Finance Minister Paul Martin yesterday released a revised draft of income tax legislation regarding the taxation of the income of non-resident trusts and foreign investment entities.

It says that the proposals are designed to make the income tax system fairer and prevent tax avoidance by taxpayers that invest in or otherwise transfer property to offshore trusts and foreign investment entities. The proposals were first announced in the 1999 budget.

The proposed measures caused a public outcry when they
were first released. Investors protested that the proposals would unfairly punish average investors buying offshore products, such as foreign exchange-traded funds, rather than simply catching those attempting to circumvent tax laws with sophisticated offshore strategies.

Finance says that the revised legislative proposals released today reflect comments received by the department on the previous draft, which was released on June 22, 2000.

The Minister announced modifications to those legislative proposals on Sept. 7, 2000, and extended the consultation period to the end of 2000 to permit taxpayers to make further representations.

Comments on the revised draft are to be submitted to the Department of Finance before the end of October.