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.