Canada's first budget implementation bill, which includes several personal and indirect tax measures from the 2022 budget, received Royal Assent on June 23, 2022. Bill C-19 also includes several outstanding 2021 federal budget measures, including immediate expensing of certain capital property, corporate income tax rate reductions for eligible zero-emission technology manufacturing profits and the new luxury tax, among other changes.
The corporate income tax measures in Bill C-19 are considered enacted for U.S. GAAP purposes on June 23, 2022 (the date the bill received Royal Assent). These measures were considered substantively enacted for IFRS and Accounting Standards for Private Enterprise (ASPE) purposes on June 9, 2022 (the date the bill passed third reading), as Canada has a minority government.
Corporate measures
This bill includes several corporate income tax measures related to:
- Immediate expensing of up to $1.5 million per year of eligible property acquired after April 18, 2021 and available for use before 2024 (for Canadian-controlled private corporations (CCPCs)) or acquired after December 31, 2021 and available for use before 2025 (for eligible sole proprietors and certain partnerships)
- Expanded access to the accelerated capital cost allowance (CCA) for certain clean energy equipment, applicable to eligible property acquired after April 18, 2021, with certain other changes effective for property that becomes available for use after 2024
- The temporary extension for eligible expenses and other deadlines under film or video production tax credits, effective as April 11, 2020
- Corporate income tax rate reductions for zero-emission technology manufacturing profits.
Note that the income tax rate reductions for zero-emission technology manufacturing profits reduce the general corporate income tax rate and small business income tax rate on eligible profits to 7.5% (from 15%) and to 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.
Other measures
Among other measures, Bill C-19 also includes legislation for a luxury tax on certain new aircrafts and motor vehicles priced over $100,000 and certain boats priced over $250,000, under the new Select Luxury Items Tax Act. However, note that the legislation does not specify the coming into force date for the luxury tax on aircraft, which will be fixed separately by order of the Governor in Council. In addition, Bill C-19 provides the CRA with discretion to accept late-filed wage and rent subsidy claims as well as claims under the Canada Recovery Hiring Program.
For more information on these and other tax measures included in the bill, see TaxNewsNow "2022 Federal Budget Bill #1 Passes Third Reading" or contact your KPMG adviser.
Information is current to June 27, 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.
