The budget expects a deficit of $43 billion for 2022-23 and forecasts deficits of $40.1 billion for 2023-24, and $35 billion for 2024-25. Although the budget does not change the federal personal or corporate tax rates, it does make new changes to broaden the Alternative Minimum Tax (AMT) by disallowing certain deductions and increasing the AMT capital gains inclusion rate to 100% (from 80%), among other adjustments. The budget asks for public feedback on important changes to the general anti-avoidance rule (GAAR) and introduces changes to allow Employee Ownership Trusts (EOTs) to acquire and hold shares of a business.
One major focus of this year’s budget is developing Canada’s green economy by introducing a slate of corporate tax credits meant to encourage investment in clean energy. In particular, the budget announces new tax credits for clean electricity and for clean technology manufacturing and processing and critical mineral extraction and processing. In addition, the budget provides additional details on other green credits, including the labor conditions required to claim the full 30% rate under the previously announced Clean Technology Investment Credit and the Clean Hydrogen Investment Tax Credit.
The budget also includes other anticipated measures, including to introduce a 2% tax on the net value of share repurchases by public corporations in Canada, and adjust the rules for intergenerational business transfers originally introduced in Bill C-208.
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