Bill C-19, which reflects certain personal and indirect tax proposals introduced in the 2022 federal budget, received first reading on April 28, 2022. The bill also includes several outstanding 2021 federal budget measures, such as immediate expensing of certain capital property for Canadian-controlled private corporations (CCPCs), sole proprietors and certain partnerships, corporate income tax rate reductions for zero-emission technology manufacturing, changes to capital cost allowance (CCA) for clean energy equipment and the new luxury tax. Note that Bill C-19 does not include corporate tax changes proposed in the 2022 federal budget, such as the "substantive CCPC" rules, the one-time 15% Canada Recovery Dividend on bank and life insurer groups or the additional 1.5% tax on the taxable income for members of bank and life insurer groups (as determined for the purposes of the dividend).
The proposed corporate income tax measures in Bill C-19 will not be substantively enacted for purposes of IFRS or Accounting Standards for Private Enterprise (ASPE) until the bill passes third reading in the House of Commons (as Canada has a minority government).
The measures in the bill were first released in a Notice of Ways and Means Motion on April 26, 2022.
Business income tax measures
Bill C-19 includes proposed legislation for certain outstanding 2021 federal budget measures related to:
- Immediate expensing of eligible property for Canadian-controlled private corporations (CCPCs), sole proprietors and certain partnerships
- Expanded access to the accelerated CCA for certain clean energy equipment (Classes 43.1 and 43.2)
- The 50% reduction of the general corporate and small business income tax rates for businesses that manufacture zero-emission technologies to 7.5% (from 15%) and 4.5% (from 9%), respectively, for taxation years beginning after 2021 and before 2029 (this reduction is gradually phased out for taxation years that begin in 2029 and are fully phased out for taxation years that begin after 2031)
- The temporary extension to the period for incurring eligible expenses and other deadlines under film or video production tax credits.
For more information, please see TaxNewsFlash-Canada 2021-21, "2021 Federal Budget Highlights".
Personal tax measures
Bill C-19 includes proposed legislation for certain personal tax measures proposed in the 2022 federal budget, such as:
- A Labour Mobility Deduction for Tradespeople that provides tax relief on eligible travel and temporary relocation expenses
- Doubling the maximum amount of qualifying expenditures for the Home Accessibility Tax Credit to $20,000 (from $10,000).
For more information, please see TaxNewsFlash-Canada 2022-24, "2022 Federal Budget Highlights".
Bill C-19 also includes proposed legislation for previously announced personal tax measures, such as:
- Changes to the Disability Tax Credit
- A change to the Climate Action Incentive payments from an annual refundable tax credit to quarterly payments starting in July 2022
- Including postdoctoral fellowship income in the definition of "earned income" for RRSP purposes
- Clarifying change for the one-time additional payment under the GST/HST tax credit in relation to COVID-19.
Indirect tax measures
Bill C-19 includes proposed legislation for the new Select Luxury Items Tax Act, which introduces a luxury tax on certain new aircrafts and motor vehicles priced over $100,000 and certain boats priced over $250,000. The new tax generally applies as of September 1, 2022. Finance originally announced this tax in the 2021 federal budget and previously released draft legislation on March 11, 2022 (see TaxNewsFlash-Canada 2022-17, "Vendors — Prepare Now to Meet Luxury Tax Requirements").
Bill C-19 also includes proposed legislation for certain indirect tax measures announced in the 2022 federal budget, such as:
- Making all assignment sales in respect of newly constructed or substantially renovated residential housing taxable for GST/HST purposes
- Expanding the GST/HST health care rebate for charities or non-profit organizations to include certain health care services delivered by nurse practitioners
- Implementing a new federal excise duty framework for vaping products
- Changes to excise tax on wine and beer.
Other measures
The proposed legislation in Bill C-19 also includes other measures to:
- Provide the CRA discretion to accept late applications for the Canada Emergency Wage Subsidy, the Canada Emergency Rent Subsidy and the Canada Recovery Hiring Program
- Introduce a two-year ban on foreign investment in Canadian housing (effective date to be set by order of the Governor in Council)
- Implement certain changes affecting Employment Insurance
- Allow registered charities to enter into charitable partnerships with organizations other than qualified donees under certain conditions
- Changes to the Special Import Measures Act
- Changes to the Customs Act.
For more information, contact your KPMG adviser.
Information is current to May 2, 2022. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500
