November 23, 2005
On November 23, Finance Minister Ralph Goodale announced an early end to the FTE consultation process that started with the release of the Consultation Paper on FTEs in early September. After hearing from many interested sources, the Minister noted that the "overwhelming consensus of submissions received ... was to reduce personal income tax on dividends. Today's announcement acts on that consensus and ends the consultation process."
The Minister has announced changes to the dividend gross-up and tax credit rules applicable to individuals. The effect of the proposed changes is to essentially eliminate double taxation on income earned by a corporation and paid to its shareholders as dividends. The Minister did not announce any measures dealing with income trusts or other FTEs.
It was also announced that the government will resume providing advance tax rulings on FTEs.
Details of the announcement, together with a Backgrounder that provides additional detail on the dividend tax credit can be found at http://www.fin.gc.ca/news05/05-082e.html.
This announcement comes just before the start of an expected federal election campaign, which could affect the timing of the implementation of the change to the dividend tax credit regime.