Retroactive legislation - Press Release 99-067 announcing clarifying amendments regarding the tax treatment of resource expenditures.

• Position: Canada Dept. of Finance Press Release concerning retroactivity of tax provisions

September 10, 1999

On September 10, 1999, Tax Executives Institute submitted the following comments to Minister of Finance Paul Martin concerning the Department of Finance's July 23 announcement of retroactive legislation "clarifying" the tax treatment of resource expenditures. The Institute's comments, in the form of a letter from TEl President Charles W. Shewbridge, III, were prepared under the aegis of TEI's Canadian Income Tax Committee, whose chair is John M. Allinotte of Dofasco, Inc. Contributing to the development of TEI's comments were Monika M. Siegmund of Shell Canada Limited and David M. Penney of General Motors Corporation.

On behalf of Tax Executives Institute, Inc., I am writing to express TEI's concern about, and objection to, the retroactive effective dates in the draft income tax legislation announced by the Department of Finance on July 23, 1999. While in this case the substantive amendments detailed in Press Release 99-067 affect only a segment of Canadian business taxpayers and TEI members (i.e., those in the oil and gas industry with resource expenditures), retroactive legislation generally engenders unpredictable and unfair results. Consequently, the government's actions implicate much broader policy concerns. Indeed, we believe the government's actions will undermine confidence in the Canadian self-assessment tax system.

Background

Tax Executives institute is the preeminent association of business tax executives in North America. The Institute's 5,000 professionals manage the tax affairs of the leading 2,800 companies in Canada and the United States and must contend daily with the planning and compliance aspects of Canada's business tax laws. Canadians make up 10 percent of TEI's membership, with our Canadian members belongin to chapters in Calgary, Montreal, Toronto, and Vancouver, which together make up one of our eight geographic regions. Our non-Canadian members (including those in Europe) work for companies with substantial activities in Canada. In sum, TEI's membership includes representatives from most major industries including manufacturing, distributing, wholesaling, and retailing; real estate; transportation; financial services; telecommunications; and natural resources (including timber and integrated oil companies). The comments set forth in this letter reflect the views of the Institute as a whole, but more particularly those of our Canadian constituency.

TEI is concerned with issues of tax policy and...