Ralph Goodale, Minister of Finance, announced today that the interim measure that limits the deductibility of increases in provincial payroll and capital taxes will continue to apply in 2004.

Under the interim measure, any existing provincial payroll and capital taxes will remain deductible for federal income tax purposes, the Department of Finance says.

However, any increases in these taxes by way of provincial actions to increase the rate, change the definition of the base or introduce new taxes would not be deductible.

The department says the announcement of the extension of the interim measure for 2004 ensures that all businesses and provinces are provided with timely notice of the rules that apply to the deductibility of provincial payroll and capital taxes.