Minister of finance and national revenue François-Philippe Champagne has unveiled draft legislative proposals implementing previously announced tax measures.
The following measures were presented in the 2024 Fall Economic Statement:
- Expanding the definition of an eligible small business share and loosening specific conditions on the applicability of the rule on the capital gains rollover on business investment.
- Boosting the annual expenditure limit and taxable capital phase-out thresholds for the enhanced 35 percent scientific research and experimental development investment tax credit; extending refundable credit to small public corporations and restoring the availability of capital expenditures credit.
- Bolstering non-profit organizations’ reporting requirements for greater transparency in the sector.
The following measures were announced in Budget 2024:
- Incorporating a $10 million capital gains exemption for qualifying sales of businesses to worker co-ops. It also covers the implementation of technical changes to the current exemption for sales to employee ownership trusts.
- implementing the Organisation for Economic Co-operation and Development’s Crypto-Asset Reporting Framework in the country, with attendant Common Reporting Standard adjustments.
- Enhancing the audit powers of the Canada Revenue Agency to secure new information, such as through a new non-compliance penalty.
- Offering an exemption from the excessive interest and financing expenses limitation (EIFEL) rules for debt financing the acquisition, construction or conversion of purpose-built residential rental buildings.
A measure that was initially announced on August 12, 2024 also provides EIFEL rules exemption for debt funding a regulated energy utility business operating in Canada. A measure pitched in Budget 2022 implements the rest of the substantive Canadian-controlled private corporations measure.
Another measure incorporates routine technical amendments to align Canada’s tax laws with underlying policy objectives.
The government has opened the draft legislation to consultation. Canadians and stakeholders may provide input by email to comments to [email protected]. The consultation window closes on September 12.
The finance departments also published draft legislative proposals modifying the Goods and Services Tax/Harmonized Sales Tax rules in the Excise Tax Act. Input tax credits for redeemed coupons are only permitted for payments exclusively made in line with commercial activities. This is a response to a recent Federal Court of Appeal ruling.
The pitched change would take effect on August 16 and in respect of any input tax credits for payments made that were not already claimed in a return filed on or prior to August 15.