MINISTRY OF FINANCE

---

The federal government has proposed amendments to the Income Tax Act (“ITA”) under sections 68 and 69 of Bill C-47, An Act to implement certain provisions of the budget tabled in Parliament on March 28, 2023.

The Law Society of Ontario is concerned about this proposal and has sent in a submission to the Standing Senate Committee on National Finance. They are also  hoping to secure an appearance before the Committee.

The  Federation of Law Societies of Canada has also sent a submission.

FOLA would like to hear from Law Association members in respect of anticipated impacts of these proposed changes -  specifically, regarding the practical effects these changes will have on sole practitioners and lawyers working in small firms.  Please send your comments to Katie at katie.robinette@fola.ca by June 5th.  

There is a government of Canada backgrounder available here. It sets out the information that will be required to be filed in respect of the new notifiable transactions (copied below) and a CRA information form in respect of the current reportable (avoidance) transaction regime. 

NOTIFIABLE TRANSACTIONS

It is expected that every information return required to be filed in respect of a notifiable transaction must: 

• describe the expected, claimed or purported tax treatment and all potential benefits expected to result from the transaction;
• describe any contractual protection with respect to the transaction;
• describe any contingent fees with respect to the transaction;
• identify and describe the transaction in sufficient detail for the Minister to be able to understand the tax structure of the transaction;
• identify the provisions – relied upon for the tax treatment – of any one or more of
  • the Act,
  • the Regulations,
  • the Income Tax  Application Rules,
  • a tax treaty, or
  • any other enactment that is relevant in computing tax or any other amount payable or refundable to a person under the Act or in determining any amount that is relevant for the purposes of that computation;
• identify, to the best knowledge of the person who is filing the return, every person required under subsection 237.4(4) of the Act to file an information return in respect of the transaction; and
• provide such other information as is required by the information return.

Justice-Specific Mentions:

Justice sector expense is projected to be $313 million higher, primarily due to investments related to essential service delivery within courts, corrections and policing.

Base Justice sector expense is projected to decrease from $5.5 billion in 2022–23 to $5.3 billion in 2025–26. This is primarily due to obligations under the Crown Liability and Proceedings Act, 2019 in 2022–23, which are recorded annually and are not included in forecasted expenses beyond 2022–23. The government continues to make investments in the Justice sector for key initiatives such as the Guns, Gangs and Violence Reduction Strategy in order to protect public safety.

Total expense in 2023–24 is projected to be $204.7 billion.  The largest expense is the Health Sector at $81.0 billion, accounting for 39.6 per cent of total expense. The remaining sectors of total expense include the Education Sector* at $34.7 billion or 17.0 per cent; the Postsecondary Education Sector at $12.1 billion or 5.9 per cent; the Children, Community and Social Services Sector at $19.4 billion or 9.5 per cent; the Justice Sector at $5.4 billion or 2.6 per cent; Other Programs at $38.1 billion or 18.6 per cent; and Interest on Debt, included as part of Total Expense, is $14.1 billion or 6.9 per cent.

That’s it for justice – nothing on legal aid or, specifically, courthouses/courthouse infrastructure.  

Access full Budget, Highlights, & the Ministry's Press Release here: https://budget.ontario.ca/2023/index.html