2017 Federal Budget – Selected Tax Measures

On March 22, 2017 the Minister of Finance introduced Canada's 2017 Federal Budget (2017 Budget). Despite persistent rumours, no change was proposed to the capital gains inclusion rate. The 2017 Budget does include a mix of targeted anti-avoidance rules, legislative responses to recent jurisprudence, and other narrow changes to address perceived problems in the existing provisions of the Income Tax Act (Act).

BUSINESS TAX MEASURES

Mark-to-Market Election for Derivatives

The recent Federal Court of Appeal decision in Kruger Incorporated v. Canada (Kruger) allowed a taxpayer, under general income computation principles, to apply mark-to-market treatment in determining its income and losses from certain derivative positions acquired as part of a business. While mark-to-market treatment for certain financial instruments has been available to financial institutions under specific rules in the Act, the absence of statutory rules or clear guidance in case law has left