FEDERAL BUDGET SUMMARY – 2017
• It is part of hedging transactions entered into in the normal course of the
• The taxpayer continues to hold the offsetting position for a specified
period ( 30 days) beginning on the date of disposition (with no other
positions being entered into that materially impact the taxpayer); or
• It is part of a series of transactions none of the main purposes of which is
to defer or avoid tax.
This is to apply to any loss realized after Budget Day.
INVESTMENT TAX CREDIT FOR CHILD CARE SPACES
A 25% non-refundable credit was available on costs incurred to build or increase
child care spaces which were for the benefit of the taxpayer’s employees and
ancillary to their business. Budget 2017 eliminates this credit for expenditures
incurred on or after March 22, 2017 with some transitional rules applicable.
CASH PURCHASE TICKETS
Historically, when a farmer delivers grain to the operator of a licensed elevator,
they are issued a cash purchase ticket. Some of these tickets are not settled until
the following year and the farmer was not required to include the deferred
amount in income until the next year. Because of the deregulation of the grain
marketing regime and the commercialization of the Canadian Wheat Board, the
delivery for grain is now largely done by the private sector and there is arguably
no longer a rationale for the tax deferral. Accordingly, the government has
launched a consultation to examine the possible elimination of the tax deferral
arising from cash purchase tickets.
INVESTMENT FUND MERGERS
Merger of Switch Funds into Mutual Fund Trusts
Switch corporations are mutual fund corporations with multiple classes of shares,
where typically each class is a distinct investment fund.
The Income Tax Act contains special rules to facilitate the merger of mutual funds
on a tax-deferred basis, under which two mutual fund trusts can be merged or a
mutual fund corporation can be merged into a mutual fund trust. However, the
rules do not provide for the reorganization of a mutual fund corporation into
multiple mutual fund trusts.
Budget 2017 proposes to extend the mutual fund merger rules to facilitate the
reorganization of a mutual fund corporation that is structured as a switch
corporation into multiple mutual fund trusts on a tax-deferred basis.
Segregated Fund Mergers
Segregated funds are life insurance policies that have many of the characteristics
of mutual fund trusts.