Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
MINISTER/DM'S OFFICE 96-04734M
ADM'S OFFICE
RETURN TO RULINGS, 15TH FLOOR, 25 NICHOLAS ST.
PENDING
XXXXXXXXXX
November 6, 1996
Dear XXXXXXXXXX:
I am replying to your correspondence regarding the taxation of family trusts leaving Canada. A copy of your letter was sent to me on June 19, 1996, by Mr. Steve Dunnigan, Departmental Assistant to the Honourable Ralph Goodale, Minister of Agriculture and Agri-Food.
The role of Revenue Canada is to administer and enforce the Income Tax Act as passed by Parliament, while the Department of Finance is responsible for tax policy and any proposed changes to the Act. The concern raised in your letter on the taxation of family trusts that left Canada was one of several tax policy issues included in a recent Auditor General's report. Those issues were considered by the House of Commons Standing Committee on Finance in its report released on September 18, 1996.
Although the committee found that the specific cases referred to in the Auditor General's report were in accordance with existing provisions of the Act, the committee's majority report recommended that changes be made to the Act to address the tax policy issues. The Department of Finance responded to those recommendations on October 2, 1996, by announcing amendments to the Act, which when enacted will be effective as of that date. As a result, all emigrants from Canada, including trusts, will pay capital gains tax on any capital gains that have accrued in Canada up to the time of departure. Exceptions to this rule will include gains that accrue on Canadian real estate and Canadian business property, which can always be taxed when they are ultimately sold.
I wish to thank you for expressing your concern on this matter.
Yours sincerely,
Jane Stewart, P.C., M.P.
Catherine Bowen
957-8585
October 9, 1996
962351