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Canada

28 June 2019

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Canada Budget Implementation Act, 2019, No. 1 Receives Royal Assent

The Canadian Government has announced that the Budget Implementation Act, 2019, No. 1 (Bill C-97) received Royal Assent on 21 June 2019. The Act implements a number of tax measures proposed in the Federal Budget 2019 (previous coverage). As provided in the included summary, part 1 of the legislation implements certain income tax and related measures by:

  • providing a temporary enhanced first-year capital cost allowance rate of 100% in respect of eligible zero-emission vehicles;
  • removing the requirement that property be of "national importance" in order to qualify for the enhanced tax incentives for donations of cultural property;
  • providing a temporary enhanced first-year capital cost allowance rate in respect of a wide range of depreciable capital properties, including a temporary first-year capital cost allowance rate of 100% in respect of:
    • machinery and equipment used for the manufacturing or processing of goods; and
    • specified clean energy equipment;
  • ensuring that social assistance payments under certain programs are non-taxable, are not included in income for the purposes of determining entitlement to income-tested benefits and credits and do not preclude an individual from being considered a "parent" for the purposes of the Canada Workers Benefit;
  • repealing the use of taxable income as a factor in determining a Canadian-controlled private corporation's annual expenditure limit for the purpose of the enhanced scientific research and experimental development tax credit;
  • providing support for Canadian journalism;
  • introducing the Canada Training Credit;
  • amending the Income Tax Act to reflect the current regulations for accessing cannabis for medical purposes;
  • eliminating the requirement that sales be to a farming or fishing cooperative corporation in order to be excluded from specified corporate income for the purposes of the small business deduction;
  • extending the mineral exploration tax credit for an additional five years;
  • ensuring that business income of a communal organization retains its character when it is allocated to members of the communal organization for tax purposes;
  • increasing the withdrawal limit under the Home Buyers' Plan and amending how it applies on the breakdown of a marriage or common-law partnership;
  • extending joint and several liability for tax owing on income from carrying on business in a TFSA to the TFSA's holder and limiting the TFSA issuer's liability for such tax;
  • supporting employees who must reimburse a salary overpayment to their employer due to a system, administrative or clerical error;
  • expanding tax support for electric vehicle charging stations and electrical energy storage equipment;
  • allowing joint projects of producers from Canada and Belgium to qualify for the Canadian film or video production tax credit; and
  • ensuring appropriate pension adjustment calculations in 2019 and subsequent tax years for registered pension plans that reference the enhanced Canada Pension Plan.

Part 2 of the legislation implements certain goods and services tax/harmonized sales tax (GST/HST) measures:

  • to provide GST/HST relief in the health care sector by relieving the GST/HST on supplies and importations of human ova and importations of in vitro embryos, by adding licenced podiatrists and chiropodists to the list of practitioners on whose order supplies of foot care devices are zero-rated and by exempting from the GST/HST certain health care services rendered by a multidisciplinary team of licenced health care professionals; and
  • by introducing amendments to ensure that the GST/HST treatment of expenses incurred in respect of zero-emission passenger vehicles parallels the income tax treatment of those vehicles.

And lastly, part 3 of the legislation implements certain excise measures by changing the federal excise duty rates on cannabis products that are edible cannabis, cannabis extracts (including cannabis oils) and cannabis topicals to CAD 0.0025 per milligram of total tetrahydrocannabinol contained in the cannabis product. Various other measures are provided for as well.

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