2019 IFA Conference - Ted Cook Legislative Update

This provides abbreviated summaries of comments made by Ted Cook, Director General, Tax Legislation Division, Department of Finance on May 15, 2019 at the annual IFA (Canadian branch) conference held in Montreal during the second half of his oral legislative update.

Items not in First BIA

Items that are not in the first 2019 Budget Implementation Act include the transfer-pricing measures (re ordering and the meaning of “transaction”), the expansion in the foreign-affiliate dumping measures to natural persons and trusts, and the amendments to the cross-border share-lending arrangement rules. The Budget Implementation Act also does not include the trust reporting measure (or the amendment to the CBCA to make beneficial ownership information maintained by federally incorporated corporations more easily accessible to tax authorities and law enforcement officials). Neither of those are included in the bill.

It is Finance’s normal practice to release draft legislative proposals, on measures are not included in the first Budget Implementation Act, for comment over the summer, and Finance is working towards that.

Budget 2018 provided for consultations respecting measures, which would require health and welfare trusts to either wind up or convert to employee life and health trusts. Finance is working through the comments and on getting draft legislative proposals completed and approved for release.

Budget 2019 announced that the government would be proceeding to align Canada’s treatment of employee stock-options with that of the US, and would do so by applying a $200,000 annual cap on employee stock-option grants, based on the FMV of the underlying shares that may receive preferred tax treatment. The new rules would apply to large, long-established, mature firms. The Budget indicated that further details would be provided before summer (i.e., June 21), and Finance has been working on these proposals.

Effect of 2019 federal election

Given the fixed-date legislation, there will be a federal election no later than in October, and the House of Commons is rising on June 21st, and then there will be a dropping of the writ sometime before the next federal election. Knowing that there will be an election, Finance is trying to push its WIP along as quickly as possible.

Assistance to new government following election

During the federal election, Finance will prepare transition documents to brief the new government on where policy issues are, and the analysis done to date. A preliminary analysis is performed on the various platform commitments of the parties, so that some preliminary analysis can be provided to the new government (whichever party it may be from) when it takes office. Thus, Finance is prepared to help them, and start providing advice to them at an early stage, and help them start to implement their policy agenda. Finally, Department of Finance staff are made available to assist the public budget officer in costing the election platforms.