Bill C-97 received first reading on April 8, 2019. The bill contains selected measures announced in the 2019 budget as well as the accelerated CCA measures announced in the Fall Economic Update and other previously announced measures. Notably, it does not include international tax measures announced in the 2019 federal budget, nor does it include the measures related to character conversions or mutual funds. It also does not include any changes related to stock options. The bill also includes changes to the Canada Business Corporations Act announced in the federal budget to make the beneficial ownership information maintained by federally incorporated corporations more readily available to tax authorities and law enforcement.

Since Bill C-97 received first reading on April 8, 2019, the corporate income tax measures that it introduces are considered to be substantively enacted for purposes of IFRS and Accounting Standards for Private Enterprise (ASPE) as of this date (as Canada has a majority government). The measures will be considered enacted for U.S. GAAP purposes on the date the bill receives Royal Assent.

The bill includes tax measures that were first released in a Notice of Ways and Means Motion (NWMM) on April 4, 2019.

What's included in Bill C-97

Corporate income tax measures

Bill C-97 includes corporate income tax measures proposed in the 2019 budget to:

• Repeal the use of a CCPC's taxable income as a factor when determining its annual eligible expenditure limit under the enhanced SR&ED tax credit
• Introduce new tax measures supporting Canadian journalism including
  • Qualified donee status
  • A new refundable labour tax credit
  • A new temporary non-refundable tax credit
• Introduce a temporary enhanced first-year CCA of 100% for zero-emission vehicles (new Classes 54 and 55)
• Exclude income from sales of farming products or fishing catches of farming and fishing businesses to arm's-length purchaser corporations from "specified corporate income".

For more details, see TaxNewsFlash No. 2019-09, "2019 Federal Budget Highlights".

Bill C-97 also includes income tax measures proposed in the Fall Economic Update to:

• Introduce the Accelerated Investment Incentive
• Provide an immediate write-off of the full cost of machinery and equipment used in the manufacturing and processing of goods and the full cost of specified clean energy equipment
• Extend the 15% mineral exploration tax credit
• Ensure that business income of communal organizations retains its character when allocated to its members.

For more details on these measures, which were from the fall 2018 Economic Update, see TaxNewsFlash No. 2018-47, "Canada Announces Enhanced Capital Cost Allowances".

Bill C-97 also includes other previously announced measures to:

• Support employees who must reimburse a salary overpayment to their employers due to a system administrative or clerical error
• Expand tax support for electric vehicle charging stations and electrical energy storage equipment (2016 federal budget).

Personal tax measures

Personal tax measures from the 2019 federal budget in Bill C-97 include amendments to:

• Introduce the new refundable Canada Training Credit
• Increase the withdrawal limit to $35,000 (from $25,000) for the Home Buyer's Plan and other changes
• Remove the requirement that property must be of "national importance" to qualify for enhanced tax incentives for donations of cultural property
• Change the TFSA rules to extend the joint and several liability for tax owing on income from carrying on a business in a TFSA to the unit holder
• Clarify that "kinship providers" are eligible for the Canada Workers Benefit amount, provided other eligibility requirements are met.

For more details, see TaxNewsFlash No. 2019-09, "2019 Federal Budget Highlights".

Indirect tax measures

The bill does not include significant excise tax changes. It does include changes to the calculation of excise tax on cannabis.

Other measures

The bill amends the Canada Business Corporations Act so that federally incorporated corporations must provide a copy of the corporation's register of individuals with significant control, or disclose specified information that is in that register to tax authorities and law enforcement on request, subject to certain conditions.

What's not included?
Notably, the bill does not include measures from the 2019 federal budget related to:

• Character conversion transactions
• Mutual funds - allocation to redeemers methodology
• Foreign affiliate dumping amendments
• Cross-border share lending arrangements
• Transfer pricing (ordering of rules and reassessment period)
• Change in use rules for multi-unit residential properties
• Electronic delivery of requirements for information
• Changes to the rules for specified multi-employer pension plans
• Changes to pensionable service under an individual pension plan.

For more information, contact your KPMG adviser.

Information is current to April 09, 2019. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500