Canada: Tax provisions in federal budget for 2023
Changes to broaden the alternative minimum tax
Changes to broaden the alternative minimum tax
The Deputy Prime Minister and Finance Minister presented the federal budget for 2023 on 28 March 2023.
Although the budget does not change the federal individual (personal) or corporate tax rates, it does introduce 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 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.
A major focus of the 2023 federal 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
- 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:
- Introduction of a 2% tax on the net value of share repurchases by public corporations in Canada
- Denial of dividend received deductions for dividends received by financial institutions on shares that are mark-to-market property
- Adjustment of the rules for intergenerational business transfers originally introduced in Bill C-208
Read a March 2023 report [PDF 321 KB] (19 pages) prepared by the KPMG member firm in Canada
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