Highlights Of Canada’s 2010 Federal Budget

The federal budget tabled on March 4, 2010 contains a number of unexpected proposed amendments to Canada's Income Tax Act (the Tax Act), including welcome amendments to the concept of taxable Canadian property, helpful changes relating to the foreign investment entity and non-resident trust proposals, rules dealing with loss trading in the context of the conversion of SIFTs to corporate form and proposed changes to the stock option rules. Highlights of these proposed amendments are described below.

Proposed Amendments to the Concept of Taxable Canadian Property

The concept of "taxable Canadian property" (TCP) is of importance to non-residents and the 2010 Budget proposes to make significant changes to this concept. Non-residents are subject to Canadian taxation in respect of capital gains on the disposition of property that is TCP. Under the current rules, shares of a private (unlisted) Canadian corporation are TCP regardless of the level of ownership by the