The federal finance department is seeking comment on draft amendments released today that aim to improve the taxation of financial institutions by better aligning tax laws with new standards set out by the Accounting Standards Board.

The proposed amendments relate to the calculation of: the income of financial institutions from certain share holdings and debt obligations; policy reserves that are deductible by insurance corporations in computing income for tax purposes; and, the minimum tax for life insurance corporations resident in Canada.

These proposals are proposed to become effective for taxation years that begin on or after Oct. 1, 2006. The intention to release these proposals was originally announced on Dec. 28, 2006.

This package also contains a number of additional changes to the “mark-to-market” rules determining the income of financial institutions from certain share holdings and debt obligations. These changes will provide that, in certain situations, securities held in corporations carrying on a stock exchange or a credit card business will not be subject to these rules.

Comments on these proposals are requested by November 30. Once the consultation period is over, the government will work toward introducing these measures in Parliament at the earliest opportunity.

“The government is committed to reducing the compliance burden faced by Canadian businesses,” said Finance Minister Jim Flaherty, in a news release. “These changes will ease this burden on financial institutions as well as improve the economic efficiency of the tax system by improving the measurement of income and capital for tax purposes.”