Department of Finance Canada Consulting on Draft Proposals to Improve Tax System

A fair and efficient tax system is fundamental to an economy that works for everyone-making life more affordable for Canada's middle class and people working hard to join it.

To support this goal, the Government of Canada routinely seeks public feedback on proposed changes to the tax system.

The Department of Finance Canada today released for public comment a set of draft legislative proposals to implement tax and other related measures announced in Budget 2019 that have not yet been legislated.

Specifically, the proposals would implement Budget 2019 measures to:

• improve the consistency of the tax treatment of owners of multi-unit residential properties with that of owners of single-unit residential properties;
• provide greater flexibility in managing retirement savings by permitting two new types of annuities under the tax rules for certain registered plans;
• modify the Income Tax Act to remove the time limitation on the period that a Registered Disability Savings Plan may remain open after a beneficiary becomes ineligible for the Disability Tax Credit, and eliminate the requirement for medical certification that the beneficiary is likely to become eligible for the Disability Tax Credit in the future in order for the plan to remain open (draft legislative proposals to amend the Canada Disability Savings Regulations as part of this measure are not included in the release);
• bring the specified multi-employer plan rules into line with the tax rules that apply to other defined benefit registered pension plans;
• prohibit an Individual Pension Plan from providing retirement benefits in respect of past years of pensionable service under a defined benefit plan of an employer other than the Individual Pension Plan's participating employer (or its predecessor employer);
• improve the "allocation to redeemers" methodology used to allocate capital gains to redeeming unitholders of mutual funds;
• improve the rules meant to prevent taxpayers from using derivative transactions to convert fully taxable ordinary income into capital gains;