Bill C-32, which implements some of the outstanding tax measures announced in the 2022 and 2021 federal budgets, passed third reading in the House of Commons on December 8, 2022. This bill enacts the enhanced trust reporting rules, the one-time Canada Recovery Dividend and the additional 1.5% tax on banks and life insurer groups, among other measures. Bill C-32 received first reading on November 4, 2022.
The corporate income tax measures in Bill C-32 are considered substantively enacted for IFRS and Accounting Standards for Private Enterprise (ASPE) purposes on December 8, 2022, the date Bill C-32 passed third reading (as Canada has a minority government). The corporate income tax measures in Bill C-32 will be considered enacted for U.S. GAAP purposes on the date the bill receives Royal Assent.
Business income tax measures
The bill includes certain business tax measures announced in the 2022 federal budget related to:
- The Canada Recovery Dividend and the additional 1.5% Tax on Banks and Life Insurers
- The Small Business Deduction (i.e., increasing the upper limit of taxable capital to $50 million (from $15 million))
- Clean Technology Tax Incentives for air-source heat pumps (i.e., expanding the CCA regime and tax rate reduction for zero-emission technology manufacturers)
- The 30% Critical Mineral Exploration Tax Credit
- Phase-out of flow-through shares for oil, gas and coal activities
- International Financial Reporting Standards for insurance contracts (IFRS 17)
- The application of the general anti-avoidance rule (GAAR) to tax attributes
- Interest coupon stripping.
Other tax measures
The bill includes other previously announced tax measures related to:
- Enhanced trust reporting rules
- Avoidance of tax debts
- Annual disbursement quota for charities
- Taxes on registered investments
- CRA audit authority
- Mutual funds — Allocation to redeemers rules
- The Underused Housing Tax, including a new exemption for certain vacation properties.
The bill also includes several personal income tax measures, including the residential property flipping rule, as well as certain changes to the excise duty frameworks related to cannabis and vaping products.
For more information, contact your local KPMG adviser.
Information is current to December 12, 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