Much of Bill C-32 is related to measures
announced in Budget 2022. We've noted in our information on Budget
2022 if the measures are included in Bill C-32.
Deems profits from flipped residential property to be business income, not
capital gain, and principal residence exemption cannot apply to the income.
Included in Bill C-32 tabled Nov 3, 2022.
Effective January 1, 2023.
Will also apply to profits arising from the disposition of rights to
purchase a residential property via an assignment sale, if the rights were
assigned after having been owned for less than 12 months.
Once the property is owned by the taxpayer who entered into a purchase and
sale agreement, the 12-month holding period for the flipping rule will be
reset - i.e., start anew.
CWB is a refundable tax
credit currently claimed on the tax return, and advance payments can be
received for 1/2 of the estimated benefit.
Advance payments of 1/2 of the estimated CWB entitlement will now be done automatically,
with 1/6th of the 2022 CWB amount paid in July, October and January - no need
to apply. This will be done based on the prior year tax return, so
payments are proposed to start in July 2023 based on 2022 tax returns.
Any residual entitlement would be calculated and paid to the taxpayer through their tax return for the year.
Amounts received that exceed the actual entitlement will not have to be
repaid.
The wording in the FES is that the FES "proposes to automatically
provide individuals who received the CWB for the previous taxation year an entitlement
for the current taxation year through quarterly advance payments, so long as
their income tax return for the previous year is received and assessed by the
CRA prior to November 1 of the current year".
In their report Fall
Economic Statement 2022 - Issues for Parliamentarians the Parliamentary
Budget Officer report indicates on page 7 of the pdf that the government made a
"policy decision not to recoup these advance payments when recipients'
incomes rise and they become ineligible for benefits, or eligible for lower
benefits. Not requiring repayment of federal benefits for ineligible individuals
is a pronounced departure from the existing federal tax and transfer system."
The legislation for this measure is not yet available.
Canada has an alternative minimum tax system that ensures that in certain
situations where a taxpayer would have little or no tax under the
"regular" tax calculation rules, there will be a minimum amount of
tax paid.
Detailed proposal and path for implementation will be announced in Budget
2023.
New refundable tax credit equal to 30% of the capital cost of eligible
equipment. See above link for the types of equipment eligible for the
credit.
Available for property that is acquired and becomes available for use on
or after the day that the 2023 Budget is released, where it has not been
used for any purpose before its acquisition.
Will be phased out by reducing the credit rate to 20% in 2032, 10% in
2033, and 5% in 2034, with the credit not available after 2034.
Certain labour conditions must be fulfilled to obtain the 30% rate,
otherwise a 20% rate is available. Additional details on labour conditions
will be announced in Budget 2023.
The expanded trust reporting rules will be effective for Trust years
ended after December 30, 2023 (i.e., ending December 31, 2023 and later) -
deferred by one year to Dec 31, 2023 by Bill C-32.
There are many exceptions to the reporting requirements - see the above
link.
Addressing the digitalization of money: re digital currencies, including
cryptocurrencies, stablecoins, and central bank digital currencies.
Implementing the Organisation for Economic Cooperation and Development (OECD)
Model Rules for income reporting by digital platforms
Limiting excessive interest deductions for large and multinational
companies.
Official Development Assistance - whether current international assistance
payments continue to contribute to fighting poverty, meeting the needs of
developing countries, and upholding international human rights standards
All budget measures are subject to legislative
approval. Not all budget measures are included below, just the main tax
measures. See the 2022 Federal
Budget website for complete information.
All federal draft legislation, whether budget-related or not,
can be found on the Department of Finance website Draft
Legislation page.
Doubles the Goods and Services Tax/Harmonized Sales Tax (GST/HST)
credit for 6 months, increasing the maximum annual GST/HST credit
amounts by 50% for the 2022-2023 benefit year.
Canada
Dental Benefit portal is open until Friday June 30, 2023 for
applications related to the first benefit period of October 1, 2022 to June
30, 2023.
Provides financial support for eligible parents for dental care
services for their children under 12 years of age from October 2022
until June 2024.
For families with adjusted net income under $90,000 per year and
without dental coverage.
Application is made through your CRA My Account, or by phone.
Tax-free benefit amounts per year for each eligible child under
12:
$650 for adjusted net income under $70,000
$390 for adjusted net income greater than $70,000 but less
than $80,000
$260 for adjusted net income greater than $80,000 but less
than $90,000
Keep your dental care receipts for 6 years in case CRA needs to validate
your eligibility.
Provides for establishment of a one-time tax-free $500 rental housing
benefit for eligible persons who have paid rent in 2022 for their
principal residence and who apply for the benefit.
To apply, applicants do not need to be receiving other housing benefits
such as the Canada Housing Benefit.
Available to applicants who pay at least 30% of the adjusted net
income on rent, and with adjusted net income of no more than:
$35,000 for families, or
$20,000 for individuals
Application is made through your CRA My Account, via the online
application, or by phone.
Draft Legislation Introduced Subsequent to
the Tabling of the Budget
August
9, 2022 News Release re draft legislation for consultation, which
includes measures from Budget 2022, as well as from the 2021 Economic Update and
Budget 2021. The proposals re Budget 2022 measures relate to:
non-refundable tax credit of 15% of the lesser of eligible expenses
and $50,000, for a maximum credit of $7,500
for eligible expenses for a qualifying renovation that creates a
secondary dwelling unit to permit an eligible person (a senior or a
person with a disability) to live with a qualifying relation
profits are fully taxable as business income, not capital gains, and
no principal
residence exemption, for residential property owned for less than 12
months
one-time 15% tax for 2022 tax year, payable in equal amounts over
5 years
applies to banks and life insurer groups
group would include a bank or life insurer and any other financial
institution (for the purposes of Part VI (capital tax) of the Income
Tax Act) that is related to the bank or life insurer
each group would be permitted to share a $1 billion taxable income
exemption
Additional Tax on Banks and Life Insurers
included in Bill C-32 tabled November 3, 2022
annual 1.5% tax on the taxable income for members of bank and life
insurer groups, determined in the same manner as the CRD
each group would be permitted to share a $100 million taxable
income exemption
applies to taxation years that end after April 7, 2022
for taxation year that includes April 7th, the additional tax
would be prorated based on the number of days in the taxation year
after April 7th.
expansion of CCA Classes 43.1 and 43.2 for equipment that is part of
an air-source heat pump system
for property that is acquired and that becomes available for use after
April 7, 2022, where it has not been used or acquired for use for any
purpose before that date
accelerated CCA rates of 30% and 50% for Classes 43.1 and 43.2
following rules in place for the Mineral Exploration Tax Credit (METC)
METC provides a tax credit of 15% of specified mineral exploration
expenses incurred in Canada and renounced to flow-through share
investors
new CMETC would provide a 30% tax credit for specified minerals used
in the production of batteries and permanent magnets, or in the
production and processing of advanced materials, clean technology, or
semi-conductors
eligible expenditures would not benefit from both the proposed CMETC
and the METC
would apply to expenditures renounced under eligible flow-through
share agreements entered into after April 7, 2022 and on or before March
31, 2027
included in Bill C-32 tabled November 3, 2022 proposal to extend the range over which the business limit is reduced
based on the combined taxable capital employed in Canada of the CCPC and
its associated corporations.
New range for taxable capital would be $10 million to $50 million, to
allow more medium-sized CCPCs to benefit from the small business
deduction.
Applies to taxation years that begin on or after April 7, 2022.
proposal to amend the Income Tax Act to provide that the GAAR can
apply to transactions that affect attributes that have not yet become
relevant to the computation of tax
determinations made before April 7, 2022, where the rights of object
and appeal in respect of the determination were exhausted before April
7, 2022, would remain binding on taxpayers and the CRA
would apply to notices of determination issued on or after April 7,
2022
Bill C-208, which received Royal Assent in June 2021, may
unintentionally permit surplus stripping
Budget 2022 announces a consultation process for Canadians to share
views on how the rules could be modified to facilitate genuine
intergenerational business transfers
measures proposed to prevent taxpayers from "manipulating" the status
of their corporations to avoid qualifying as a CCPC to achieve a
tax-deferral advantage on investment income earned in their corporations
Substantive CCPCs earning and distributing investment income would be
subject to the same anti-deferral and integration mechanisms as CCPCs
with respect to such income.
would apply to taxation years that end on or after April 7, 2022
re Foreign Accrual Property Income (FAPI) rules, which provide a
tax-deferral advantage for CCPS and their individual shareholders
earning passive investment income through non-resident corporations
measures are proposed to eliminate this tax-deferral advantage
would apply to taxation years that begin on or after April 7, 2022
currently these sales may be taxable or exempt, depending on certain
criteria
proposal for Excise Tax Act amendments to make all assignment sales in
respect of newly constructed or substantially renovated residential
housing taxable for GST/HST purposes
GST/HST would apply to total amount paid for a new home by its first
occupant
these changes may affect the amount of a GST New Housing Rebate or of
a new housing rebate in respect of the provincial component of the HST
that may be available in respect of a new home
would apply in respect of any assignment agreement entered into on or
after the day that is one month after April 7, 2022
retailers may continue to sell until January 1, 2023 unstamped
products that are in inventory as of October 1, 2022
exclusions for vaping products already subject to the cannabis excise
duty framework and those produced by individuals for their personal use
duty-free importations of unstamped vaping products for personal use
for travellers returning to Canada, for an absence of 48 hours or more,
for up to 12 vaping products with a total volume being imported of up to
120 ml.
proposal to allow licensed cannabis producers to remit excise duties
on a quarterly rather than month basis, starting from the quarter that
began on April 1, 2022, for licensees required to remit less than a
total of $1M in excise duties during the four fiscal quarters
immediately preceding that fiscal quarter
proposals for other technical amendments; changes to penalties for
lost excise stamps; changes to licences
as per agreement with the World Trade Organization (WTO), the excise
duty exemption for wine that is produced in Canada and composed wholly
of agricultural or plant product grown in Canada
proposal to eliminate excise duty for beer containing no more than
0.5% alcohol by volume (ABV), bringing the tax treatment of such beer
into line with the treatment of wine and spirits with the same alcohol
content
proposal to amend the Nisga'a Final Agreement Act to provide force-of-law
to all provisions of the Nisga'a Nation Taxation Agreement
includes a forthcoming amendment with respect to an income tax exemption
for amounts received by citizens of the Nisga'a Nation from a registered
pension plan to the extent that the employment on which the pension amounts
are based was itself exempt from tax