As we agreed, the next bill we’ll be dealing with is Bill 14.
At this time I’d like to ask the Minister responsible for the bill if he has any opening comments. Minister Miltenberger.
Thank you, Mr. Chairman. I’m pleased to present Bill 14, An Act to Amend the Income Tax Act.
This amends the provisions of the Northwest Territories Income Tax Act to make them consistent with parallel provisions of the Income Tax Act, Canada, that relate to the charitable donations tax credit, the medical expense tax credit, assessment of returns and tax avoidance.
These amendments are routine housekeeping measures that will have no significant impact on our revenues and which will not change income tax rates. These changes are necessary to keep the Northwest Territories Income Tax Act harmonized with the federal act.
Ensuring our act is consistent with the federal act helps reduce the complexity of administration for both the taxpayer and the Canada Revenue Agency. Under our tax collection agreement with Canada, if we do not harmonize our act, we could be required to pay additional administration costs.
The proposed legislation amends the act to make the treatment of the NWT charitable donations credit consistent with the federal treatment. A taxpayer claiming this tax credit will be required to use the same donation amount for the purpose of calculating both the federal and territorial credits. This will prevent people who move from or to the NWT from either losing part of the credit or being able to claim part of it twice.
Harmonizing the provisions of the medical expense tax credit will increase the benefit for the small number of NWT taxpayers who claim medical expenses for dependants. In 2007 an estimated 20 NWT taxpayers had about $32,000 in medical expenses for dependants that would be eligible for a credit.
The proposed legislation also adopts several relevant sections of the federal act dealing with administrative procedures on filing income tax returns, assessments, withholding of tax and payment of tax owing. This amendment further simplifies the administration of both acts by the Canadian Revenue Agency.
Finally, the general anti-avoidance rule in the federal Income Tax Act was introduced in 1988 as part of the tax reform. It has been used by the Canada Revenue Agency as the last resort to disallow tax benefits from abusive or unacceptable tax planning transactions that are inconsistent with the overall object or spirit of the law. Unlike tax evasion, tax avoidance does not face prosecution in a criminal court.
The Canada Revenue Agency has requested that the NWT establish a similar provision. The proposed legislation will amend the act by introducing a new section on a general anti-avoidance rule that parallels the federal general anti-avoidance rule provision.
Mr. Chairman, I am prepared to answer questions Members may have.
At this time I’d like to ask the standing committee that reviewed the bill if they have any opening comments. Mr. Abernethy.
Thank you, Mr. Chair. The Standing Committee on Government Operations held a public hearing on Bill 14, An Act to Amend the Income Tax Act, on October 6, 2008.
The proposed amendments make the Income Tax Act consistent with similar provisions in the federal Income Tax Act. These amendments were recommended by the Canada Customs and Revenue Agency and are part of a nationwide updating exercise.
The Northwest Territories, Nunavut and New Brunswick are the three remaining jurisdictions needing to update their legislation. The affected provisions are related to charitable donations, medical expense tax credits, returns and assessments, withholding and payment, and to tax avoidance.
The amendment to the medical expense tax credit provisions will allow caregivers to claim more of the medical and disability related expenses incurred on behalf of their dependent relatives.
The proposed new section on general anti-avoidance rules will provide for the identification of tax avoidance transactions and permit the reversal of the tax benefits from these transactions.
The proposed changes to the NWT charitable donations credit will require a tax creditor who claims a federal donation to credit the same value for the purpose of the NWT donations credit.
This concludes the committee’s comments on Bill 14, An Act to Amend the Income Tax Act. Individual members of the committee may have comments or questions as we proceed.
At this time I’d like to ask the Minister if he’ll be bringing in any witnesses. Mr. Miltenberger.
Yes, Mr. Chairman.
Does committee agree the Minister brings in his witnesses?
Agreed.
Sergeant-at-Arms, could you escort the witnesses in.
For the record, Mr. Minister, could you introduce your witnesses.
Thank you, Mr. Chairman. I have with me Ms. Margaret Melhorn, Mr. John Monroe and Ms. Lana Birch from Finance, FMB.
Do you want to clarify that for the record?
Thank you, Mr. Chairman. Ms. Birch is from Justice.
Thank you, Mr. Minister. Welcome, witnesses. At this time general comments with regard to Bill 14. General comments?
Detail.
Okay; we’ll switch to Bill 14. Page 1, clause 1.
Clauses 1 through 6 inclusive approved.
Bill 14, An Act to Amend the Income Tax Act. The bill as a whole.
Bill 14 as a whole approved.
Does committee agree that Bill 14 is ready for third reading?
Bill 14, An Act to Amend the Income Tax Act, approved for third reading.
Bill 14 is now ready for third reading.
With that, I’d like to thank the Minister and thank his witnesses. Sergeant-at-Arms, could you escort the witnesses out.
Mr. Speaker, I move, seconded by the honourable Member for Range Lake, that Bill 14, An Act to Amend the Income Tax Act, be read for the third time.
Bill 14 has had third reading.
Motion carried; Bill 14, An Act to Amend the Income Tax Act, read a third time.
