Federal budget disappoints

"Finance Minister Paul Martin's first budget disappointed almost everyone. The business sector was disappointed at the some what feeble attempt to grapple with the country's deficit. The mining industry was disappointed by tax proposals regarding mine reclamation that fall short of the industry's needs. Has anybody been happy with a federal budget? Federal Budget DisappointsThe federal government's budget papers that were tabled on February 22, 1994, contained a rather bizarre mixture of unrelated tax proposals. The budget signals an unexpected attack on the tax treatment of debt settlements, on certain types of corporate reorgani2ations, and on income earned by foreign affiliates. This is an old style budget, which proposes a pot pourri of technical changes and policy initiatives. Mine ReclamationEffective February 23, 1994, a taxpayer's contributions to a prescribed mine reclamation trust fund will be deductible as a current expense. The budget papers do not provide a definition of what will constitute a ""prescribed"" trust: this definition will surface in due course. However, the budget papers indicate that:• income earned in such trusts will be subject to tax each year;• all withdrawals from the trust (including income already taxed) will be included in computing the income for tax purposes of the recipient;• reclamation costs will continue to be fully deductible at the time incurred; and • contributions, trust earnings, and withdrawals will not be taken into account for the purposes of determining a taxpayer's resource allowance."