Canada: Corporate income tax measures enacted, budget bill
Canada: Corporate income tax measures enacted
Corporate income tax measures as included in three federal bills are deemed to be substantially enacted.
In brief, the corporate tax measures:
- 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
- Provide that business income of communal organizations retains its character when allocated to its members
- 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 capital cost allowance of 100% for zero-emission vehicles (new Classes 54 and 55)
- Exclude from "specified corporate income" income from sales of farming products or fishing catches of farming and fishing businesses to arm's length purchaser corporations
- 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 (proposed in the 2016 federal budget)
The legislation also included a number of individual (personal) tax measures, including changes to the home buyer's plan.
There are measures to implement the multilateral instrument (MLI). Although the bill received Royal Assent on 21 June 2019, Canada's ratification instrument must still be deposited with the Organisation for Economic Cooperation and Development (OECD) before it enters into force. If Canada deposits its notice of ratification with the OECD on or before 30 September 2019, the MLI will begin to apply to some Canadian tax treaties for withholding tax purposes on 1 January 2020.
Finally, a bill to ratify the Canada-United States-Mexico Agreement (CUSMA that is also referred to by some as the USMCA) received a second reading and has been referred to the Standing Committee on International Trade. Although now adjourned for the summer, the government says it may recall Parliament if necessary to pass the CUSMA bill.
Read a June 2019 report prepared by the KPMG member firm in Canada
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor 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 on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.
