Fall Economic Statement Implementation Act, 2022 (S.C. 2022, c. 19)
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Assented to 2022-12-15
Fall Economic Statement Implementation Act, 2022
S.C. 2022, c. 19
Assented to 2022-12-15
An Act to implement certain provisions of the fall economic statement tabled in Parliament on November 3, 2022 and certain provisions of the budget tabled in Parliament on April 7, 2022
RECOMMENDATION
Her Excellency the Governor General recommends to the House of Commons the appropriation of public revenue under the circumstances, in the manner and for the purposes set out in a measure entitled “An Act to implement certain provisions of the fall economic statement tabled in Parliament on November 3, 2022 and certain provisions of the budget tabled in Parliament on April 7, 2022”.
SUMMARY
Part 1 implements certain measures in respect of the Income Tax Act by
(a) providing that any gain on the disposition of a Canadian housing unit within a one-year period of its acquisition is treated as business income;
(b) introducing a Tax-Free First Home Savings Account;
(c) phasing out flow-through shares for oil, gas and coal activities;
(d) introducing a new 30% Critical Mineral Exploration Tax Credit for specified mineral exploration expenses incurred in Canada and renounced to flow-through share investors;
(e) introducing the Canada Recovery Dividend under which banks and life insurers’ groups pay a temporary one-time 15% tax on taxable income above $1 billion over five years;
(f) increasing the corporate income tax rate of banks and life insurers’ groups by 1.5% on taxable income above $100 million;
(g) providing additional reporting requirements for trusts;
(h) providing rules applicable to mutual fund trusts listed on a designated stock exchange in Canada with respect to amounts that are allocated to redeeming unitholders;
(i) providing the Minister of National Revenue with the discretion to decline to issue a certificate under section 116 of the Income Tax Act in certain circumstances relating to the administration and enforcement of the Underused Housing Tax Act;
(j) doubling the First-Time Homebuyers’ Tax Credit;
(k) expanding the eligibility criteria for the Medical Expense Tax Credit in respect of medical expenses incurred in Canada related to surrogate mothers and donors and fees paid in Canada to fertility clinics and donor banks;
(l) introducing the Multigenerational Home Renovation Tax Credit;
(m) allowing access to the small business tax rate on a phased-out basis up to taxable capital of $50 million;
(n) modifying the computation of income as a result of the adoption of a new international accounting standard for insurance contracts;
(o) introducing a new graduated disbursement quota rate for charities;
(p) providing that the general anti-avoidance rules can apply to transactions that affect tax attributes that have not yet been used to reduce taxes;
(q) strengthening the rules on avoidance of tax debts;
(r) modifying the calculation of the taxes applicable to registered investments that hold property that is not a qualified investment;
(s) modifying the tax treatment of certain interest coupon stripping arrangements that might otherwise be used to avoid tax on cross-border interest payments;
(t) clarifying the applicable rules with respect to audits by Canada Revenue Agency officials, including requiring taxpayers to give reasonable assistance and to answer all proper questions for tax purposes; and
(u) extending the capital cost allowance for clean energy and the tax rate reduction for zero-emission technology manufacturers to include air-source heat pumps.
It also makes related and consequential amendments to the Canada Deposit Insurance Corporation Act, the Excise Tax Act, the Air Travellers Security Charge Act, the Excise Act, 2001, Part 1 of the Greenhouse Gas Pollution Pricing Act and the Income Tax Regulations.
Part 2 amends the Excise Act, 2001 and other related texts in order to implement changes to
(a) the federal excise duty frameworks for cannabis and other products by, among other things,
(i) permitting excise duty remittances for certain cannabis licensees to be made on a quarterly rather than a monthly basis, starting from the quarter that began on April 1, 2022, and
(ii) allowing the transfer of packaged, but unstamped, cannabis products between licensed cannabis producers; and
(b) the federal excise duty framework for vaping products in relation to the markings, customs storage and excise duty liability of these products.
Part 3 amends the Underused Housing Tax Act to make amendments of a technical or housekeeping nature. It also makes regulations under that Act in order to, among other things, implement an exemption for certain vacation properties.
Division 1 of Part 4 authorizes the Minister of Finance to acquire and hold on behalf of His Majesty in right of Canada non-voting shares of a wholly-owned subsidiary of the Canada Development Investment Corporation that is responsible for administering the Canada Growth Fund and to requisition the amounts for the acquisition of those shares out of the Consolidated Revenue Fund.
Division 2 of Part 4 amends the Bretton Woods and Related Agreements Act to increase the maximum financial assistance that may be provided in respect of foreign states.
Subdivision A of Division 3 of Part 4 enacts the Framework Agreement on First Nation Land Management Act.
Subdivision B of Division 3 of Part 4 contains transitional provisions in respect of the enactment of the Framework Agreement on First Nation Land Management Act and makes consequential amendments to other Acts. It also repeals the First Nations Land Management Act.
Division 4 of Part 4 amends the Government Employees Compensation Act in order to fulfil Canada’s obligations under the Memorandum of Understanding between the Government of Canada and the Government of the United States of America concerning Cooperation on the Civil Lunar Gateway.
Division 5 of Part 4 amends the Canada Student Loans Act to eliminate the accrual of interest on guaranteed student loans beginning on April 1, 2023.
It also amends the Canada Student Financial Assistance Act to eliminate the accrual of interest on student loans beginning on April 1, 2023.
Finally, it amends the Apprentice Loans Act to eliminate the accrual of interest on apprentice loans beginning on April 1, 2023 and to clarify when the repayment of apprentice loans begins during the interest suspension period from April 1, 2021 to March 31, 2023.
His Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:
Short Title
Marginal note:Short title
1 This Act may be cited as the Fall Economic Statement Implementation Act, 2022.
PART 1Amendments to the Income Tax Act and Other Legislation
R.S., c. 1 (5th Supp.)Income Tax Act
2 (1) Section 12 of the Income Tax Act is amended by adding the following after subsection (11):
Marginal note:Flipped property — deemed business
(12) For the purposes of this Act, if, absent this subsection and paragraph 40(2)(b), a taxpayer would have had a gain from the disposition of a flipped property, then throughout the period that the taxpayer owned the flipped property
(a) the taxpayer is deemed to carry on a business that is an adventure or concern in the nature of trade with respect to the flipped property;
(b) the flipped property is deemed to be inventory of the taxpayer’s business; and
(c) the flipped property is deemed not to be capital property of the taxpayer.
Marginal note:Definition of flipped property
(13) For the purposes of subsections (12) and (14), a flipped property means a housing unit of a taxpayer (other than a property that would be inventory of the taxpayer if the definition inventory in subsection 248(1) were read without reference to subsection (12)) located in Canada that was owned by the taxpayer for less than 365 consecutive days prior to the disposition of the property, other than a disposition that can reasonably be considered to occur due to, or in anticipation of, one or more of the following events:
(a) the death of the taxpayer or a person related to the taxpayer;
(b) one or more persons related to the taxpayer becoming a member of the taxpayer’s household or the taxpayer becoming a member of the household of a related person;
(c) the breakdown of the marriage or common-law partnership of the taxpayer if the taxpayer has been living separate and apart from their spouse or common-law partner for at least 90 days prior to the disposition;
(d) a threat to the personal safety of the taxpayer or a related person;
(e) the taxpayer or a related person suffering from a serious illness or disability;
(f) an eligible relocation (as defined in subsection 248(1)) of the taxpayer or the taxpayer’s spouse or common-law partner, if that definition was read without reference to the requirements for the new work location and the new residence to be in Canada;
(g) an involuntary termination of the employment of the taxpayer or the taxpayer’s spouse or common-law partner;
(h) the insolvency of the taxpayer; or
(i) the destruction or expropriation of the property. (bien à revente précipitée)
Marginal note:Flipped property — loss denial
(14) For the purposes of this Part, a taxpayer’s loss from a business in respect of a flipped property is deemed to be nil.
(2) Subsection (1) applies throughout the period that the flipped property is owned by the taxpayer in respect of dispositions that occur after 2022.
3 (1) Paragraph 18(1)(u) of the Act is replaced by the following:
Marginal note:Fees — individual saving plans
(u) any amount paid or payable by the taxpayer for services in respect of a FHSA, retirement savings plan, retirement income fund or TFSA under or of which the taxpayer is the annuitant or holder;
(2) Subsection 18(9.02) of the Act is replaced by the following:
Marginal note:Application of subsection (9) to insurers
(9.02) For the purpose of subsection (9), an outlay or expense made or incurred by an insurer in a taxation year on account of the acquisition of an insurance policy at any time prior to the issuance of the policy is deemed to be an expense incurred as consideration for services rendered in the particular year that the policy is issued.
(3) Subsection 18(11) of the Act is amended by striking out “or” at the end of paragraph (i), by adding “or” at the end of paragraph (j) and by adding the following after paragraph (j):
(k) making a contribution to a FHSA,
(4) Subsections (1) and (3) come into force on April 1, 2023.
(5) Subsection (2) applies to taxation years that begin after 2022.
4 (1) Clause 40(2)(g)(iv)(A) of the Act is replaced by the following:
(A) a trust governed by a deferred profit sharing plan, an employees profit sharing plan, a FHSA, a registered disability savings plan, a registered retirement income fund or a TFSA, under which the taxpayer is a beneficiary or immediately after the disposition becomes a beneficiary, or
(2) Subsection (1) comes into force on April 1, 2023.
5 (1) Subsection 56(1) of the Act is amended by striking out “and” at the end of paragraph (z.4), by adding “and” at the end of paragraph (z.5) and by adding the following after paragraph (z.5):
Marginal note:First home savings account
(z.6) any amount required by section 146.6 to be included in computing the taxpayer’s income for the year.
(2) Subsection (1) comes into force on April 1, 2023.
6 (1) Paragraph 60(i) of the Act is replaced by the following:
Marginal note:Premium or payment — FHSA, RRSP or RRIF
(i) any amount that is deductible under section 146, 146.3 or 146.6 or subsection 147.3(13.1) in computing the income of the taxpayer for the year;
(2) Subsection (1) comes into force on April 1, 2023.
7 (1) Paragraph 66(12.6)(a) of the Act is replaced by the following:
(a) the assistance that the corporation has received, is entitled to receive or can reasonably be expected to receive at any time, and that can reasonably be related to the specified expenses or to Canadian exploration activities to which the specified expenses relate (other than assistance that can reasonably be related to expenses referred to in any of paragraphs (b) to (b.2)),
(2) Subsection 66(12.6) of the Act is amended by striking out “and” at the end of paragraph (b.1) and by adding the following after that paragraph:
(b.2) if the agreement is made after March 2023, all specified expenses that are not described in paragraph (b) or (b.1) and that would be Canadian exploration expenses if
(i) the definition Canadian exploration expense in subsection 66.1(6) were read without reference to its paragraph (g.1), and
(ii) the definition mineral resource in subsection 248(1) were read without reference to its paragraphs (a) and (d), and
(3) Paragraph 66(12.62)(a) of the Act is replaced by the following:
(a) the assistance that the corporation has received, is entitled to receive, or can reasonably be expected to receive at any time, and that can reasonably be related to the specified expenses or to Canadian development activities to which the specified expenses relate (other than assistance that can reasonably be related to expenses referred to in any of paragraphs (b) to (b.2)),
(4) Subsection 66(12.62) of the Act is amended by striking out “and” at the end of paragraph (b.1) and by adding the following after that paragraph:
(b.2) if the agreement is made after March 2023, all specified expenses that are not described in paragraph (b) or (b.1) and that would be Canadian development expenses if the definition mineral resource in subsection 248(1) were read without reference to its paragraphs (a) and (d), and
(5) Subsections (1) and (3) apply in respect of flow-through share agreements made after March 2023.
8 (1) The description of L in the definition cumulative Canadian exploration expense in subsection 66.1(6) of the Act is replaced by the following:
- L
- is that portion of the total of all amounts each of which was deducted by the taxpayer under subsection 127(5) or (6) for a taxation year that ended before that time and that can reasonably be attributed to a qualified Canadian exploration expenditure, a pre-production mining expenditure, a flow-through mining expenditure or a flow-through critical mineral mining expenditure (each expenditure as defined in subsection 127(9)) made in a preceding taxation year, and
(2) Subsection (1) is deemed to have come into force on April 7, 2022.
9 (1) Subsection 74.5(12) of the Act is amended by striking out “or” at the end of paragraph (b), by adding “or” at the end of paragraph (c) and by adding the following after paragraph (c):
(d) as a payment of a contribution under a FHSA.
(2) Subsection (1) comes into force on April 1, 2023.
10 (1) Paragraph 75(3)(a) of the Act is replaced by the following:
(a) by a trust governed by a deferred profit sharing plan, an employee benefit plan, an employees profit sharing plan, a FHSA, a pooled registered pension plan, a registered disability savings plan, a registered education savings plan, a registered pension plan, a registered retirement income fund, a registered retirement savings plan, a registered supplementary unemployment benefit plan, a retirement compensation arrangement or a TFSA;
(2) Subsection (1) comes into force on April 1, 2023.
11 (1) Subsection 87(2) of the Act is amended by striking out “and” at the end of paragraph (vv), by adding “and” at the end of paragraph (ww) and by adding the following after paragraph (ww):
(xx) for the purposes of Part VI.2, the new corporation is deemed to be the same corporation as, and a continuation of, each predecessor corporation.
(2) Subsection (1) applies to the 2022 and subsequent taxation years.
12 (1) The portion of paragraph 88(1)(e.2) of the Act before subparagraph (i) is replaced by the following:
(e.2) paragraphs 87(2)(c), (d.1), (e.1), (e.3), (e.42), (g) to (l), (l.21) to (u), (x), (z.1), (z.2), (aa), (cc), (ll), (nn), (pp), (rr) and (tt) to (xx), subsection 87(6) and, subject to section 78, subsection 87(7) apply to the winding-up as if the references in those provisions to
(2) Subsection (1) applies to the 2022 and subsequent taxation years.
13 (1) Subsection 104(1) of the Act is replaced by the following:
Marginal note:Reference to trust or estate
104 (1) In this Act, a reference to a trust or estate (in this Subdivision referred to as a “trust”) shall, unless the context otherwise requires, be read to include a reference to the trustee, executor, administrator, liquidator of a succession, heir or other legal representative having ownership or control of the trust property, but, except for the purposes of this subsection, subsection (1.1), section 150, subparagraph (b)(v) of the definition disposition in subsection 248(1) and paragraph (k) of that definition, a trust is deemed not to include an arrangement under which the trust can reasonably be considered to act as agent for all the beneficiaries under the trust with respect to all dealings with all of the trust’s property unless the trust is described in any of paragraphs (a) to (e.1) of the definition trust in subsection 108(1).
(2) Subsection (1) applies to taxation years that end after December 30, 2023.
14 (1) The portion of paragraph 107(2.1)(c) of the Act before subparagraph (i) is replaced by the following:
(c) unless the trust is a mutual fund trust, the beneficiary’s proceeds of disposition of the portion of the former interest disposed of by the beneficiary on the distribution are deemed to be equal to the amount, if any, by which
(2) Subsection (1) applies to taxation years that begin after December 15, 2021.
15 (1) Paragraph (a) of the definition trust in subsection 108(1) of the Act is replaced by the following:
(a) an amateur athlete trust, an employee life and health trust, an employee trust, a trust described in paragraph 149(1)(o.4) or a trust governed by a deferred profit sharing plan, an employee benefit plan, an employees profit sharing plan, a FHSA, a foreign retirement arrangement, a pooled registered pension plan, a registered disability savings plan, a registered education savings plan, a registered pension plan, a registered retirement income fund, a registered retirement savings plan, a registered supplementary unemployment benefit plan or a TFSA,
(2) Paragraph 108(1.1)(a) of the Act is replaced by the following:
(a) a qualifying expenditure (within the meaning of section 118.04, 118.041 or 122.92) of a beneficiary under the trust; or
(3) Subsection (1) comes into force on April 1, 2023.
(4) Subsection (2) comes into force or is deemed to have come into force on January 1, 2023.
16 Section 116 of the Act is amended by adding the following after subsection (7):
Marginal note:Exception — underused housing tax
(8) If, in the absence of this subsection, the Minister would be required to issue a certificate under subsection (2), (4) or (5.2) in respect of a disposition, or a proposed disposition, of property that is residential property, as defined in section 2 of the Underused Housing Tax Act, the Minister may decline to issue the certificate if
(a) the Minister is not satisfied that all returns that the non-resident person is required to file under section 7 of that Act in respect of the property have been filed;
(b) the Minister is not satisfied that all taxes and other amounts payable under that Act by the non-resident person have been paid; or
(c) the following conditions are met:
(i) the Minister has reasonable grounds to believe that, for the calendar year immediately preceding the calendar year in which the property is or is expected to be disposed of, the non-resident person will be required to file a return under section 7 of that Act in respect of the property or will become liable to pay an amount of tax under subsection 6(3) of that Act in respect of the property, and
(ii) the return has not been filed or the amount of tax has not been paid.
17 (1) Subsection 118.05(3) of the Act is replaced by the following:
Marginal note:First-time homebuyers’ tax credit
(3) In computing the tax payable under this Part by an individual for a taxation year in which a qualifying home in respect of the individual is acquired, there may be deducted the amount determined by multiplying $10,000 by the appropriate percentage for the taxation year.
(2) Subsection (1) applies to the 2022 and subsequent taxation years.
- Date modified: