Bill C-394: An Act to amend the Income Tax Act (parenting tax credit)

Bill C-394 LEGISinfo First Reading Bilingual view XML PDF Short title Income Tax Act First Session, Forty-second Parliament, 64-65-66 Elizabeth II, 2015-2016-2017-2018 HOUSE OF COMMONS OF CANADA BILL C-394 An Act to amend the Income Tax Act (parenting tax credit) FIRST READING, February 5, 2018 Mr. Scheer 421472 SUMMARY This enactment amends the Income Tax Act to establish a tax credit with respect to maternal and parental benefits. Available on the House of Commons website at the following address: www.ourcommons.ca 1st Session, 42nd Parliament, 64-65-66 Elizabeth II, 2015-2016-2017-2018 HOUSE OF COMMONS OF CANADA BILL C-394 An Act to amend the Income Tax Act (parenting tax credit) Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows: Short title Short title 1 This Act may be cited as the Supporting New Parents Act. R.‍S.‍, c. 1 (5th Supp.‍) Income Tax Act 2 The Income Tax Act is amended by adding the following after section 118.‍07: Parenting tax credit 118.‍08 For the purpose of computing the tax payable under this Part for a taxation year by an individual, there may be deducted an amount determined by the formula A × B where A is the appropriate percentage for the taxation year; and B is the total of (a) the amounts that an individual received in the taxation year as special benefits paid for any reason mentioned in paragraph 12(3)‍(a) or (b) or 152.‍14(1)‍(a) or (b) of the Employment Insurance Act; and (b) in the case of an individual who received in the taxation year benefits under the Act respecting parental insurance, R.‍S.‍Q.‍, c. A-29.‍011, the amount that the individual would have received in the same taxation year under the provisions referred to in paragraph (a) if he or she had been entitled to those benefits. Unused parenting tax credit 118.‍09 (1) In this section, an individual’s unused parenting tax credit at the end of a taxation year is the amount determined by the formula A + (B - C) - D where A is the amount determined under this subsection in respect of the individual at the end of the preceding taxation year; B is the amount that may be deducted under section 118.‍08 in computing the individual’s tax payable under this Part for the taxation year; C is the lesser of the value of B and the amount that would be the individual’s tax payable under this Part for the year if no amount were deductible under this Division (other than an amount deductible under this section and any of sections 118 to 118.‍07, 118.‍3 and 118.‍7); and D is the amount that the individual may deduct under subsection (2) for the year. Deduction of carryforward (2) For the purpose of computing an individual’s tax payable under this Part for a taxation year, there may be deducted the lesser of (a) the amount determined under subsection (1) in respect of the individual at the end of the preceding taxation year, and (b) the amount that would be the individual’s tax payable under this Part for the year if no amount were deductible under this Division (other than an amount deductible under this section and any of sections 118 to 118.‍07, 118.‍3 and 118.‍7). Change of appropriate percentage (3) For the purpose of determining the amount that may be deducted under subsection (2) in computing an individual’s tax payable for a taxation year, in circumstances where the appropriate percentage for the taxation year is different from the appropriate percentage for the preceding taxation year, the individual’s unused parenting tax credit at the end of the preceding taxation year is deemed to be the amount determined by the formula A/B × C where A is the appropriate percentage for the current taxation year; B is the appropriate percentage for the preceding taxation year; and C is the amount that would be the individual’s unused parenting tax credit at the end of the preceding taxation year if this section were read without reference to this subsection. 3 (1) The description of C in subsection 118.‍61(1) of the Act is replaced by the following: C is the lesser of the value of B and the amount that would be the individual’s tax payable under this Part for the year if no amount were deductible under this Division (other than an amount deductible under this section and any of sections 118 to 118.‍09, 118.‍3 and 118.‍7); (2) Paragraph 118.‍61(2)‍(b) of the Act is replaced by the following: (b) the amount that would be the individual’s tax payable under this Part for the year if no amount were deductible under this Division (other than an amount deductible under this section and any of sections 118 to 118.‍09, 118.‍3 and 118.‍7). 4 (1) Paragraph (a) of the description of C in section 118.‍8 of the Act is replaced by the following: (a) the amount that would be the spouse’s or common-law partner’s tax payable under this Part for the year if no amount were deductible under this Division (other than an amount deductible under subsection 118(1) because of paragraph (c) of the description of B in that subsection, under subsection 118(10) or under any of sections 118.‍01 to 118.‍09, 118.‍3, 118.‍61 and 118.‍7) (2) Subparagraph (b)‍(ii) of the description of C in section 118.‍8 of the Act is replaced by the following: (ii) the amount that would be the spouse’s or common-law partner’s tax payable under this Part for the year if no amount were deductible under this Division (other than an amount deductible under any of sections 118 to 118.‍09, 118.‍3, 118.‍61 and 118.‍7). 5 Section 118.‍92 of the Act is replaced by the following: Ordering of credits 118.‍92 In computing an individual’s tax payable under this Part, the following provisions shall be applied in the following order: subsections 118(1) and (2), section 118.‍7, subsections 118(3) and (10) and sections 118.‍01, 118.‍02, 118.‍04, 118.‍041, 118.‍05, 118.‍06, 118.‍07, 118.‍3, 118.‍08, 118.‍09,118.‍61, 118.‍5, 118.‍9, 118.‍8, 118.‍2, 118.‍1, 118.‍62 and 121. 6 Clause 128(2)‍(e)‍(iii)‍(A) of the Act is replaced by the following: (A) under any of sections 118 to 118.‍09, 118.‍2, 118.‍3, 118.‍5, 118.‍8 and 118.‍9, 7 Sections 2 to 6 apply to the 2018 and subsequent taxation years. 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