Canada: Outstanding tax measures enacted, including Pillar Two, EIFEL, hybrid mismatch, clean economy, and GAAR

Canada has enacted tax measures that were previously proposed in the federal budgets of 2022, 2023, and 2024, as well as the 2023 federal economic update. These measures have been incorporated into Bill C-59 and Bill C-69, both of which received Royal Assent on June 20, 2024.

Business tax measures

• Global Minimum Tax Act
• Implementation of the excessive interest and financing expenses limitation (EIFEL) rules
• Hybrid mismatch arrangements
• Introduction of new substantive rules for Canadian-controlled private corporations (CCPCs)
• Expansion of the critical mineral exploration tax credit to include lithium from brines, introduction of investment tax credits for carbon capture, utilization, and storage (CCUS), and clean technology
• Changes to the general anti-avoidance rule (GAAR), adjustments in the taxation of dividends for financial institutions, and modifications to the tax treatment of employee stock options
   

Individual (personal) tax measures

• Amendments to facilitate intergenerational business transfers
• Provisions related to the sale of businesses to employee trusts
• Enhancements to the registered disability savings plan and the first home savings account
   

Indirect tax measures

• Introduction of a new digital services tax requiring a future commencement date
• Amendments to the excise duty frameworks for tobacco, vaping, and alcohol products