In this week's edition

Draft legislation dropped this week for implementing the controversial increase to the capital gains inclusion rate. The legislation clarified how private corporations should manage the capital dividend account. As one source told reporters Melissa Shin and Rudy Mezzetta, the feds fixed a technical issue that could have had “unintended, surprising results to certain taxpayers.”

Canada’s biggest banks may soon be prevented from merging — with each other. That’s one of several proposals in a Finance consultation paper released this week that discusses strengthening Canada’s financial sector. Another one of the proposals would require banks that choose to close branches to publicly explain why, and facilitate account transfers to rival institutions. Finance is also considering legislative reforms to beef up security of the financial sector — for example, through information sharing and regulatory co-operation.

Draft legislation released this week also said bare trusts won’t have a filing obligation for 2024 (assuming the legislation passes). The move gives Finance and the Canada Revenue Agency (CRA) more time to provide guidance on the filing requirements for bare trusts, a source suggested. (Earlier this year — a few days before the trust return filing deadline of April 2 — the CRA provided a blanket filing exemption to bare trusts for the 2023 tax year.) In the draft legislation, the government also proposed broader trust reporting relief.

The Canadian Federation of Independent Business, among other organizations and individuals, is disappointed that draft legislation for the Canadian Entrepreneurs’ Incentive maintains restrictions on which business owners get a tax break on the increased capital gains inclusion rate when they sell their business shares. However, the legislation extended eligibility to farming and fishing property, and to personal services businesses, as well as tweaked other requirements.

This weekly newsletter will take a break over the next couple of weeks and return after Labour Day. In the meantime, enjoy the rest of the summer!