Budget Implementation Act, 2022, No. 1 (S.C. 2022, c. 10)
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Assented to 2022-06-23
PART 1Amendments to the Income Tax Act and Other Legislation (continued)
C.R.C., c. 945Income Tax Regulations (continued)
40 The Regulations are amended by adding the following after section 3702:
Information Returns
3703 For the purpose of subsection 149.1(14) of the Act, the following is prescribed information for the public information return of a charity in a taxation year:
(a) in respect of each grantee organization that received total qualifying disbursements from the charity in excess of $5,000 in the taxation year, the name of the grantee organization;
(b) the purpose of each qualifying disbursement made to a grantee organization referred to in paragraph (a) in the taxation year; and
(c) the total amount disbursed by the charity to each grantee organization referred to in paragraph (a) in the taxation year.
41 (1) Section 5202 of the Regulations is amended by adding the following in alphabetical order:
- qualified zero-emission technology manufacturing activities
qualified zero-emission technology manufacturing activities means
(a) qualified activities that are
(i) performed in connection with the manufacturing or processing of
(A) solar energy conversion equipment, including solar thermal collectors, photovoltaic solar arrays and custom supporting structures or frames, but excluding passive solar heating equipment,
(B) wind energy conversion equipment, including wind turbine towers, nacelles and rotor blades,
(C) water energy conversion equipment, including hydroelectric, water current, tidal and wave energy conversion equipment,
(D) geothermal energy equipment,
(E) equipment for a ground source heat pump system,
(F) electrical energy storage equipment used for storage of renewable energy or for providing grid-scale storage or other ancillary services, including battery, compressed air and flywheel storage systems,
(G) equipment used to charge, or to dispense hydrogen to, property included in clause (J),
(H) equipment used for the production of hydrogen by electrolysis of water,
(I) equipment that is a component of property included in clauses (A) to (H), if such equipment is purpose-built or designed exclusively to form an integral part of that property,
(J) property that
(I) would be a zero-emission vehicle (as defined in subsection 248(1) of the Act if that definition were read without reference to its paragraphs (b) and (c)), or
(II) is described in subparagraph (a)(i) of Class 56 of Schedule II, and
(K) integral components of the powertrain of property included in clause (J), including batteries or fuel cells, and
(ii) not the manufacturing or processing of general purpose components or equipment which components or equipment are suitable for integration into property other than property described in subparagraph (i);
(b) qualified activities that are performed in connection with production in Canada of
(i) hydrogen by electrolysis of water,
(ii) gaseous biofuel (as defined in subsection 1104(13)),
(iii) liquid biofuel (as defined in subsection 1104(13)), and
(iv) solid biofuel (as defined in subsection 1104(13)); and
(c) the conversion of a vehicle, performed in Canada, into a property described in clause (a)(i)(J); (activités admissibles de fabrication de technologies à zéro émission)
- ZETM cost of capital
ZETM cost of capital, of a corporation for a taxation year, means the portion of the cost of capital of the corporation for the year that reflects the extent to which each property included in the calculation of the cost of capital was used directly in qualified zero-emission technology manufacturing activities of the corporation during the year; (coût en capital de FTZE)
- ZETM cost of labour
ZETM cost of labour, of a corporation for a taxation year, means the portion of the cost of labour of the corporation for that year that reflects the extent to which
(a) the salaries and wages included in the calculation of the cost of labour were paid or payable to persons for the portion of their time that they were directly engaged in qualified zero-emission technology manufacturing activities of the corporation during the year, and
(b) the other amounts included in the calculation of the cost of labour were paid or payable to persons for the performance of functions that would be directly related to qualified zero-emission technology manufacturing activities of the corporation during the year if those persons were employees of the corporation; (coût en main-d’œuvre de FTZE)
(2) Subsection (1) is deemed to have come into force on January 1, 2022.
42 (1) The portion of section 5204 of the Regulations before the definition cost of capital is replaced by the following:
5204 If a corporation is a member of a partnership at any time in a taxation year of the corporation, the following definitions apply:
(2) Section 5204 of the Regulations is amended by adding the following in alphabetical order:
- ZETM cost of capital
ZETM cost of capital, of the corporation for the year, means the portion of the cost of capital of the corporation for that year that reflects the extent to which each property included in the calculation of the cost of capital was used directly in qualified zero-emission technology manufacturing activities
(a) of the corporation during the year, or
(b) of the partnership during its fiscal period coinciding with or ending in the year, as the case may be; (coût en capital de FTZE)
- ZETM cost of labour
ZETM cost of labour, of the corporation for the year, means the portion of the cost of labour of the corporation for that year that reflects the extent to which
(a) the salaries and wages included in the calculation of the cost of labour were paid or payable to persons for the portion of their time that they were directly engaged in qualified zero-emission technology manufacturing activities
(i) of the corporation during the year, or
(ii) of the partnership during its fiscal period coinciding with or ending in the year, and
(b) the other amounts included in the calculation of the cost of labour were paid or payable to persons for the performance of functions that would be directly related to qualified zero-emission technology manufacturing activities of the corporation during the year, or of the partnership during its fiscal period coinciding with or ending in the year, if those persons were employees of the corporation or the partnership, as the case may be; (coût en main-d’œuvre de FTZE)
(3) Subsections (1) and (2) are deemed to have come into force on January 1, 2022.
43 Section 9300 of the Regulations is amended by adding the following after subsection (1):
(1.1) The references to “24 months” in paragraphs 9300(1)(a) and (b) are to be read as references to “36 months” in respect of film or video productions for which the Canadian labour expenditure of the corporation in respect of the production for the taxation years ending in 2020 or 2021 was greater than nil.
44 (1) Subparagraphs (c)(i) and (ii) of Class 43.1 in Schedule II to the Regulations are replaced by the following:
(i) part of a system that
(A) is used by the taxpayer, or by a lessee of the taxpayer, to generate electrical energy, or both electrical and heat energy, using only fuel that is eligible waste fuel, fossil fuel, producer gas, spent pulping liquor or any combination of those fuels,
(B) if the system is rated to generate more than three megawatts of electrical energy, meets the following condition on an annual basis:
A ≥ (2 × B + C)/(D + E/3412)
where
- A
- is 11,000 BTU per kilowatt-hour,
- B
- is the energy content of fossil fuel other than solution gas (expressed as the higher heating value of the fuel) consumed by the system in BTU,
- C
- is the energy content of the eligible waste fuel, producer gas and spent pulping liquor (expressed as the higher heating value of the fuel) consumed by the system in BTU,
- D
- is the gross electrical energy produced by the system in kilowatt-hours, and
- E
- is the net useful energy in the form of heat exported from the system to a thermal host in BTU, and
(C) uses fuel of which no more than 25% of the energy content (expressed as the higher heating value of the fuel) is from fossil fuel, as determined on an annual basis, or
(2) Clause (d)(i)(B) of Class 43.1 in Schedule II to the Regulations is replaced by the following:
(B) it is not a building, part of a building (other than a solar collector that is not a window and that is integrated into a building), energy equipment that backs up equipment described in subclause (A)(I) or (II) nor equipment that distributes heated or cooled air or water in a building,
(3) Subparagraph (d)(iv) of Class 43.1 in Schedule II to the Regulations is replaced by the following:
(iv) heat recovery equipment used by the taxpayer, or by a lessee of the taxpayer, primarily for the purpose of conserving energy, reducing the requirement to acquire energy or extracting heat for sale, by extracting for reuse thermal waste that is generated directly in an industrial process (other than an industrial process that generates or processes electrical energy), including such equipment that consists of heat exchange equipment, compressors used to upgrade low pressure steam, vapour or gas, waste heat boilers and other ancillary equipment such as control panels, fans, instruments or pumps, but not including property that is employed in re-using the recovered heat (such as property that is part of the internal heating or cooling system of a building or electrical generating equipment) or is a building,
(4) Subparagraph (d)(vii) of Class 43.1 in Schedule II to the Regulations is replaced by the following:
(vii) equipment used by the taxpayer, or by a lessee of the taxpayer, primarily for the purpose of generating electrical energy or heat energy, or both electrical and heat energy, solely from geothermal energy, including such equipment that consists of piping (including above or below ground piping and the cost of completing a well (including the wellhead and production string), or trenching, for the purpose of installing that piping), pumps, heat exchangers, steam separators, electrical generating equipment and ancillary equipment used to collect the geothermal heat, but not including buildings, distribution equipment, equipment described in subclause (i)(A)(II), property otherwise included in Class 10 and property that would be included in Class 17 if that Class were read without reference to its paragraph (a.1),
(5) Subparagraph (d)(ix) of Class 43.1 in Schedule II to the Regulations is replaced by the following:
(ix) equipment that
(A) is used by the taxpayer, or by a lessee of the taxpayer, for the sole purpose of generating heat energy, not using any fuel other than eligible waste fuel, fossil fuel, producer gas or a combination of those fuels,
(B) uses fuel of which no more than 25% of the energy content (expressed as the higher heating value of the fuel) is from fossil fuel, as determined on an annual basis,
(C) may include
(I) fuel handling equipment used to upgrade the combustible portion of the fuel,
(II) control, feedwater and condensate systems, and
(III) other ancillary equipment, and
(D) does not include
(I) equipment used for the purpose of producing heat energy to operate electrical generating equipment,
(II) buildings or other structures,
(III) heat rejection equipment (such as condensers and cooling water systems),
(IV) fuel storage facilities,
(V) other fuel handling equipment, and
(VI) property otherwise included in Class 10 or 17,
(6) Subparagraphs (d)(xi) and (xii) of Class 43.1 in Schedule II to the Regulations are replaced by the following:
(xi) equipment all or substantially all of the use of which by the taxpayer, or by a lessee of the taxpayer, is to produce liquid biofuel, including storage, materials handling and ash-handling equipment and equipment used to remove non-combustibles and contaminants from the fuels produced, but not including
(A) equipment used to produce spent pulping liquor,
(B) equipment used for the collection or transportation of specified waste material or carbon dioxide,
(C) equipment used for the transmission or distribution of liquid biofuel,
(D) property that would otherwise be included in Class 17,
(E) automotive vehicles, and
(F) buildings or other structures,
(xii) fixed location fuel cell equipment used by the taxpayer, or by a lessee of the taxpayer, that uses hydrogen generated only from ancillary electrolysis equipment (or, if the fuel cell is reversible, the fuel cell itself) using electricity all or substantially all of which is generated by using kinetic energy of flowing water or wave or tidal energy or by geothermal, photovoltaic, wind energy conversion, or hydro-electric equipment, of the taxpayer or the lessee, and equipment ancillary to the fuel cell equipment other than buildings or other structures, transmission equipment, distribution equipment, auxiliary electrical generating equipment and property otherwise included in Class 10 or 17,
(7) Subparagraph (d)(xiv) of Class 43.1 in Schedule II to the Regulations is replaced by the following:
(xiv) property that is used by the taxpayer, or by a lessee of the taxpayer, primarily for the purpose of generating electricity using kinetic energy of flowing water or wave or tidal energy, including support structures, control and conditioning equipment, submerged cables and transmission equipment, but not including buildings, distribution equipment, auxiliary electricity generating equipment, property otherwise included in Class 10 and property that would be included in Class 17 if that class were read without reference to its subparagraph (a.1)(i),
(8) Subparagraph (d)(xvi) of Class 43.1 in Schedule II to the Regulations is replaced by the following:
(xvi) equipment used by the taxpayer, or by a lessee of the taxpayer, primarily for the purpose of generating producer gas (other than producer gas that is to be converted into liquid fuels or chemicals), including related piping (including fans and compressors), air separation equipment, storage equipment, equipment used for drying or shredding feedstock, ash-handling equipment, equipment used to upgrade the producer gas into biomethane and equipment used to remove non-combustibles and contaminants from the producer gas, but not including, buildings or other structures, heat rejection equipment (such as condensers and cooling water systems), equipment used to convert producer gas into liquid fuels or chemicals, and property otherwise included in Class 10 or 17,
(9) Subparagraph (d)(xvi) of Class 43.1 in Schedule II to the Regulations is replaced by the following:
(xvi) equipment that
(A) is used by the taxpayer, or by a lessee of the taxpayer, primarily for the purpose of generating producer gas (other than producer gas that is to be converted into liquid fuels or chemicals),
(B) uses feedstock of which no more than 25% of the energy content (expressed as the higher heating value of the feedstock) is from fossil fuel, as determined on an annual basis,
(C) may include
(I) related piping (including fans and compressors),
(II) air separation equipment,
(III) storage equipment,
(IV) equipment used for drying or shredding feedstock,
(V) ash-handling equipment,
(VI) equipment used to upgrade the producer gas into biomethane, and
(VII) equipment used to remove non-combustibles and contaminants from the producer gas, and
(D) does not include
(I) buildings or other structures,
(II) heat rejection equipment (such as condensers and cooling water systems),
(III) equipment used to convert producer gas into liquid fuels or chemicals, and
(IV) property otherwise included in Class 10 or 17,
(10) Paragraph (d) of Class 43.1 in Schedule II to the Regulations is amended by striking out “or” at the end of subparagraph (xvii) and by adding the following after subparagraph (xviii):
(xix) a pumped hydroelectric energy storage installation all or substantially all of the use of which by the taxpayer, or by a lessee of the taxpayer, is to store electrical energy including reversing turbines, transmission equipment, dams, reservoirs and related structures, and that meets the condition in either subclause (d)(xviii)(B)(I) or (II) in this Class, but not including
(A) property used solely for backup electrical energy, and
(B) buildings,
(xx) equipment all or substantially all of the use of which by the taxpayer, or by a lessee of the taxpayer, is to produce solid biofuel, including storage, materials handling and ash-handling equipment, but not including
(A) equipment used to make wood chips, hog fuel or black liquor,
(B) property that would otherwise be included in Class 17,
(C) automotive vehicles, and
(D) buildings and other structures,
(xxi) equipment used by the taxpayer, or by a lessee of the taxpayer, to dispense hydrogen for use in automotive equipment powered by hydrogen, including vaporization, compression, cooling and storage equipment, but not including
(A) equipment used for the production or transmission of hydrogen,
(B) equipment used for the transmission or distribution of electricity,
(C) automotive vehicles,
(D) auxiliary electrical generating equipment, and
(E) buildings and other structures, or
(xxii) equipment all or substantially all of the use of which by the taxpayer, or by a lessee of the taxpayer, is to produce hydrogen through electrolysis of water, including electrolysers, rectifiers and other ancillary electrical equipment, water treatment and conditioning equipment and equipment used for hydrogen compression and storage, but not including
(A) equipment used for the transmission or distribution of hydrogen,
(B) equipment used for the transmission or distribution of electricity,
(C) automotive vehicles,
(D) auxiliary electrical generating equipment, and
(E) buildings and other structures, and
(11) Subsections (1), (5) and (9) apply in respect of property of a taxpayer that becomes available for use by the taxpayer after 2024.
(12) Subsections (2) to (4), (6) to (8) and (10) apply to property acquired after April 18, 2021 that has not been used or acquired for use before April 19, 2021.
- Date modified: