25 April 2006 Ministerial Correspondence 2006-0177371M4 - Proposed 3.1 of the Income Tax Act

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Principal Issues: What is the status of proposed 3.1 of the Income Tax Act?

Position: Under review by the Department of Finance

Reasons: Finance continues to receive submissions on the draft legislation and intends to address the concerns raised prior to enactment.

April 25, 2006

XXXXXXXXXX

Dear Colleague:

I am writing in reply to correspondence from your office received on March 21, 2006, and the attached letter from one of your constituents, concerning proposed section 3.1 of the Income Tax Act.

The proposed legislation, released by the Department of Finance Canada on October 31, 2003, deals with the deductibility of interest and other expenses for income tax purposes. The intent of the proposed legislation is to address concerns resulting from adverse court decisions that departed significantly from what the Government had considered to be the law in this area.

Since the release date, there has been an extensive consultation period during which public concern has been expressed that the proposed legislation goes well beyond how the law was applied before the adverse court decisions. It is my understanding that the Department of Finance Canada continues to receive submissions on the draft legislation and intends to address the concerns raised prior to enacting it. I assure you that the Honourable Jim Flaherty, Minister of Finance, is aware of the concerns expressed on this issue.

I trust that the above information will assist you in responding to your constituent.

						Sincerely,

						The Honourable Carol Skelton, P.C., M.P.
 c.c.:  Minister's Office
Political Assistant

Randy Hewlett
957-2049
2006-017737
March 30, 2006