Selected Tax Measures in Federal Budget Enacted: Bill C-30 Receives Royal AssentTuesday, July 6, 2021
Bill C-30, Budget Implementation Act, 2021, No. 1 (“Bill C-30”), which includes certain tax measures that were proposed in the 2021 Federal Budget, the 2020 Fall Economic Statement, and the 2019 Federal Budget, received Royal Assent and was enacted into law on June 29, 2021.
Not surprisingly, Bill C-30 does not contain many of the tax proposals announced in the 2021 Federal Budget, such as enhanced limitations on interest deductibility, strengthening of the rules related to the avoidance of tax debts, rules to curtail the use of hybrid mismatch arrangements, or the expansion of the existing accelerated capital cost allowance regime to certain types of clean energy equipment.
Highlights of the tax measures enacted by Bill C-30 include:
- Limiting the stock option deduction for employees of non-Canadian controlled private corporations with consolidated group revenue of at least $500 million.
- Expanding the scope of the “foreign affiliate dumping” rules to apply to Canadian resident corporations that are controlled by non-resident individuals and trusts, or groups of non-residents not dealing at arm’s length.
- Providing flow-through share issuers with an additional year to incur qualifying expenditures in respect of subscription agreements entered into in 2019 and 2020.
- Denying deductions to mutual fund trusts for income or capital gains (beyond certain limits) allocated to redeeming unitholders.
- Preventing non-residents from avoiding dividend withholding tax on compensation payments made under cross-border securities lending arrangements in respect of shares of Canadian-resident corporations.
- Narrowing the exception to the rules related to “derivative forward agreements,” which are rules designed to prevent taxpayers from using derivative transactions to convert ordinary income into capital gains.
- Introducing the Canada Recovery Hiring Program refundable tax credit.
- Revising certain rules related to the Canada Emergency Wage Subsidy (CEWS) and Canada Emergency Rent Subsidy (CERS).
- Enhancing GST/HST measures related to non-resident vendors and e-commerce.
The full text of Bill C-30 can be found here.
This update is intended as a summary only and should not be regarded or relied upon as advice to any specific client or regarding any specific situation.