Canada's first budget implementation bill, which includes several tax measures from the 2021 federal budget, received first reading on April 30, 2021. In addition, Bill C-30 also includes previously announced tax measures, including measures from the 2020 Fall Economic Update and the 2019 federal budget. These measures were tabled in a Notice of Ways and Means Motion (NWMM) on April 28, 2021.

Notably, Bill C-30 does not include several significant tax measures announced in the 2021 federal budget that are subject to further consultation or comment, including new rules to restrict interest deductibility, address hybrid mismatches and introduce new mandatory disclosure rules, among other measures.

Note that the corporate income tax measures included in this bill will not be substantively enacted for purposes of IFRS or Accounting Standards for Private Enterprise (ASPE) until the bill passes third reading in the House of Commons (as Canada has a minority government).

What's included in Bill C-30

Corporate income tax measures

Bill C-30 includes corporate income tax measures included in the 2021 budget to:

  • Introduce the Canada Recovery Hiring Program refundable tax credit
  • Extend the Canada Emergency Wage Subsidy (CEWS), and Canada Emergency Rent Subsidy (CERS), including Lockdown Support, until September 25, 2021 (with certain revisions to eligibility requirements and subsidy levels)
  • Introduce a CEWS repayment obligation for certain public corporations if aggregate compensation for specified executives during the 2021 calendar year exceeds such compensation for the 2019 calendar year.

For more information, please see TaxNewsFlash-Canada 2021-23, "Budget Brings Hiring Subsidy & Extends COVID-19 Support" and TaxNewsFlash-Canada 2021-21, "2021 Federal Budget Highlights".

Bill C-30 also includes corporate income tax measures included in the 2020 Fall Economic Update to:

  • Extend the income tax deferral available for certain patronage dividends paid in shares by an agricultural cooperative to payments made before 2026.

For more information, please see TaxNewsFlash-Canada 2020-87, "Highlights of the 2020 Federal Fall Economic Update".

Bill C-30 also includes outstanding 2019 federal budget measures related to:

  • Character conversion transactions
  • Foreign affiliate dumping
  • Transfer pricing rules (ordering of rules and reassessment period)
  • Cross-border securities lending arrangements.

For more information, please see TaxNewsFlash-Canada 2019-09, "2019 Federal Budget Highlights".

Other previously announced changes included in Bill C-30 include measures to:

  • Provide flow-through share issuers with temporary additional time to incur eligible expenses
  • Apply the short taxation year rule to the accelerated investment incentive for resource expenditures among other technical changes
  • Broaden eligibility for the enhanced capital cost allowance to additional zero-emission vehicles
  • Amend support measures for Canadian journalism.

Personal tax measures

Personal tax measures included in the bill include 2021 federal budget measures to:

  • Provide an option to deduct repayments of emergency benefits in the year of receipt, and clarify the tax treatment of non-resident beneficiaries
  • Expand access to the Canada Workers benefit
  • Increase the Old Age Security pension payable to individuals 75 and over by 10%
  • Suspend or revoke a charity's registration in certain circumstances.

For more information, see TaxNewsFlash-Canada 2021-21, "2021 Federal Budget Highlights".

The bill also includes outstanding personal tax measures from the 2020 Fall Economic Update to:

  • Limit the employee stock option deduction for certain employees
  • Adjust certain time limits for a registered disability savings plan.

For more information, please see TaxNewsFlash-Canada 2020-87, "Highlights of the 2020 Federal Fall Economic Update".

Bill C-30 also includes outstanding 2019 federal budget measures related to:

  • Change-in use rules for multi-unit residential properties
  • Mutual funds — allocation to redeemer rules
  • Permitting additional types of annuities under registered plans
  • Contributions to specified multi-employer pension plans for older members
  • Pensionable service under an individual pension plan.

For more information, please see TaxNewsFlash-Canada 2019-09, "2019 Federal Budget Highlights".

The bill also includes other previously announced personal tax measures to:

  • Increase the basic personal amount for certain taxpayers
  • Provide relieving measures for employee-use of an employer provided automobile for the 2020 and 2021 taxation years
  • Amend the employee life and health trust rules
  • Temporarily adjust certain rules related to child care expense deduction and disability supports deduction for 2020 and 2021
  • Clarify the definition of shared-custody parent for purposes of the Canada Child Benefit.

Indirect tax measures

The bill includes several outstanding GST/HST measures from the 2021 federal budget and 2020 Fall Economic Update to:

  • Temporarily relieve supplies of certain face masks and face shields from GST/HST
  • Require certain distribution platform operators and non-resident vendors supplying services or digital products to certain businesses and consumers in Canada to register for GST/HST, and to collect and remit the tax on these taxable supplies
  • Require certain distribution platform operators and non-resident vendors to register under the normal GST/HST rules, and to collect and remit the GST/HST in respect of certain supplies of goods shipped from a fulfillment warehouse or another place in Canada
  • Apply the GST/HST on all supplies of short-term accommodation in Canada facilitated through a digital platform
  • Expand eligibility for the GST rebate for new housing.

For more information, see TaxNewsFlash-Canada 2021-21, "2021 Federal Budget Highlights" and TaxNewsFlash-Canada 2020-87, "Highlights of the 2020 Federal Fall Economic Update".

The bill also includes several previously announced GST/HST measures to:

  • Expand the definition of freight transportation services for purposes of the GST/HST
  • Extend the application of the drop shipment rules
  • Treat certain virtual currency as a financial instrument
  • Clarify the GST/HST holding corporation rules and expand those rules to holding partnerships and trusts.


What's not included ?

Notably, the bill does not include several significant 2021 federal budget measures. For example, Bill C-30 does not include measures that are or will be subject to consultation or comment, including those related to :

  • Interest deductibility limits
  • Hybrid mismatch arrangements
  • Mandatory disclosure rules
  • Digital services tax
  • Rate reduction for zero-emission technology manufacturers
  • Tax on unproductive use of Canadian housing by foreign non-resident owners
  • Tax incentive for carbon capture, utilization and storage.

The bill also does not include 2021 federal budget measures related to:

  • Immediate expensing of eligible property for Canadian-controlled private corporations
  • Changes to capital cost allowance for clean energy equipment (class 43.1 and 43.2)
  • Avoidance of tax debts
  • Luxury tax.

The bill also does not include other outstanding previously announced measures including:

  • Regulatory proposals providing relief for Deferred Salary Leave Plans and Registered Pension Plans during the COVID-19 pandemic, announced on July 2, 2020
  • Income tax measures to extend the maturation period of amateur athlete trusts maturing in 2019 to nine years (from eight years), announced on December 20, 2019
  • Income tax measures to implement enhanced reporting requirements for certain trusts to provide additional information on an annual basis, announced in the 2018 federal budget
  • Measures relating to the GST/HST joint venture election, confirmed in the 2016 federal budget.

For more information, contact your KPMG advisor.

Information is current to May 3, 2021. 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