Canada: Federal Budget 2013 - Improving The Integrity Of The Tax System

Last Updated: April 5 2013
Article by BLG's National Tax Group

Most Read Contributor in Canada, September 2016

The Honourable James Flaherty, Minister of Finance, tabled the government's 2013 Federal Budget (Budget 2013) on March 21, 2013 (Budget Day). According to Budget 2013, the government remains on track to return to balanced budgets by 2015-2016, despite continued global economic uncertainty. While still continuing to focus on controlling direct program spending by government departments, the government's priorities in Budget 2013 are to connect Canadians with available jobs by equipping them with the skills and training to obtain high-quality well-paying jobs, to help manufacturers and businesses succeed in the global economy by enhancing the conditions for creating and growing businesses, to create a new infrastructure plan focused on projects that create jobs and economic growth, and to invest in world-class research and innovation.

Budget 2013 proposes a number of significant business income tax, international tax, personal income tax and GST/HST measures which are discussed below. The government's intentions in introducing these measures are to improve the integrity of the tax system, close tax loopholes, strengthen compliance, clarify tax rules, and combat international tax evasion and aggressive tax avoidance.



The government has indicated that despite the various provisions meant to curtail the inappropriate trading of tax attributes between unrelated parties, transactions intended to circumvent these provisions continue to be undertaken. Existing provisions of the Income Tax Act allow the government to challenge such transactions, but the process is both time-consuming and costly.

Budget 2013 proposes to introduce a new anti-avoidance rule to support existing restrictions on the trading of tax attributes, which generally apply on the acquisition of control of a corporation. This new measure will apply to deem an acquisition of control (and thus a triggering of the restrictions) to occur where a person or group of persons acquire shares of a corporation representing more than 75% of the fair market value of all the shares of the corporation without otherwise acquiring voting control of the corporation. This anti-avoidance rule will only apply in circumstances where it is reasonable to conclude that one of the main purposes for not acquiring control of the corporation was to avoid existing restrictions on the trading of tax attributes. Additional measures are also proposed to ensure that this proposed anti-avoidance measure is not circumvented.

The government projects that the proposed measures will generate approximately $95 million in tax revenue over a period of 5 years. Using a 15% federal corporate tax rate, this could affect the usage of approximately $630 million in corporate losses.

This new anti-avoidance rule will apply in the case of shares of a corporation acquired after March 20, 2013, unless such shares were acquired pursuant to an agreement in writing entered into before March 20, 2013 under which the parties are obligated to complete the transaction. Parties will generally be considered not to be obligated to complete the transaction where a party may be excused from completing the transaction due to changes to the Income Tax Act.


Manufacturing and Processing Machinery and Equipment

Budget 2013 proposes to extend the temporary support for investment in machinery and equipment for the manufacturing and processing sector by an additional two years. Manufacturing and processing machinery and equipment (that would otherwise be included in Class 43) and that is acquired in 2014 or 2015 will qualify for the 50% straight-line CCA rate (subject to the half-year rule), and will be included in Class 29. Eligible assets acquired in 2016 and subsequent years will qualify for the regular 30% declining-balance rate (subject to the half-year rule), and will be included in Class 43.

Clean Energy Generation Equipment

Budget 2013 proposes to expand the biogas production equipment that is eligible for inclusion in Class 43.2 by providing that more types of eligible organic waste can be used in qualifying biogas production equipment and specifically, to include pulp and paper waste and wastewater, beverage industry waste and wastewater (for example, winery and distillery wastes) and separated organics from municipal waste.

Budget 2013 also proposes to expand eligibility under Class 43.2 so that all types of cleaning and upgrading equipment that can be used to treat eligible gases from waste will be included in Class 43.2. These measures will apply in respect of property acquired on or after Budget Day that has not been used or acquired for use before Budget Day.


More detailed information will be required to be provided on SR&ED program claim forms about SR&ED program tax preparers and billing arrangements, where one or more third parties have assisted with the preparation of a claim. Also proposed is a new penalty of $1,000 in respect of each SR&ED program claim for which the information about SR&ED program tax preparers and billing arrangements is missing, incomplete or inaccurate. In the case where a third-party SR&ED program tax preparer has been engaged, the SR&ED program claimant and tax preparer will be jointly and severally, or solidarily, liable for the penalty. These changes will apply to SR&ED program claims filed on or after the later of January 1, 2014 and the day of Royal Assent to the enacting legislation.


Pre-Production Mine Development Expenses

Pre-production mine development expenses are currently treated as Canadian exploration expense (CEE) and may be deducted in full in the year incurred or carried forward indefinitely for use in future years. In contrast, intangible mine development expenses incurred after a mine comes into production are treated as Canadian development expense (CDE) and are deductible at a rate of 30% per year on a declining-balance basis.

Budget 2013 proposes that pre-production mine development expenses, as described in paragraph (g) of the definition CEE in subsection 66.1(6) of the Income Tax Act, be treated as CDE. The transition from CEE to CDE treatment will be phased in over 2015-2017, with pre-production mine development expenses being allocated proportionally to CEE and CDE according to a transitional schedule based on the calendar year in which the expense is incurred, with full phase-in after 2017. This measure will generally apply to expenses incurred on or after Budget Day. The existing CEE treatment for pre-production mine development expenses will be maintained for expenses incurred before Budget Day, and will also apply for expenses incurred before 2017 in specified circumstances.

Accelerated CCA

Most machinery, equipment and structures used to produce income from a mine or an oil or gas project are currently eligible for a CCA rate of 25% on a declining-balance basis. Accelerated CCA is provided for certain assets acquired for use in new mines or eligible mine expansions.

Budget 2013 proposes to phase out the additional allowance available for mining (other than for bituminous sands and oil shale, for which the phase-out will be complete in 2015). The additional allowance will be phased out over the 2017-2020 calendar years. A taxpayer will be allowed to claim a percentage of the amount of the additional allowance otherwise permitted under the existing rules according to a specific transitional schedule. This measure will generally apply to expenses incurred on or after Budget Day. The existing additional allowance will be maintained for eligible assets acquired before Budget Day, and will also apply for such assets acquired before 2018 in specified circumstances.


To clarify the tax treatment of amounts set aside to meet future reclamation obligations, Budget 2013 proposes to amend the Income Tax Act to ensure that the reserve for future services in paragraph 20(1)(m) cannot be used by taxpayers with respect to amounts received for the purpose of funding future reclamation obligations. This measure will apply to amounts received on or after Budget Day, other than amounts received that are directly attributable to future reclamation costs, that were authorized by a government or regulatory authority before Budget Day and that are received (i) under a written agreement between the taxpayer and another party (other than a government or regulatory authority) that was entered into before Budget Day and not extended or renewed on or after Budget Day, or (ii) before 2018.


Budget 2013 proposes to phase out over five years the additional deduction for credit unions which provided them access to a preferential income tax rate for income not eligible for the small business deduction. The phase-out will begin in 2013, with full elimination for 2017 and subsequent years. This measure will apply to taxation years that end on or after Budget Day, with proration for all taxation years during the phase-out period that do not coincide with the calendar year.


Leveraged Insured Annuity (LIA)

A LIA is an investment product that is acquired with borrowed funds and provides guaranteed fixed income to the investor until the death of an individual. Upon such death, the capital invested in the annuity is returned in the form of a tax-free death benefit. The life insurance policy and annuity are held by the lender as security for the loan. Generally, in these arrangements, the death benefit under the policy equals the amount invested in the annuity. Notwithstanding the fact that a LIA is marketed and sold as an integrated investment product, each element is treated separately for income tax purposes. As such, part of the income earned on the capital invested will be tax-free because the policy is an exempt policy and deductions may be available for part of the capital invested (relating to the policy premium) and interest on the borrowed amount (if the proceeds are used for income-producing purposes). Further, a LIA can provide additional tax benefits in connection with post mortem tax planning with private company shares.

Budget 2013 proposes to eliminate unintended tax benefits of LIAs by introducing rules for "LIA policies". A life insurance policy issued on the life of an individual will be a LIA policy if (i) a person or partnership becomes obligated on or after Budget Day to repay an amount to another person or partnership (the lender) at a time determined by reference to the death of the individual; and (ii) an annuity contract, the terms of which provide that payments are to continue for the life of the individual, and the policy are assigned to the lender.

Income accruing in a LIA policy will be subject to annual accrual-based taxation, no deduction will be allowed for any portion of a premium paid on the policy, and the capital dividend account of a private corporation will not be increased by the death benefit received in respect of the policy. In addition, for the purposes of a deemed disposition on death, the fair market value of an annuity contract assigned to the lender in connection with a LIA policy will be deemed to be equal to the total of the premiums paid under the contract. This measure will apply to taxation years that end on or after Budget Day, but will not apply in respect of a LIA for which all borrowings were entered into before Budget Day.

10/8 Arrangements

Budget 2013 proposes to ensure that unintended tax benefits are not available in relation to 10/8 arrangements. In respect of taxation years that end on or after Budget Day, if a life insurance policy (or an investment account under the policy) is assigned as security on a borrowing, and either (i) the interest rate payable on an investment account under the policy is determined by reference to the interest rate payable on the borrowing or (ii) the maximum value of an investment account under the policy is determined by reference to the amount of the borrowing, then neither interest paid or payable on the borrowing that relates to a period after 2013 nor a premium that is paid or payable under the policy that relates to a period after 2013 will be deductible. In addition, the capital dividend account of a policy holder will not be increased by the amount of the death benefit that becomes payable after 2013 under the policy and that is associated with the borrowing.

In order to facilitate the termination of existing 10/8 arrangements before 2014, Budget 2013 also proposes to alleviate the income tax consequences on a withdrawal, from a policy under a 10/8 arrangement, made to repay a borrowing under the arrangement, if the withdrawal is made on or after Budget Day and before January 1, 2014.


The RFL rules apply to taxpayers who have incurred a loss from farming, unless their chief source of income for a taxation year is farming or a combination of farming and some other source of income. In 2012, in The Queen v. Craig, the Supreme Court overruled Moldowan by establishing a test that permits the full deduction of farming losses where a taxpayer places significant emphasis on both farming and non-farming sources of income, even if farming is subordinate to the other source of income.

Budget 2013 proposes to amend the RFL rules to codify the chief source of income test as interpreted in Moldowan. This amendment will clarify that a taxpayer's other sources of income must be subordinate to farming in order for farming losses to be fully deductible against income from those other sources. Budget 2013 also proposes to increase the RFL limit from $8,750 to $17,500 of deductible farm losses annually. These measures will apply to taxation years that end on or after Budget Day.


In Budget 2013, the government announced that its examination of possible new rules for the taxation of corporate groups, which was first mentioned in Budget 2010, is now complete and that it has determined that "moving to a formal system of corporate group taxation is not a priority at this time".



Canada's "thin capitalization" regime limits interest expense deductibility on debts owing by a Canadian corporation to some non-residents if the corporation's leverage exceeds a specified debt-to-equity ratio. This rule applies to debt owing to ''specified non-residents,'' being non-residents who either are 25%-plus shareholders (by votes or value) of the corporation or who do not deal at arm's length with such 25%-plus shareholders. To the extent that the corporation owes money to specified non-residents in excess of 1.5 times its "equity" (the sum of the corporation's total retained earnings plus the paid-up capital attributable to shares of the corporation owned by non-residents who are 25%-plus shareholders), the corporation cannot deduct interest on the excess debt. The 2012 federal budget extended these rules to partnerships of which a Canadian corporation is a member.

Canadian-Resident Trusts

Budget 2013 proposes to extend the thin capitalization rules to apply to Canadian-resident trusts, with appropriate modifications of the existing rules. For example, a trust's "equity" for the purposes of the thin capitalization rules will generally consist of contributions to the trust from specified non-residents plus the tax-paid earnings of the trust, less any capital distributions from the trust to specified non-residents. An elective transitional rule allows equity to be computed based on the net fair market value of the trust's assets.

Where interest expense of a trust is not deductible as a result of the application of the thin capitalization rules, the trust will be entitled to designate the non-deductible interest as a payment of income of the trust to a non-resident beneficiary (i.e., the recipient of the non-deductible interest). In such a case, the trust will be able to deduct the designated payment in computing its income, but the designated payment will be subject to non-resident withholding tax under Part XIII and potentially tax under Part XII.2 of the Income Tax Act, depending on the character of the income earned by the trust.

The thin capitalization rules will also be extended to apply to partnerships in which a Canadian-resident trust is a member. Where these rules result in an amount being included in computing the income of a trust, the trust will be entitled to designate the included amount as having been paid to a non-resident beneficiary as income of the trust. These measures will apply to taxation years that begin after 2013 and will apply with respect to existing as well as new borrowings.

Non-Resident Corporations and Trusts

Budget 2013 proposes to extend the thin capitalization rules to non-resident corporations and trusts that carry on business in Canada (or elect to be taxed as a Canadian resident under section 216 of the Income Tax Act). Since a Canadian branch does not have shareholders or equity for purposes of the thin capitalization rules, the thin capitalization rules for non-resident corporations and trusts will differ from the rules for Canadian-resident corporations in certain respects.

A loan that is used in a Canadian branch of a non-resident corporation or trust will be an outstanding debt to a specified non-resident for thin capitalization purposes if it is a loan from a non-resident who does not deal at arm's length with the non-resident corporation or trust. In addition, a debt-to-asset ratio of 3:5 will be used, which parallels the 1.5:1 debt-to-equity ratio used for Canadian-resident corporations. Where the non-resident is a corporation, the application of the thin capitalization rules could increase its liability for branch tax under Part XIV of the Income Tax Act.

This proposal will also extend the thin capitalization rules to apply to partnerships in which a non-resident corporation or trust is a member. Any income inclusion for a non-resident partner that arises as a consequence of the application of the thin capitalization rules will be deemed to have the same character as the income against which the partnership's interest deduction is applied. These measures will apply to taxation years that begin after 2013 and will apply with respect to existing as well as new borrowings.


International Electronic Funds Transfers

Budget 2013 proposes that the Income Tax Act, the Excise Tax Act and the Excise Act be amended to require that certain financial intermediaries report to the CRA international electronic funds transfers (EFTs) of $10,000 or more. This requirement will apply to the same financial intermediaries that are currently required to report international EFTs to the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, including banks, credit unions, caisses populaires, trust and loan companies, money services businesses, and casinos. Reporting will be required beginning in 2015.

Stop International Tax Evasion Program

Under this new program, the CRA will pay rewards to individuals with knowledge of major international tax non-compliance when they provide information to the CRA that leads to the collection of outstanding taxes due. The CRA will enter into a contract that will pay an individual only if the information results in total additional assessments or reassessments exceeding $100,000 in federal tax. Awards will be paid only where the non-compliant activity involves foreign property or property located or transferred outside Canada, or transactions conducted partially or entirely outside Canada. Any rewards paid under the program will be subject to income tax.

Extended Reassessment Period: Form T1135

Budget 2013 proposes to extend the normal reassessment period for a taxation year of a taxpayer by three years if (i) the taxpayer has failed to report income from a specified foreign property on their annual income tax return; and (ii) the Form T1135 was not filed on time by the taxpayer, or a specified foreign property was not identified, or was improperly identified, on the Form T1135. This measure will apply to the 2013 and subsequent taxation years. Form T1135 will also be revised to require taxpayers to provide more detailed information about each specified foreign property. The revised Form T1135 will be required to be used for the 2013 and subsequent taxation years.


In response to the government's lack of success in challenging treaty shopping cases in court and its concern that treaty shopping poses significant risks to the tax base, Budget 2013 announces the government's intention to consult on possible measures that would protect the integrity of Canada's tax treaties while preserving a business tax environment that is conducive to foreign investment. A consultation paper will be publicly released to provide stakeholders with an opportunity to comment on possible measures.


The IBC rules exempt prescribed financial institutions from tax on certain income earned through a branch or office in the metropolitan areas of Montreal and Vancouver. Budget 2013 proposes to repeal the IBC rules for taxation years that begin on or after Budget Day.



Budget 2013 proposes to increase the LCGE by $50,000 so that it will apply on up to $800,000 of capital gains realized by an individual on qualified property, effective for the 2014 taxation year. In addition, the LCGE will be indexed to inflation for taxation years after 2014. The new LCGE limit will apply for all individuals, even those who have previously used the LCGE at the lower threshold amount.


Budget 2013 proposes to adjust the gross-up factor applicable to non-eligible dividends and the corresponding DTC so that the effective rate of the DTC in respect of such a dividend will be reduced to 11%. This measure will apply to non-eligible dividends paid after 2013.


Budget 2013 proposes to extend the normal reassessment period in respect of a participant in a tax shelter or reportable transaction where an information return that is required for the tax shelter or reportable transaction is not filed on time, by extending it to three years after the date that the relevant information return is filed. This measure will apply to taxation years that end on or after Budget Day.


If a taxpayer has objected to an assessment of tax, interest or penalties that results from the disallowance of a deduction or tax credit claimed in respect of a tax shelter that involves a charitable donation, Budget 2013 proposes to permit the CRA, pending the ultimate determination of the taxpayer's liability, to collect 50% of the disputed tax, interest or penalties. This measure will apply in respect of amounts assessed for the 2013 and subsequent taxation years.


Budget 2013 proposes to extend eligibility for the mineral exploration tax credit for one year, to flow-through share agreements entered into on or before March 31, 2014.


The federal LSVCC tax credit will be phased out. The federal LSVCC tax credit will remain at 15% when it is claimed for a taxation year that ends before 2015 and will be reduced to 10% for the 2015 taxation year and 5% for the 2016 taxation year. The federal LSVCC tax credit will be eliminated for the 2017 and subsequent taxation years. Budget 2013 also proposes to end new federal LSVCC registrations, as well as the prescription of new provincially registered LSVCCs in the Income Tax Act. In order to assist with an orderly phase-out of the federal LSVCC tax credit, the government is seeking stakeholder input by May 31, 2013 on potential changes to the tax rules governing LSVCCs.


One of the loopholes closed by Budget 2013 is the ability of a taxpayer to create an economic monetization of a property making use of derivatives, while deferring the recognition of the gain until the derivative position is settled. Common examples of this type of arrangement are put and collar transactions, total return swaps, and forward arrangements, coupled with a secured loan. Such monetization transactions have been in use for some time. In response to what was perceived to be an inappropriate deferral of the income recognition, Budget 2013 introduces the concept of a "synthetic disposition".

A synthetic disposition arises where the taxpayer (or a person who does not deal at arm's length with the taxpayer) enters into one or more agreements (or arrangements) that have the effect of eliminating all or substantially all of the taxpayer's risk of loss and opportunity for gain or profit in respect of a property of the taxpayer for a period of more than one year. Where this condition applies, the taxpayer will be deemed to have disposed of the property for proceeds equal to its fair market value, subject to a loosely worded purpose test and the caveat that the property has not otherwise been disposed of within the year. The taxpayer will be deemed to have reacquired the property immediately after the deemed disposition at a cost equal to that fair market value. The deemed disposition and reacquisition will not have tax consequences for other parties involved in the synthetic disposition transaction. Where a person that does not deal at arm's length with the taxpayer enters into such an agreement or agreements, the measure will not apply if it is reasonable to conclude that the non-arm's length person did so without knowledge of the taxpayer's ownership of the property.

The technical notes go on to comment that a synthetic disposition is not meant to include normal hedging transactions where only the risk of loss is mitigated, ordinary-course securities lending arrangements or ordinary commercial leasing transactions.

Related amendments are made to the stop-loss rules in section 112 and the foreign tax credit rules in subsection 126 (4.2) of the Income Tax Act, such that the taxpayer is considered to not own the property for the purposes of determining whether the taxpayer meets the holding-period tests applicable to those provisions.

This measure will apply to agreements and arrangements entered into on or after Budget Day, and to agreements and arrangements entered into before Budget Day if their term is extended on or after Budget Day.


Budget 2013 proposes to eliminate the tax benefits associated with character conversion transactions. Such transactions have been used in structuring investment funds in Canada and elsewhere. These transactions involve the use of a derivative forward agreement made in respect of Canadian securities owned by the taxpayer and a special election under subsection 39(4) of the Income Tax Act to achieve capital gains treatment on income which would otherwise be taxed as ordinary income. The derivative forward agreements caught include both forward sale agreements and forward purchase agreements. Budget 2013 would tax the returns under a derivative forward agreement on income account rather than as capital gains. In the case of a forward sale agreement, the income inclusion occurs when the property is sold, and in the case of a forward purchase agreement, the income inclusion occurs when the property is acquired. There are provisions for deductions where a loss is realized instead of a gain. As well, there are additions to adjusted cost base to prevent double taxation.

The proposed rules apply to derivative forward agreements that have a duration of more than 180 days, or that are part of a series of agreements with a term that exceeds 180 days. The rules apply to derivative forward agreements entered into on or after Budget Day, and to derivative forward agreements entered into before Budget Day the terms of which have been extended on or after Budget Day. It appears that existing forward agreements may be able to be increased in size provided that the term is not increased; however it may be prudent to avoid increasing the size of a forward agreement until it becomes certain that it would not be considered an extension of the term. In the case of a series of ongoing forward agreements with short terms (say 30 days), it appears that the rules will apply to the next 30-day forward agreement beginning after Budget Day. There would appear to be a good case to lobby for grandfathering to apply to a series of short term forwards entered into before Budget Day, as a series of short term forward agreements does not afford deferral and arguably should not be subject to harsher treatment than a single longer term forward agreement. It may be worth leaving existing short term structures in place in case the grandfathering can be extended.


Budget 2013 proposes to extend, with appropriate modifications, to trusts the loss-streaming and related rules that currently apply on the acquisition of control of a corporation, including the limited exception allowing the ongoing use of non-capital losses from a business. The proposed measure will trigger the application of loss-streaming and related rules to a trust if the trust is subject to a "loss restriction event", which occurs when a person or partnership becomes a majority-interest beneficiary of the trust or a group becomes a majority-interest group of beneficiaries of the trust.

It is expected that many of the typical transactions or events involving changes in the beneficiaries of a personal (i.e., family) trust will not, because of the continuity of ownership rules, result in the trust being subject to a loss restriction event.

The government has invited stakeholders to submit comments within 180 days after Budget Day as to whether there are additional transactions or events that should be treated similarly in determining whether such a personal trust is subject to a loss restriction event.


The Income Tax Act currently provides that income from property held by a trust will be attributed to a Canadian-resident taxpayer if the property is held by the trust on condition that the property can revert to the taxpayer or the taxpayer has influence over the trust's dealings in respect of the property (the trust attribution rule). A related rule (the rollout denial rule) prevents a tax-deferred distribution (rollout) of property from a trust if the trust is, or has been, subject to the trust attribution rule.

To respond to the Federal Court of Appeal's decision in The Queen v. Sommerer, and to protect the integrity of the tax rules that apply where a Canadian-resident taxpayer maintains effective ownership over property held by a non-resident trust, Budget 2013 proposes to amend the deemed residence rules to apply if a trust holds property on conditions that grant effective ownership of the property (generally as described above in the context of the trust attribution rule) to such a taxpayer. In these circumstances, any transfer or loan of the property (regardless of the consideration exchanged) made directly or indirectly by the Canadian resident taxpayer to the trust will be treated as a transfer or loan of restricted property (as defined in the Income Tax Act). As a result, the Canadian resident taxpayer will generally be treated as having made a contribution to the trust and the deemed residence rules will apply to the trust. Further, the rollout denial rule will be extended to apply to the trust.

To clarify the application of the tax rules that apply to non-resident trusts discussed above, Budget 2013 also proposes to restrict the application of the trust attribution rule so that it applies only in respect of property held by a trust that is resident in Canada (determined without regard to the deemed residence rules). This measure will apply to taxation years that end on or after Budget Day.


In Budget 2013, the government announced its intention to consult on possible measures to eliminate the tax benefits that arise from taxing at graduated rates grandfathered inter vivos trusts, trusts created by will, and estates (after a reasonable period of estate administration). A consultation paper will be publicly released to provide stakeholders with an opportunity to comment on those possible measures.



Under the current GST/HST rules, an employer that participates in a RPP must collect GST/HST on taxable supplies made by the employer to the plan. Further, where employer resources are used for the benefit of the plan, the employer is required to account for and remit GST/HST under deemed taxable supply rules. To simplify employer compliance with these rules, Budget 2013 proposes two relieving measures.

First, an employer participating in a RPP will be permitted to jointly elect with a pension entity of that pension plan to treat an actual taxable supply by the employer to the pension entity as being for no consideration where the employer accounts for and remits tax on the deemed taxable supply. This measure would simplify compliance for employers as they would not have to account for tax on the actual taxable supply and would not have to make a subsequent tax adjustment to net tax. Once a joint election is made, it would remain in effect until it is jointly revoked by the employer and the pension entity effective from the beginning of a fiscal year of the employer. This measure will apply to supplies made after Budget Day.

Second, to simplify employer compliance with the GST/HST rules, Budget 2013 proposes that an employer participating in a RPP be permitted to be fully or partially relieved from accounting for tax on deemed taxable supplies where the employer's pension plan-related activities fall below certain thresholds. An employer is not permitted to benefit from this measure where the joint election not to account for actual taxable supplies is in place.

This measure will apply in respect of any fiscal year of an employer that begins after Budget Day.


Supplies of Paid Parking by a Public Sector Body (PSB)

Special provisions exempt from GST/HST all supplies of a property or a service made by a PSB if all or substantially all (generally 90% or more) of the supplies of the property or service are made for free. Budget 2013 proposes to clarify

that this special simplifying exempting provision does not apply to supplies of paid parking that are made in the course of a business carried on by a PSB. Taxable parking would include paid parking provided on a regular basis by a PSB. Occasional supplies of paid parking by a PSB, such as those made as part of a special fund-raising event, would continue to qualify for the exemption. These measures are deemed to have come into force on December 17, 1990.

Supplies of Paid Parking through Charities

A special exemption from GST/HST applies to parking provided by charities that are not a municipality, university, public college, school or hospital. Budget 2013 proposes to clarify that the special GST/HST exemption for parking supplied by charities does not apply to supplies of paid parking that are made in the course of a business carried on by a charity set up or used by a municipality, university, public college, school or a hospital to operate a parking facility. This measure will apply to supplies made after Budget Day.



The Income Tax Act, the Excise Tax Act and the Excise Act, contain rules requiring the CRA to first obtain a court order before issuing a requirement to a third party to provide information for the purpose of verifying compliance by unnamed persons. The tax rules currently contemplate that the CRA will obtain this judicial authorization on an ex parte basis (without the CRA being legally required to notify the third party of the application). In order to streamline the court order process, Budget 2013 proposes to eliminate the ex parte aspect. Instead, the CRA will have to give notice to the third party when it initially seeks a court order from a judge of the Federal Court. This measure will apply on Royal Assent to the enacting legislation.

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Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.