Canada: 2021 fall economic update bill now law

Corporate income tax measures

Corporate income tax measures

Bill C-8, which implements some of the measures announced in the 2021 Federal Fall Economic Update, received Royal Assent on 9 June 2022. This bill enacts the temporary small businesses air quality improvement tax credit and a new refundable tax credit for farming businesses as well as the Underused Housing Tax Act, among other measures.

Corporate income tax measures

  • Small businesses air quality improvement tax credit: Bill C-8 includes a temporary refundable 25% tax credit for eligible entities that have qualifying expenditures for air quality improvements incurred between 1 September 2021 and 31 December 2022. Eligible entities include unincorporated sole proprietors and Canadian-controlled private corporations with taxable capital employed in Canada of less than $15 million* in the immediately preceding tax year. This tax credit is available to a maximum of $10,000 in qualifying expenditures per qualifying location and provides a maximum of $50,000 across all qualifying locations (both of these expense limits are shared among affiliated businesses).
  • Refundable tax credit for farming businesses: The bill also includes a new refundable tax credit to return fuel charge proceeds from pollution pricing directly to farming businesses in backstop jurisdictions (i.e., Ontario, Manitoba, Saskatchewan, and Alberta), starting in 2021. This credit is available to taxpayers that are actively engaged in the management or day-to-day activities of earning income from farming (including farming businesses carried on through a partnership) and incur total farming expenses of $25,000 or more, which are all or partly attributable to these provinces.

Other measures

Among other measures, Bill C-8 also includes the Underused Housing Tax Act, which implements an annual tax of 1% on the value of vacant or underused Canadian residential real property directly or indirectly owned by non-resident non-Canadians. The new annual tax was originally announced in the 2021 federal budget and applies beginning in the 2022 calendar year.

The bill also includes measures to expand the refundable tax credit for eligible school supplies expenditures by teachers and early childhood educators, effective for the 2021 and subsequent tax years.

Read a June 2022 report prepared by the KPMG member firm in Canada

*$=Canadian dollar

 

 

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