Principal Issues: Concern expressed over the impact of draft section 3.1 of the Income Tax Act.
Position: Finance intends to address the concerns raised prior to the legislation being enacted.
Reasons: There has been extensive public consultation with Finance since release.
Signed on July 5, 2006
XXXXXXXXXX
Dear Colleague:
Thank you for your letter received on May 15, 2006, and the attached copy of correspondence from your constituent, XXXXXXXXXX, concerning proposed section 3.1 of the Income Tax Act.
The proposed legislation, released by the Department of Finance Canada on October 31, 2003, deals with the deductibility of interest and other expenses for income tax purposes. The intent of the proposed legislation is to address concerns resulting from adverse court decisions that departed significantly from what the Government had considered to be the law in this area.
Since the release date, there has been an extensive consultation period during which public concern has been expressed that the proposed legislation goes well beyond how the law was applied before the adverse court decisions. It is my understanding that the Department of Finance Canada continues to receive submissions on the draft legislation and intends to address the concerns raised prior to enacting it. I assure you that our colleague the Honourable Jim Flaherty, Minister of Finance, is aware of the concerns expressed by your constituent on this issue.
I trust that this explanation will assist you in responding to XXXXXXXXXX.
Sincerely,
The Honourable Carol Skelton, P.C., M.P.
c.c.: The Honourable Jim Flaherty, P.C., M.P.
Minister of Finance
House of Commons
Ottawa ON K1A 0A6
Randy Hewlett
957-2049
2006-018807