The Department of Finance has released draft legislative proposals to implement the remaining tax measures from the federal 2008 budget, along with several previously announced tax initiatives for consultation.

The proposals include draft legislation to:

> Clarify the application of the excess corporate holdings rules for private foundations;

> Increase the amount that corporations will be able in future to pay as “eligible dividends”, to reflect lower corporate income tax rates and in keeping with the Budget 2008 modification of the dividend tax credit;

> Introduce minor adjustments to the Tax Free Savings Account (TFSA) rules and the scientific research and experimental development investment tax credit rules, further to post-budget consultation with affected taxpayers.

The draft legislative proposals also include other previously announced measures including:

> New income tax rules to facilitate the conversion of income trusts into corporations;

> Revised draft amendments to take into account financial institution accounting changes;

> The extension of the general treatment of capital gains and losses on an acquisition of control of a corporation to gains and losses that result from fluctuations in foreign exchange rates in respect of debt denominated in foreign currency;

> An enhanced carry-forward for investment tax credits;

> Updated prescribed amounts for automobile expenses and benefits;

> Revised draft amendments relating to the computation of income, gains and losses of a foreign affiliate; and

> Revised draft regulations that modify the tax treatment of foreign affiliate active business income earned in a jurisdiction with which Canada has concluded a tax information exchange agreement.

While it is expected that the draft amendments will form part of a bill to be introduced into Parliament later this year, that bill may also include other items.

Comments on the draft legislative proposals are due by September 15.