Notice and that have not been previously announced.

To facilitate understanding of the Notice, a revised full set of explanatory notes relating to the proposed amendments is also being released. References to "Announcement Date" in the Notice and explanatory notes should be read as references to today’s date.

The Government intends to introduce a bill implementing these measures at the earliest opportunity.

The Notice and explanatory notes may be viewed on the Department of Finance Web site at the address shown below. Printed copies of the Notice are available for $55 from the Department of Finance Distribution Centre at (613) 943-8665. In a few days, printed copies of the explanatory notes will be available from the Distribution Centre for $65.

__________________
For further information:

 

Jean-Michel Catta Public Affairs and Operations Division (613) 996-8080	Karl Littler Senior Advisor, Tax Policy Office of the Minister of Finance (613) 996-3170
Tax Legislation Division (613) 943-9412

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Backgrounder

The following chart provides a brief description of new proposed amendments to the Income Tax Act that are included in the detailed Notice of Ways and Means Motion and that have not been previously announced. Further information on these measures is available in the Motion and the accompanying explanatory notes.