RECOMMENDATION

Her Excellency the Governor General recommends to the House of Commons the appropriation of public revenue under the circumstances, in the manner and for the purposes set out in a measure entitled “An Act to implement certain provisions of the budget tabled in Parliament on April 16, 2024”.

Short Title

Marginal note:Short title

1 This Act may be cited as the Budget Implementation Act, 2024, No. 1.

PART 1Amendments to the Income Tax Act and Other Legislation

R.S., c. 1 (5th Supp.)Income Tax Act

• 2 (1) The description of B in subsection 6(2) of the French version of the Income Tax Act is replaced by the following:

  B

  le produit obtenu en multipliant 1 667 par le quotient obtenu en divisant le nombre total de jours ci-dessus par 30, si le quotient ainsi obtenu n’est pas un nombre entier et qu’il est supérieur à un, en l’arrondissant au nombre entier le plus proche ou, si ce quotient est équidistant de deux nombres entiers consécutifs, en l’arrondissant au plus petit de ces deux nombres;

• (2) The description of D in subsection 6(2) of the French version of the Act is replaced by the following:

  D

  le nombre obtenu en divisant par 30 le nombre total de jours ci-dessus où l’employeur est propriétaire de l’automobile, si le quotient ainsi obtenu n’est pas un nombre entier et qu’il est supérieur à un, en l’arrondissant au nombre entier le plus proche ou, si ce quotient est équidistant de deux nombres entiers consécutifs, en l’arrondissant au plus petit de ces deux nombres;

• 3 (1) Subsection 7(1.11) of the Act is replaced by the following:

  • Marginal note:Non-arm’s length relationship with trusts

    (1.11) For the purposes of this section, a mutual fund trust is deemed not to deal at arm’s length with a corporation only if

    • (a) the trust controls the corporation; or

    • (b) the corporation holds securities that give the corporation not less than 50% of the votes that could be cast at a meeting of the unitholders of the trust.

• (2) The portion of subsection 7(1.31) of the Act before paragraph (a) is replaced by the following:

  • Marginal note:Disposition of newly acquired security

    (1.31) Where a taxpayer acquires at a particular time a particular security under an agreement referred to in subsection (1) — or acquires the particular security as consideration for the disposition of rights under the agreement — and, on a day that is no later than 30 days after the day that includes the particular time, the taxpayer disposes of a security that is identical to the particular security, the particular security is deemed to be the security that is so disposed of if

• (3) Subsection (1) applies to rights exercised or disposed of after 2004 under agreements to sell or issue securities made after 2002.

• (4) Subsection (2) is deemed to have come into force on January 1, 2023.

• 4 (1) Subparagraph 8(1)(f)(vi) of the French version of the Act is replaced by the following:

  • (vi) des dépenses qui ne seraient pas, en vertu de l’alinéa 18(1)l), déductibles dans le calcul du revenu du contribuable pour l’année, si son emploi consistait en une entreprise exploitée par lui;

• (2) The portion of paragraph 8(1)(g) of the French version of the Act after subparagraph (ii) is replaced by the following:

  les sommes qu’il a ainsi déboursées au cours de l’année, dans la mesure où il n’a pas été remboursé et n’a pas le droit d’être remboursé à cet égard;

• (3) The portion of paragraph 8(1)(i) of the French version of the Act before subparagraph (i) is replaced by the following:

  • Marginal note:Cotisations et autres dépenses liées à l’exercice de fonctions

    i) dans la mesure où il n’a pas été remboursé et n’a pas le droit d’être remboursé à cet égard, les sommes payées par le contribuable au cours de l’année, ou les sommes payées pour son compte au cours de l’année si elles sont à inclure dans son revenu pour l’année, au titre :

• 5 (1) Paragraph 12(1)(t) of the Act is replaced by the following:

  • Marginal note:Investment tax credit

    (t) the amount deducted under subsection 127(5) or (6) or 127.48(3) in respect of a property acquired or an expenditure made in a preceding taxation year in computing the taxpayer’s tax payable for a preceding taxation year to the extent that it was not included in computing the taxpayer’s income for a preceding taxation year under this paragraph or is not included in an amount determined under paragraph 13(7.1)(e) or 37(1)(e), subparagraph 53(2)(c)(vi) or (viii.1) or (h)(ii) or for I in the definition undepreciated capital cost in subsection 13(21) or L in the definition cumulative Canadian exploration expense in subsection 66.1(6);

• (2) Paragraph 12(1)(t) of the Act, as enacted by subsection (1), is replaced by the following:

  • Marginal note:Investment tax credit

    (t) the amount deducted under subsection 127(5) or (6), 127.48(3) or 127.49(6) in respect of a property acquired or an expenditure made in a preceding taxation year in computing the taxpayer’s tax payable for a preceding taxation year to the extent that it was not included in computing the taxpayer’s income for a preceding taxation year under this paragraph or is not included in an amount determined under paragraph 13(7.1)(e) or 37(1)(e), subparagraph 53(2)(c)(vi), (viii.1) or (viii.2) or (h)(ii) or for I in the definition undepreciated capital cost in subsection 13(21) or L in the definition cumulative Canadian exploration expense in subsection 66.1(6);

• (3) Paragraph 12(1)‍(x) of the Act is amended by striking out “and” at the end of subparagraph (vii), by adding “and” at the end of subparagraph (viii) and by adding the following after subparagraph (viii):

  • (ix) was not received by the taxpayer as an excluded loan;

• (4) Subsection 12(11) of the Act is amended by adding the following in alphabetical order:

  excluded loan

  excluded loan means a loan, other than a forgivable loan, evidenced in writing

  • (a) that is from a payer that is

    • (i) a government, municipality or other public authority in Canada, or

    • (ii) a person resident in Canada or Canadian partnership, if it is reasonable to conclude that the payer would not have made the loan but for the direct or indirect receipt by the payer of amounts from a government, municipality or other public authority in Canada;

  • (b) for which, at the time the loan was made, bona fide arrangements were made for repayment of the loan within a reasonable time; and

  • (c) the funds from which were used for the purpose of earning income from a business or property. (prêt exclu)

• (5) Subsection (1) is deemed to have come into force immediately after the expiration of March 27, 2023.

• (6) Subsection (2) is deemed to have come into force on January 1, 2024.

• (7) Subsections (3) and (4) are deemed to have come into force on January 1, 2020, and apply to loans made after December 31, 2019.

• 6 (1) Section 13 of the Act is amended by adding the following after subsection (4):

  • Marginal note:COVID — time not counted

    (4.01) For the purposes of subparagraph (4)(c)(ii), the period beginning on March 15, 2020 and ending on March 12, 2022 is not to be counted.

• (2) The portion of subsection 13(7.1) of the Act before paragraph (a) is replaced by the following:

  • Marginal note:Deemed capital cost of certain property

    (7.1) For the purposes of this Act, where section 80 applied to reduce the capital cost to a taxpayer of a depreciable property or a taxpayer deducted an amount under subsection 127(5) or (6) or 127.48(3) in respect of a depreciable property or received or is entitled to receive assistance from a government, municipality or other public authority in respect of, or for the acquisition of, depreciable property, whether as a grant, subsidy, forgivable loan, deduction from tax, investment allowance or as any other form of assistance other than

• (3) The portion of subsection 13(7.1) of the Act before paragraph (a), as enacted by subsection (2), is replaced by the following:

  • Marginal note:Deemed capital cost of certain property

    (7.1) For the purposes of this Act, where section 80 applied to reduce the capital cost to a taxpayer of a depreciable property or a taxpayer deducted an amount under subsection 127(5) or (6), 127.48(3) or 127.49(6) in respect of a depreciable property or received or is entitled to receive assistance from a government, municipality or other public authority in respect of, or for the acquisition of, depreciable property, whether as a grant, subsidy, forgivable loan, deduction from tax, investment allowance or as any other form of assistance other than

• (4) Subsection 13(7.1) of the Act is amended by striking out “or” at the end of paragraph (b), by adding “or” at the end of paragraph (b.1) and by adding the following after paragraph (b.1):

  • (b.2) an amount received as an excluded loan as defined in subsection 12(11),

• (5) Paragraph 13(7.1)(e) of the Act is replaced by the following:

  • (e) where the property was acquired in a taxation year ending before the particular time, all amounts deducted under subsection 127(5) or (6) or 127.48(3) by the taxpayer for a taxation year ending before the particular time,

• (6) Paragraph 13(7.1)(e) of the Act, as enacted by subsection (5), is replaced by the following:

  • (e) where the property was acquired in a taxation year ending before the particular time, all amounts deducted under subsection 127(5) or (6), 127.48(3) or 127.49(6) by the taxpayer for a taxation year ending before the particular time,

• (7) The description of I in the definition undepreciated capital cost in subsection 13(21) of the Act is replaced by the following:

  I

  is the total of all amounts deducted under subsection 127(5) or (6) or 127.48(3), in respect of a depreciable property of the class of the taxpayer, in computing the taxpayer’s tax payable for a taxation year ending before that time and subsequent to the disposition of that property by the taxpayer,

• (8) The description of I in the definition undepreciated capital cost in subsection 13(21) of the Act, as enacted by subsection (7), is replaced by the following:

  I

  is the total of all amounts deducted under subsection 127(5) or (6), 127.48(3) or 127.49(6), in respect of a depreciable property of the class of the taxpayer, in computing the taxpayer’s tax payable for a taxation year ending before that time and subsequent to the disposition of that property by the taxpayer,

• (9) The portion of paragraph 13(24)(a) of the Act before subparagraph (i) is replaced by the following:

  • (a) subject to paragraph (b), for the purposes of the description of A in the definition undepreciated capital cost in subsection (21) and of sections 127, 127.1 and 127.48, the property is deemed

• (10) The portion of paragraph 13(24)(a) of the Act before subparagraph (i), as enacted by subsection (9), is replaced by the following:

  • (a) subject to paragraph (b), for the purposes of the description of A in the definition undepreciated capital cost in subsection (21) and of sections 127, 127.1, 127.48 and 127.49, the property is deemed

• (11) Subsection (1) is deemed to have come into force on March 12, 2020.

• (12) Subsections (2), (5), (7) and (9) are deemed to have come into force immediately after the expiration of March 27, 2023.

• (13) Subsection (4) is deemed to have come into force on January 1, 2020, and applies to loans made after December 31, 2019.

• (14) Subsections (3), (6), (8) and (10) are deemed to have come into force on January 1, 2024.

7 Clause 39(1)(c)(iv)(C) of the Act is replaced by the following:

• 8 (1) Section 44 of the Act is amended by adding the following after subsection (1):

  • Marginal note:COVID — time not counted

    (1.01) For the purposes of paragraphs (1)(c) and (d), the period beginning on March 15, 2020 and ending on March 12, 2022 is not to be counted.

• (2) Subsection (1) is deemed to have come into force on March 12, 2020.

9 Subparagraph 50(1)(b)(ii) of the Act is replaced by the following:

• 10 (1) Subparagraph 53(1)(e)(xiii) of the Act is replaced by the following:

  • (xiii) any amount required by subsection 127(30) or section 127.48 to be added to the taxpayer’s tax otherwise payable under this Part for a taxation year that ended before that time in respect of the interest in the partnership;

• (2) Subparagraph 53(1)(e)(xiii) of the Act, as enacted by subsection (1), is replaced by the following:

  • (xiii) any amount required by subsection 127(30), section 127.48 or subsection 127.49(17) to be added to the taxpayer’s tax otherwise payable under this Part for a taxation year that ended before that time in respect of the interest in the partnership;

• (3) Paragraph 53(2)(c) of the Act is amended by adding the following after subparagraph (viii):

  • (viii.1) an amount equal to that portion of all amounts deemed deducted under subsection 127.48(3) in computing the tax otherwise payable by the taxpayer under this Part for the taxpayer’s taxation years ending before that time that may reasonably be attributed to amounts added in computing the clean hydrogen tax credit (as defined in subsection 127.48(1)) of the taxpayer under subsection 127.48(12),

• (4) Paragraph 53(2)(c) of the Act, as modified by subsection (3), is amended by adding the following after subparagraph (viii.1):

  • (viii.2) an amount equal to that portion of all amounts deemed deducted under subsection 127.49(6) in computing the tax otherwise payable by the taxpayer under this Part for the taxpayer’s taxation years ending before that time that may reasonably be attributed to amounts added in computing the CTM investment tax credit (as defined in subsection 127.49(1)) of the taxpayer under subsection 127.49(8),

• (5) Subsections (1) and (3) are deemed to have come into force immediately after the expiration of March 27, 2023.

• (6) Subsections (2) and (4) are deemed to have come into force on January 1, 2024.

• 11 (1) Paragraph (b) of the description of B of the definition exemption threshold in section 54 of the English version of the Act is replaced by the following:

  • (b) the exemption threshold of the taxpayer in respect of the flow-through share class of property immediately before that earlier time;

• (2) The portion of paragraph (b) of the definition fresh-start date in section 54 of the English version of the Act before subparagraph (i) is replaced by the following:

  • (b) in the case of any other property that is included in the flow-through share class of property, the day that is the later of

12 Subparagraph 56(1)(a)(iv) of the Act is replaced by the following:

• 13 (1) Subparagraph 60(j)(iv) of the Act is amended by striking out “or” at the end of clause (A), by adding “or” at the end of clause (B) and by adding the following after clause (B):

  • (C) to or under a registered retirement income fund under which the taxpayer is the annuitant, as defined in subsection 146.3(1), other than the portion thereof designated for a taxation year for the purposes of paragraph (l),

• (2) The portion of paragraph 60(n) of the Act before subparagraph (i) is replaced by the following:

  • Marginal note:Repayment of pension or benefits

    (n) any amount paid by the taxpayer in the year as a repayment (otherwise than because of Part VII of the Employment Insurance Act or section 8 of the Canada Recovery Benefits Act) of any of the following amounts to the extent that the amount was included in computing the taxpayer’s income, and not deducted in computing the taxpayer’s taxable income, for the year or for a preceding taxation year, namely,

• (3) Section 60 of the Act is amended by adding the following after paragraph (n.1):

  • Marginal note:Amounts repaid in subsequent years

    (n.2) any amount paid by the taxpayer in a year (in this paragraph referred to as the “subsequent year”) that is after the year as a repayment of an amount that was included in computing the taxpayer’s income for the year under any of subparagraphs 56(1)(a)(i), (ii), (iv), (vi) or (vii) or paragraph 56(1)(r), to the extent that the amount paid

    • (i) exceeds the taxpayer’s taxable income for the subsequent year (determined without reference to paragraphs (n), (n.1) and (v.1)), and

    • (ii) is not deducted in computing the taxpayer’s taxable income for any other taxation year;

• (4) Paragraph 60(r) of the Act is repealed.

• (5) Paragraph 60(v.1) of the Act is replaced by the following:

  • Marginal note:EI benefit repayment

    (v.1) any benefit repayment payable by the taxpayer under Part VII of the Employment Insurance Act on or before April 30 of the following year, to the extent that the amount was not deductible in computing the taxpayer’s income for any preceding taxation year;

• (6) Subsection (1) is deemed to have come into force on August 4, 2023.

• (7) Subsection (3) applies to the 2019 and subsequent taxation years.

• 14 (1) Paragraph 66(12.73)(e) of the Act is replaced by the following:

  • (e) if a corporation fails to file the statement within the time required or fails in the statement filed to apply the excess fully to reduce one or more purported renunciations, the Minister may at any time reduce the total amount purported to be renounced by the corporation to one or more persons by the amount of the unapplied excess in which case, except for the purpose of Part XII.6, the amount purported to have been so renounced to a person is deemed, after that time, always to have been reduced by the portion of the unapplied excess allocated by the Minister in respect of that person.

• (2) Subsection (1) is deemed to have come into force on August 4, 2023.

• 15 (1) Subclause 66.8(1)(a)(ii)(B)(I) of the Act is replaced by the following:

  • (I) the total of all amounts required by subsections 127(8) and 127.48(12) in respect of the partnership to be added in computing the investment tax credit or the clean hydrogen tax credit (as defined in subsection 127.48(1)) of the taxpayer in respect of the fiscal period, and

• (2) Subclause 66.8(1)(a)(ii)(B)(I) of the Act, as enacted by subsection (1), is replaced by the following:

  • (I) the total of all amounts required by subsections 127(8), 127.48(12) and 127.49(8) in respect of the partnership to be added in computing the investment tax credit, the clean hydrogen tax credit (as defined in subsection 127.48(1)) or the CTM investment tax credit (as defined in subsection 127.49(1)) of the taxpayer in respect of the fiscal period, and

• (3) Subsection (1) is deemed to have come into force immediately after the expiration of March 27, 2023.

• (4) Subsection (2) is deemed to have come into force on January 1, 2024.

• 16 (1) The Act is amended by adding the following after section 67.6:

  Marginal note:Definitions

  • 67.7 (1) The following definitions apply in this section.

    non-compliant amount

    non-compliant amount, for a taxation year, means the amount determined by the formula

    A × B ÷ C

    where

    A

    is the total of all amounts that would, if subsection (2) did not apply, be deductible in computing income in the taxation year in respect of the use of a residential property as a short-term rental in the taxation year;

    B

    is the number of days in the taxation year that the residential property was a non-compliant short-term rental; and

    C

    is the number of days in the taxation year that the residential property was a short-term rental. (montant non conforme)

    non-compliant short-term rental

    non-compliant short-term rental means, at any time, a short-term rental that is located in a province or municipality that, at that time,

    • (a) does not permit the operation of the short-term rental at the location of the short-term rental; or

    • (b) requires registration, a licence or a permit to operate the short-term rental, and the short-term rental does not comply with all applicable registration, licensing and permit requirements. (location à court terme non conforme)

    residential property

    residential property means all or any part of a house, apartment, condominium unit, cottage, mobile home, trailer, houseboat or other property, located in Canada, the use of which is permitted for residential purposes under applicable law. (bien résidentiel)

    short-term rental

    short-term rental means a residential property that is rented or offered for rent for a period of less than 90 consecutive days. (location à court terme)

  • Marginal note:Non-deductibility of expenses — short-term rental

    (2) Notwithstanding any other provision of this Act, no amount is deductible in computing income in respect of a short-term rental for a taxation year, to the extent the amount is a non-compliant amount for the taxation year.

  • Marginal note:Deemed compliance

    (3) For the purposes of subsection (1), a short-term rental of a person or partnership is deemed not to be a non-compliant short-term rental for the 2024 taxation year of the person or partnership if

    • (a) the short-term rental is located in a province or municipality that requires registration, a licence or a permit to operate as a short-term rental; and

    • (b) the short-term rental complies with all applicable registration, licensing and permit requirements by December 31, 2024.

  • Marginal note:Reassessments

    (4) Notwithstanding subsections 152(4) to (5), the Minister may make any assessments, reassessments and additional assessments of tax, interest and penalties and any determinations and redeterminations that are necessary to give effect to subsection (2) for any taxation year.

• (2) Subsection (1) applies to outlays made and expenses incurred after 2023.

• 17 (1) Subsection 81(1) of the Act is amended by adding the following after paragraph (c):

  • Marginal note:Ship of resident corporations

    (c.1) the income for the year of a corporation resident in Canada (if this Act were read without reference to subsection 250(4)) earned from international shipping, if that corporation satisfies the conditions set out in paragraphs 250(6)(a) and (b);

• (2) The portion of subparagraph 81(1)(g.3)(i) of the Act before clause (A) is replaced by the following:

  • (i) the taxpayer is a trust established under

• (3) Subparagraph 81(1)(g.3)(i) of the Act is amended by striking out “or” at the end of clause (D), by replacing “and” at the end of clause (E) with “or” and by adding the following after clause (E):

  • (F) the Settlement Agreement entered into by His Majesty in right of Canada, dated effective as of April 19, 2023, in respect of the class actions relating to the First Nations Child and Family Services, Jordan’s Principle and Trout Class, and

• (4) Subsection (1) applies to taxation years that begin on or after December 31, 2023.

• (5) Subsections (2) and (3) are deemed to have come into force on January 1, 2024.

• 18 (1) Subsection 87(2) of the Act is amended by adding the following after paragraph (qq):

  • Marginal note:Continuation of corporation

    (qq.1) for the purposes of section 127.48, the new corporation is deemed to be the same corporation as, and a continuation of, each predecessor corporation;

• (2) Paragraph 87(2)(qq.1) of the Act, as enacted by subsection (1), is replaced by the following:

  • Marginal note:Continuation of corporation

    (qq.1) for the purposes of sections 127.48 and 127.49, the new corporation is deemed to be the same corporation as, and a continuation of, each predecessor corporation;

• (3) Subsection (1) is deemed to have come into force immediately after the expiration of March 27, 2023.

• (4) Subsection (2) is deemed to have come into force on January 1, 2024.

• 19 (1) Subsection 88(1) of the Act is amended by adding the following after paragraph (e.3):

  • (e.31) for the purposes of section 127.48, at the end of any particular taxation year ending after the subsidiary was wound up, the parent is deemed to be the same corporation as, and a continuation of, the subsidiary;

• (2) Paragraph 88(1)(e.31) of the Act, as enacted by subsection (1), is replaced by the following:

  • (e.31) for the purposes of sections 127.48 and 127.49, at the end of any particular taxation year ending after the subsidiary was wound up, the parent is deemed to be the same corporation as, and a continuation of, the subsidiary;

• (3) Paragraph 88(2)(c) of the Act is replaced by the following:

  • (c) for the purpose of computing the income of the corporation for its taxation year that includes the particular time, paragraph 12(1)(t) shall be read as follows:

    • “(t) the amount deducted under subsection 127(5) or (6) or 127.48(3) in computing the taxpayer’s tax payable for the year or a preceding taxation year to the extent that it was not included under this paragraph in computing the taxpayer’s income for a preceding taxation year or is not included in an amount determined under paragraph 13(7.1)(e) or 37(1)(e) or subparagraph 53(2)(c)(vi) or (viii.1) or (h)(ii) or the amount determined for I in the definition undepreciated capital cost in subsection 13(21) or L in the definition cumulative Canadian exploration expense in subsection 66.1(6);”.

• (4) Paragraph 88(2)(c) of the Act, as enacted by subsection (3), is replaced by the following:

  • (c) for the purpose of computing the income of the corporation for its taxation year that includes the particular time, paragraph 12(1)(t) shall be read as follows:

    • “(t) the amount deducted under subsection 127(5) or (6), 127.48(3) or 127.49(6) in computing the taxpayer’s tax payable for the year or a preceding taxation year to the extent that it was not included under this paragraph in computing the taxpayer’s income for a preceding taxation year or is not included in an amount determined under paragraph 13(7.1)(e) or 37(1)(e) or subparagraph 53(2)(c)(vi), (viii.1) or (viii.2) or (h)(ii) or the amount determined for I in the definition undepreciated capital cost in subsection 13(21) or L in the definition cumulative Canadian exploration expense in subsection 66.1(6);”.

• (5) Subsections (1) and (3) are deemed to have come into force immediately after the expiration of March 27, 2023.

• (6) Subsections (2) and (4) are deemed to have come into force on January 1, 2024.

20 Section 89 of the Act is amended by adding the following after subsection (14.1):

• 21 (1) The portion of clause 95(2)(a)(ii)(D) of the Act before subclause (III) is replaced by the following:

  • (D) by another foreign affiliate (referred to in this clause as the “second affiliate”) of the taxpayer — in respect of which the taxpayer has a qualifying interest throughout the year — to the extent that the amounts are paid or payable by the second affiliate, in respect of any particular period in the year, under a legal obligation to pay interest in respect of

    • (I) borrowed money used for the purpose of earning income from property, or

    • (II) an amount payable for property acquired for the purpose of gaining or producing income from property

    where

• (2) Subsection (1) is deemed to have come into force on August 4, 2023.

• 22 (1) Subparagraph 96(2.1)(b)(ii) of the Act is replaced by the following:

  • (ii) the amount required by subsection 127(8) or 127.48(12) in respect of the partnership to be added in computing the investment tax credit or the clean hydrogen tax credit (as defined in subsection 127.48(1)) of the taxpayer for the taxation year,

• (2) Subparagraph 96(2.1)(b)(ii) of the Act, as enacted by subsection (1), is replaced by the following:

  • (ii) the amount required by subsection 127(8), 127.48(12) or 127.49(8) in respect of the partnership to be added in computing the investment tax credit, the clean hydrogen tax credit (as defined in subsection 127.48(1)) or the CTM investment tax credit (as defined in subsection 127.49(1)) of the taxpayer for the taxation year,

• (3) The portion of subsection 96(2.2) of the Act before paragraph (a) is replaced by the following:

  • Marginal note:At-risk amount

    (2.2) For the purposes of this section and sections 111, 127, 127.48 and 127.491, the at-risk amount of a taxpayer, in respect of a partnership of which the taxpayer is a limited partner, at any particular time is the amount, if any, by which the total of

• (4) The portion of subsection 96(2.2) of the Act before paragraph (a), as enacted by subsection (3), is replaced by the following:

  • Marginal note:At-risk amount

    (2.2) For the purposes of this section and sections 111, 127, 127.48, 127.49 and 127.491, the at-risk amount of a taxpayer, in respect of a partnership of which the taxpayer is a limited partner, at any particular time is the amount, if any, by which the total of

• (5) The portion of subsection 96(2.4) of the Act before paragraph (a) is replaced by the following:

  • Marginal note:Limited partner

    (2.4) For the purposes of this section and sections 111, 127, 127.48 and 127.491, a taxpayer who is a member of a partnership at a particular time is a limited partner of the partnership at that time if the member’s partnership interest is not an exempt interest (within the meaning assigned by subsection (2.5)) at that time and if, at that time or within three years after that time,

• (6) The portion of subsection 96(2.4) of the Act before paragraph (a), as enacted by subsection (5), is replaced by the following:

  • Marginal note:Limited partner

    (2.4) For the purposes of this section and sections 111, 127, 127.48, 127.49 and 127.491, a taxpayer who is a member of a partnership at a particular time is a limited partner of the partnership at that time if the member’s partnership interest is not an exempt interest (within the meaning assigned by subsection (2.5)) at that time and if, at that time or within three years after that time,

• (7) Subsections (1), (3) and (5) are deemed to have come into force immediately after the expiration of March 27, 2023.

• (8) Subsections (2), (4) and (6) are deemed to have come into force on January 1, 2024.

• 23 (1) Section 108 of the Act is amended by adding the following after subsection (2):

  • Marginal note:Interest rate hedging agreements

    (2.1) For the purposes of subparagraph (2)(b)(iv), if an amount included in computing the income of a trust is derived from, or from the disposition of, an agreement that can reasonably be considered to have been made by the trust to reduce its risk from fluctuations in interest rates in respect of debt incurred by the trust to acquire or refinance property described in subparagraph (2)(b)(iii), the amount is deemed to be derived from that property.

• (2) Subsection (1) applies to taxation years that end after 2021.

• 24 (1) Clause 111(1)(e)(ii)(A) of the Act is replaced by the following:

  • (A) the amount required by subsection 127(8) or 127.48(12) in respect of the partnership to be added in computing the investment tax credit or the clean hydrogen tax credit (as defined in subsection 127.48(1)) of the taxpayer for the taxation year,

• (2) Clause 111(1)(e)(ii)(A) of the Act, as enacted by subsection (1), is replaced by the following:

  • (A) the amount required by subsection 127(8), 127.48(12) or 127.49(8) in respect of the partnership to be added in computing the investment tax credit, the clean hydrogen tax credit (as defined in subsection 127.48(1)) or the CTM investment tax credit (as defined in subsection 127.49(1)) of the taxpayer for the taxation year,

• (3) Subsection (1) is deemed to have come into force immediately after the expiration of March 27, 2023.

• (4) Subsection (2) is deemed to have come into force on January 1, 2024.

• 25 (1) Paragraph 116(5)(a) of the French version of the Act is replaced by the following:

  • a) après enquête raisonnable, l’acheteur n’avait aucune raison de croire que la personne ne résidait pas au Canada;

• (2) Paragraph 116(5.01)(a) of the French version of the Act is replaced by the following:

  • a) après enquête raisonnable, l’acheteur en vient à la conclusion que la personne non-résidente est, aux termes d’un traité fiscal que le Canada a conclu avec un pays donné, un résident de ce pays;

• (3) The portion of paragraph 116(5.3)(a) of the French version of the Act before subparagraph (i) is replaced by the following:

  • a) le contribuable, sauf si le paragraphe (5.01) s’applique à l’acquisition ou si, après enquête raisonnable, le contribuable n’avait pas de raison de croire que la personne non-résidente n’était pas un résident du Canada, est tenu de payer, au titre de l’impôt prévu par la présente partie pour l’année pour le compte de la personne non-résidente, 50 % de l’excédent du montant visé au sous-alinéa (i) sur le montant visé au sous-alinéa (ii) :

• 26 (1) The portion of subsection 118.06(2) of the Act before paragraph (a) is replaced by the following:

  • Marginal note:Volunteer firefighter tax credit

    (2) For the purpose of computing the tax payable under this Part for a taxation year by an individual who performs eligible volunteer firefighting services in the year, there may be deducted the amount determined by multiplying $6,000 by the appropriate percentage for the taxation year if the individual

• (2) Subsection (1) applies to the 2024 and subsequent taxation years.

• 27 (1) The portion of subsection 118.07(2) of the Act before paragraph (a) is replaced by the following:

  • Marginal note:Search and rescue volunteer tax credit

    (2) For the purpose of computing the tax payable under this Part for a taxation year by an individual who performs eligible search and rescue volunteer services in the year, there may be deducted the amount determined by multiplying $6,000 by the appropriate percentage for the taxation year if the individual

• (2) Subsection (1) applies to the 2024 and subsequent taxation years.

• 28 (1) Paragraph 118.2(2)(v) of the Act is replaced by the following:

  • (v) to a fertility clinic, or donor bank, in Canada as a fee or other amount paid or payable, to obtain sperm, ova or embryos to enable the conception of a child by the individual, the individual’s spouse or common-law partner or a surrogate mother on behalf of the individual.

• (2) Subsection (1) is deemed to have come into force on January 1, 2022.

• 29 (1) Subparagraph 120.2(1)(b)(i) of the Act is replaced by the following:

  • (i) the amount that, but for this section, section 120 and subsection 120.4(2), would be the individual’s tax payable under this Part for the particular year if the individual were not entitled to any deduction under section 126

• (2) Paragraph 120.2(3)(b) of the Act is replaced by the following:

  • (b) the amount that, if this Act were read without reference to section 120, would be the individual’s tax payable under this Part for the year if the individual were not entitled to any deduction under section 126, and

• (3) Subsections (1) and (2) apply to taxation years that begin after December 31, 2023.

30 Paragraph (a) of the definition shared-custody parent in section 122.6 of the English version of the Act is replaced by the following:

• 31 (1) Section 122.62 of the Act is amended by adding the following after subsection (8):

  • Marginal note:Death of child — qualified dependant

    (9) For the purposes of this Subdivision (other than subsection (4)), a person is deemed to be a qualified dependant at the beginning of a month if

    • (a) the person died in any of the six preceding months;

    • (b) the person’s date of birth was not 18 years or more prior to the beginning of the month; and

    • (c) the person was a qualified dependant immediately prior to their death.

  • Marginal note:Death of child — eligible individual

    (10) For the purposes of this Subdivision (other than subsection (4)), a person is deemed to be an eligible individual in respect of a qualified dependant at the beginning of a month if

    • (a) that qualified dependant is a qualified dependant at the beginning of that month because of subsection (9); and

    • (b) the person was an eligible individual in respect of the qualified dependant immediately before the qualified dependant’s death.

  • Marginal note:Death of child

    (11) For the purposes of paragraphs (a) and (b) of the description of E in subsection 122.61(1), if a person is deemed to be a qualified dependant at the beginning of a month because of subsection (9), the person is deemed to be the age at the beginning of that month that the person would have been at the beginning of that month had the person not died.

  • Marginal note:Death of child — disability tax credit

    (12) For the purposes of paragraph (a) of the description of N in subsection 122.61(1), if a person died on or after July 1 of a particular taxation year and an amount could have been deducted in respect of that person under section 118.3 for that taxation year, an amount is deemed to be deductible under section 118.3 in respect of that person for the immediately following taxation year.

• (2) Subsection (1) applies in respect of the death of a person that occurs after 2024.

• 32 (1) Subsection 122.92(1) of the Act is amended by adding the following in alphabetical order:

  return of income

  return of income, in respect of an eligible individual for a taxation year, means the eligible individual’s return of income (other than a return of income under subsection 70(2) or 104(23), paragraph 128(2)(e) or subsection 150(4)) that is required to be filed for the taxation year or that would be required to be filed if the eligible individual had tax payable under this Part for the taxation year. (déclaration de revenu)

• (2) Subsection (1) is deemed to have come into force on January 1, 2022.

• 33 (1) The definition qualifying labour expenditure in subsection 125.6(1) of the Act is replaced by the following:

  qualifying labour expenditure

  qualifying labour expenditure of a taxpayer for a taxation year in respect of an eligible newsroom employee, for a taxation year

  • (a) that begins before 2023 and ends after 2022, means the lesser of

    • (i) the amount determined by the formula

      $85,000 × A ÷ 365

      where

      A

      is the lesser of 365 and the number of days in the taxation year that are after 2022 during which the taxpayer is a qualifying journalism organization, and

    • (ii) the amount determined by the formula

      A − B

      where

      A

      is the amount determined by the formula

      C × D ÷ E

      where

      C

      is the salary or wages payable by the taxpayer to the eligible newsroom employee in respect of the portion of the taxation year throughout which the taxpayer is a qualifying journalism organization,

      D

      is the number of days in the taxation year that are after 2022 during which the taxpayer is a qualifying journalism organization, and

      E

      is the number of days in the taxation year during which the taxpayer is a qualifying journalism organization, and

      B

      is the amount determined by the formula

      F × G ÷ H

      where

      F

      is the total of all amounts each of which is an amount of assistance that

      • (A) the taxpayer has received, is entitled to receive or can reasonably be expected to receive, in respect of amounts described in C, and

      • (B) has not been repaid before the end of the year pursuant to a legal obligation to do so,

      G

      is the number of days in the taxation year that are after 2022 during which the taxpayer is a qualifying journalism organization, and 

      H

      is the number of days in the taxation year during which the taxpayer is a qualifying journalism organization; and 

  • (b) that begins after 2022, means the lesser of

    • (i) the amount determined by the formula

      $85,000 × A ÷ 365

      where

      A

      is the lesser of 365 and the number of days in the taxation year during which the taxpayer is a qualifying journalism organization, and

    • (ii) the amount determined by the formula

      A − B

      where

      A

      is the salary or wages payable by the taxpayer to the eligible newsroom employee in respect of the portion of the taxation year throughout which the taxpayer is a qualifying journalism organization, and

      B

      is the total of all amounts each of which is an amount of assistance that

      • (A) the taxpayer has received, is entitled to receive or can reasonably be expected to receive, in respect of amounts described in A, and

      • (B) has not been repaid before the end of the year pursuant to a legal obligation to do so. (dépense de main-d’oeuvre admissible)

• (2) Subsection 125.6(1) of the Act is amended by adding the following in alphabetical order:

  low threshold qualifying labour expenditure

  low threshold qualifying labour expenditure of a taxpayer for a taxation year that begins before 2023 and ends after 2022, in respect of an eligible newsroom employee, means the lesser of

  • (a) the amount determined by the formula

    $55,000 × A ÷ 365

    where

    A

    is the lesser of 365 and the number of days in the taxation year that are before 2023 during which the taxpayer is a qualifying journalism organization, and

  • (b) the amount determined by the formula

    A − B

    where

    A

    is the amount determined by the formula

    C × D ÷ E

    where

    C

    is the salary or wages payable by the taxpayer to the eligible newsroom employee in respect of the portion of the taxation year throughout which the taxpayer is a qualifying journalism organization,

    D

    is the number of days in the taxation year that are before 2023 during which the taxpayer is a qualifying journalism organization, and

    E

    is the number of days in the taxation year during which the taxpayer is a qualifying journalism organization, and

    B

    is the amount determined by the formula

    F × G ÷ H

    where

    F

    is the total of all amounts each of which is an amount of assistance that

    • (i) the taxpayer has received, is entitled to receive or can reasonably be expected to receive, in respect of amounts described in C, and

    • (ii) has not been repaid before the end of the year pursuant to a legal obligation to do so,

    G

    is the number of days in the taxation year that are before 2023 during which the taxpayer is a qualifying journalism organization, and 

    H

    is the number of days in the taxation year during which the taxpayer is a qualifying journalism organization. (seuil inférieur de dépense de main-d’oeuvre admissible)

• (3) Subsections 125.6(2) and (2.1) of the Act are replaced by the following:

  • Marginal note:Tax credit

    (2) A taxpayer (other than a partnership) that is a qualifying journalism organization at any time in a taxation year and that files a prescribed form containing prescribed information with its return of income for the year is deemed to have, on its balance-due day for the year, paid on account of its tax payable under this Part for the year

    • (a) if the year begins before 2023 and ends after 2022, an amount determined by the formula

      0.25 × A + 0.35 × B − C

      where

      A

      is the total of all amounts each of which is a low threshold qualifying labour expenditure of the qualifying journalism organization for the year in respect of an eligible newsroom employee,

      B

      is the total of all amounts each of which is a qualifying labour expenditure of the qualifying journalism organization for the year in respect of an eligible newsroom employee, and

      C

      is the amount received by the taxpayer from the Aid to Publishers component of the Canada Periodical Fund in the year;

    • (b) if the year begins after 2022 and ends before 2027, an amount determined by the formula

      0.35 × A − B

      where

      A

      is the total of all amounts each of which is a qualifying labour expenditure of the qualifying journalism organization for the year in respect of an eligible newsroom employee, and

      B

      is the amount received by the taxpayer from the Aid to Publishers component of the Canada Periodical Fund in the year;

    • (c) if the year begins before 2027 and ends after 2026, an amount determined by the formula

      0.35 × A + 0.25 × B − C

      where

      A

      is the amount determined by the formula

      D × E ÷ F

      where

      D

      is the total of all amounts each of which is a qualifying labour expenditure of the qualifying journalism organization for the year in respect of an eligible newsroom employee,

      E

      is the number of days in the taxation year that are before 2027 during which the taxpayer is a qualifying journalism organization, and

      F

      is the number of days in the taxation year during which the taxpayer is a qualifying journalism organization,

      B

      is the amount determined by the formula

      G × H ÷ I

      where

      G

      is the total of all amounts each of which is a qualifying labour expenditure of the qualifying journalism organization for the year in respect of an eligible newsroom employee,

      H

      is the number of days in the taxation year that are after 2026 during which the taxpayer is a qualifying journalism organization, and

      I

      is the number of days in the taxation year during which the taxpayer is a qualifying journalism organization, and

      C

      is the amount received by the taxpayer from the Aid to Publishers component of the Canada Periodical Fund in the year; and

    • (d) if the year begins after 2026, an amount determined by the formula

      0.25 × A − B

      where

      A

      is the total of all amounts each of which is a qualifying labour expenditure of the qualifying journalism organization for the year in respect of an eligible newsroom employee, and

      B

      is the amount received by the taxpayer from the Aid to Publishers component of the Canada Periodical Fund in the year.

  • Marginal note:Partnership — tax credit

    (2.1) If a taxpayer (other than a partnership) is a member of a partnership (other than a specified member of the partnership) at the end of a fiscal period of the partnership that ends in a taxation year of the taxpayer, the partnership is a qualifying journalism organization at any time in that fiscal period and the partnership files an information return in prescribed form containing prescribed information for that fiscal period, then the taxpayer is deemed to have, on the taxpayer’s balance-due day for the taxation year, paid on account of the taxpayer’s tax payable under this Part for the taxation year

    • (a) if the fiscal period begins before 2023 and ends after 2022, an amount determined by the formula

      (0.25 × A + 0.35 × B − C) × D ÷ E

      where

      A

      is the total of all amounts each of which is a low threshold qualifying labour expenditure of the qualifying journalism organization for the fiscal period in respect of an eligible newsroom employee,

      B

      is the total of all amounts each of which is a qualifying labour expenditure of the qualifying journalism organization for the fiscal period in respect of an eligible newsroom employee,

      C

      is the amount received by the qualifying journalism organization from the Aid to Publishers component of the Canada Periodical Fund in the fiscal period,

      D

      is the specified proportion of the taxpayer for the fiscal period, and

      E

      is the total of all specified proportions of members of the partnership for the fiscal period, other than members that are partnerships or specified members of the partnership;

    • (b) if the fiscal period begins after 2022 and ends before 2027, an amount determined by the formula

      (0.35 × A − B) × C ÷ D

      where

      A

      is the total of all amounts each of which is a qualifying labour expenditure of the qualifying journalism organization for the fiscal period in respect of an eligible newsroom employee,

      B

      is the amount received by the qualifying journalism organization from the Aid to Publishers component of the Canada Periodical Fund in the fiscal period,

      C

      is the specified proportion of the taxpayer for the fiscal period, and

      D

      is the total of all specified proportions of members of the partnership for the fiscal period, other than members that are partnerships or specified members of the partnership;

    • (c) if the fiscal period begins before 2027 and ends after 2026, an amount determined by the formula

      (0.35 × A + 0.25 × B − C) × D ÷ E

      where

      A

      is the amount determined by the formula

      F × G ÷ H

      where

      F

      is the total of all amounts each of which is a qualifying labour expenditure of the qualifying journalism organization for the fiscal period in respect of an eligible newsroom employee,

      G

      is the number of days in the fiscal period that are before 2027 during which the partnership is a qualifying journalism organization, and

      H

      is the number of days in the fiscal period during which the partnership is a qualifying journalism organization,

      B

      is the amount determined by the formula

      I × J ÷ K

      where

      I

      is the total of all amounts each of which is a qualifying labour expenditure of the qualifying journalism organization for the fiscal period in respect of an eligible newsroom employee,

      J

      is the number of days in the fiscal period that are after 2026 during which the partnership is a qualifying journalism organization, and

      K

      is the number of days in the fiscal period during which the partnership is a qualifying journalism organization,

      C

      is the amount received by the qualifying journalism organization from the Aid to Publishers component of the Canada Periodical Fund in the fiscal period,

      D

      is the specified proportion of the taxpayer for the fiscal period, and

      E

      is the total of all specified proportions of members of the partnership for the fiscal period, other than members that are partnerships or specified members of the partnership; and

    • (d) if the fiscal period begins after 2026, an amount determined by the formula

      (0.25 × A − B) × C ÷ D

      where

      A

      is the total of all amounts each of which is a qualifying labour expenditure of the qualifying journalism organization for the fiscal period in respect of an eligible newsroom employee,

      B

      is the amount received by the qualifying journalism organization from the Aid to Publishers component of the Canada Periodical Fund in the fiscal period,

      C

      is the specified proportion of the taxpayer for the fiscal period, and

      D

      is the total of all specified proportions of members of the partnership for the fiscal period, other than members that are partnerships or specified members of the partnership.

• (4) Subsections (1) to (3) are deemed to have come into force on January 1, 2023.

• 34 (1) Paragraph (a) of the definition flow-through mining expenditure in subsection 127(9) of the Act is replaced by the following:

  • (a) that is a Canadian exploration expense incurred by a corporation after March 2024 and before 2026 (including, for greater certainty, an expense that is deemed by subsection 66(12.66) to be incurred before 2026) in conducting mining exploration activity from or above the surface of the earth for the purpose of determining the existence, location, extent or quality of a mineral resource described in paragraph (a) or (d) of the definition mineral resource in subsection 248(1),

• (2) Paragraphs (c) and (d) of the definition flow-through mining expenditure in subsection 127(9) of the Act are replaced by the following:

  • (c) an amount in respect of which is renounced in accordance with subsection 66(12.6) by the corporation to the taxpayer (or a partnership of which the taxpayer is a member) under an agreement described in that subsection and made after March 2024 and before April 2025,

  • (d) that is not an expense that was renounced under subsection 66(12.6) to the corporation (or a partnership of which the corporation is a member), unless that renunciation was under an agreement described in that subsection and made after March 2024 and before April 2025, and

• (3) The definition government assistance in subsection 127(9) of the Act is replaced by the following:

  government assistance

  government assistance means assistance from a government, municipality or other public authority whether as a grant, subsidy, forgivable loan, deduction from tax, investment allowance or as any other form of assistance, other than as an excluded loan (as defined in subsection 12(11)) or as a deduction under subsection (5) or (6); (aide gouvernementale)

• (4) The definition government assistance in subsection 127(9) of the Act, as enacted by subsection (3), is replaced by the following:

  government assistance

  government assistance means assistance from a government, municipality or other public authority whether as a grant, subsidy, forgivable loan, deduction from tax, investment allowance or as any other form of assistance, other than as an excluded loan (as defined in subsection 12(11)) or as a deduction under subsection (5) or (6) or a deemed payment on account of tax payable under subsection 127.48(2); (aide gouvernementale)

• (5) The definition government assistance in subsection 127(9) of the Act, as enacted by subsection (4), is replaced by the following:

  government assistance

  government assistance means assistance from a government, municipality or other public authority whether as a grant, subsidy, forgivable loan, deduction from tax, investment allowance or as any other form of assistance, other than as an excluded loan (as defined in subsection 12(11)) or as a deduction under subsection (5) or (6) or a deemed payment on account of tax payable under subsection 127.48(2) or 127.49(2); (aide gouvernementale)

• (6) Subsections (1) and (2) apply in respect of expenses renounced under a flow-through share agreement entered into after March 2024.

• (7) Subsection (3) is deemed to have come into force on January 1, 2020, and applies to loans made after December 31, 2019.

• (8) Subsection (4) is deemed to have come into force immediately after the expiration of March 27, 2023.

• (9) Subsection (5) is deemed to have come into force on January 1, 2024.

35 The Act is amended by adding the following after section 127.42:

• 36 (1) The heading before section 127.43 of the Act is repealed.

• (2) Subsection (1) is deemed to have come into force on January 1, 2022.

• 37 (1) The Act is amended by adding the following before Division E.1 of Part I:

  Marginal note:Definitions

  • 127.48 (1) The following definitions apply in this section.

    actual carbon intensity

    actual carbon intensity means the carbon intensity of hydrogen that is produced by a qualified clean hydrogen project of a taxpayer, based on the actual inputs to the production of hydrogen and actual emissions from the production of hydrogen by the project. (intensité carbonique réelle)

    average actual carbon intensity

    average actual carbon intensity means, for the compliance period of a clean hydrogen project, the number determined by the formula

    ((A × B) + (C × D) + (E × F) + (G × H) + (I × J)) ÷ K

    where

    A

    is the actual carbon intensity of the project for the first operating year of the compliance period;

    B

    is the quantity, in kilograms, of hydrogen produced by the project in the first operating year of the compliance period;

    C

    is the actual carbon intensity of the project for the second operating year of the compliance period;

    D

    is the quantity, in kilograms, of hydrogen produced by the project in the second operating year of the compliance period;

    E

    is the actual carbon intensity of the project for the third operating year of the compliance period;

    F

    is the quantity, in kilograms, of hydrogen produced by the project in the third operating year of the compliance period;

    G

    is the actual carbon intensity of the project for the fourth operating year of the compliance period;

    H

    is the quantity, in kilograms, of hydrogen produced by the project in the fourth operating year of the compliance period;

    I

    is the actual carbon intensity of the project for the fifth operating year of the compliance period;

    J

    is the quantity, in kilograms, of hydrogen produced by the project in the fifth operating year of the compliance period; and

    K

    is the total quantity, in kilograms, of hydrogen produced by the project during the compliance period. (intensité carbonique réelle moyenne)

    captured carbon

    captured carbon means captured carbon dioxide that

    • (a) would otherwise be released into the atmosphere; or

    • (b) is captured directly from the ambient air. (carbone capté)

    carbon dioxide equivalent

    carbon dioxide equivalent means the carbon dioxide emissions that would be required to produce a warming effect equivalent to the emissions of any specified greenhouse gas, as determined in accordance with the Clean Hydrogen Investment Tax Credit – Carbon Intensity Modelling Guidance Document published by the Government of Canada over an assessment period of 100 years. (équivalent en dioxyde de carbone)

    carbon intensity

    carbon intensity means the quantity in kilograms of carbon dioxide equivalent per kilogram of hydrogen produced. (intensité carbonique)

    CCUS process

    CCUS process means the process of carbon capture, utilization and storage that includes the

    • (a) capture of carbon dioxide

      • (i) that would otherwise be released into the atmosphere, or

      • (ii) directly from the ambient air; and

    • (b) storage or use of the captured carbon. (processus de CUSC)

    CCUS project

    CCUS project means a project that is intended to support a CCUS process by

    • (a) capturing carbon dioxide

      • (i) that would otherwise be released into the atmosphere, or

      • (ii) directly from the ambient air;

    • (b) transporting captured carbon; or

    • (c) storing or using captured carbon. (projet de CUSC)

    CFR carbon intensity

    CFR carbon intensity means carbon intensity as defined in subsection 1(1) of the Clean Fuel Regulations. (intensité carbonique selon le RCP)

    clean ammonia

    clean ammonia means ammonia produced from clean hydrogen. (ammoniac propre)

    clean ammonia equipment

    clean ammonia equipment means equipment that is used solely for the purpose of producing ammonia, including equipment for

    • (a) converting hydrogen into ammonia;

    • (b) heat recovery and conversion;

    • (c) nitrogen generation;

    • (d) feed storage (unless the feed is stored hydrogen) and feed compression; and

    • (e) on-site refrigeration, transportation and storage of ammonia. (matériel pour ammoniac propre)

    clean hydrogen

    clean hydrogen means hydrogen produced, whether solely or in conjunction with other gases, that has a carbon intensity of less than four. (hydrogène propre)

    clean hydrogen project

    clean hydrogen project of a taxpayer means a project involving

    • (a) the operation of eligible clean hydrogen property;

    • (b) the production of clean hydrogen; and

    • (c) if applicable, the production of clean ammonia that uses a feedstock of clean hydrogen produced by the project. (projet pour l’hydrogène propre)

    clean hydrogen project plan

    clean hydrogen project plan means a plan for a clean hydrogen project of a taxpayer that

    • (a) includes a front-end engineering design study (or an equivalent study as determined by the Minister of Natural Resources) for the project;

    • (b) sets out the expected sources of electricity to be consumed in connection with the project, including sources described in any eligible power purchase agreements;

    • (c) sets out the expected carbon intensity of the hydrogen to be produced by the project

      • (i) determined in accordance with subsection (6), and

      • (ii) supported by a report prepared by a qualified validation firm in respect of the project that includes attestations by the firm that

        • (A) the assumptions in the modelling of the expected carbon intensity are reasonable, and

        • (B) the expected carbon intensity has been determined in accordance with the Clean Hydrogen Investment Tax Credit – Carbon Intensity Modelling Guidance Document published by the Government of Canada;

    • (d) if the project is intended to produce clean ammonia, demonstrates

      • (i) that the project can reasonably be expected to have sufficient hydrogen production capacity to satisfy the needs of the taxpayer’s ammonia production facility, and

      • (ii) if the taxpayer’s hydrogen production facility and its ammonia production facility are not co-located, the feasibility of transporting hydrogen between the facilities;

    • (e) contains any information required in guidelines published by the Minister of Natural Resources, including the Clean Hydrogen Investment Tax Credit – Validation and Verification Guidance Document; and

    • (f) is filed by the taxpayer with the Minister of Natural Resources, in the form and manner determined by the Minister of Natural Resources. (plan de projet pour l’hydrogène propre)

    clean hydrogen tax credit

    clean hydrogen tax credit of a qualifying taxpayer for a taxation year means

    • (a) the total of all amounts each of which is the specified percentage of the capital cost to the taxpayer of an eligible clean hydrogen property that is acquired by the taxpayer in the year; and

    • (b) the total of all amounts required by subsection (12) to be added in computing the taxpayer’s clean hydrogen tax credit at the end of the year. (crédit d’impôt pour l’hydrogène propre)

    compliance period

    compliance period in respect of a clean hydrogen project of a taxpayer, means the period of time beginning on the first day of the compliance period of the project and ending on the last day of the fifth operating year of the project. (période de conformité)

    dual-use electricity and heat equipment

    dual-use electricity and heat equipment means equipment that is part of a clean hydrogen project (excluding electricity generation equipment that supports the project indirectly by way of an electrical utility grid), that supports the production of hydrogen from eligible hydrocarbons and that

    • (a) generates electrical energy, heat energy or a combination of electrical and heat energy, and more than 50% of either the electrical energy or heat energy that is expected to be produced over the first 20 years of the project’s operations, based on the most recent clean hydrogen project plan, is expected to support

      • (i) a CCUS project, unless the equipment uses fossil fuels and emits carbon dioxide that is not subject to capture by a CCUS process, or

      • (ii) a qualified clean hydrogen project, unless the equipment uses fossil fuels and emits carbon dioxide that is not subject to capture by a CCUS process; or

    • (b) is equipment that directly transmits electrical energy from equipment described in paragraph (a) to a qualified clean hydrogen project and more than 50% of the electrical energy to be transmitted by the equipment over the first 20 years of the project’s operations, based on the most recent clean hydrogen project plan, is expected to support the CCUS project or qualified clean hydrogen project. (matériel pour électricité et chaleur à double usage)

    dual-use hydrogen and ammonia equipment

    dual-use hydrogen and ammonia equipment means equipment that is part of a clean hydrogen project and that is used for the generation of oxygen or nitrogen to be used all or substantially all in hydrogen and ammonia production for the project. (matériel pour hydrogène et ammoniac à double usage)

    eligible clean hydrogen property

    eligible clean hydrogen property means property, other than excluded property, that

    • (a) is acquired by a qualifying taxpayer and becomes available for use in respect of a qualified clean hydrogen project of the taxpayer in Canada on or after March 28, 2023, determined without reference to subsection (5);

    • (b) has not been used, or acquired for use or lease, by any person or partnership for any purpose whatever before it was acquired by the taxpayer; and

    • (c) is property situated in Canada

      • (i) that is used all or substantially all to produce hydrogen through electrolysis of water, including electrolysers, rectifiers, purification equipment, water treatment and conditioning equipment and equipment used for hydrogen compression and storage,

      • (ii) that is used all or substantially all to produce hydrogen from eligible hydrocarbons, including pre-reformers, auto-thermal reformers, steam methane reformers, pre-heating equipment, syngas coolers, shift reactors, purification equipment, fired heaters, water treatment and conditioning equipment, equipment used in hydrogen compression and storage of hydrogen, oxygen production equipment and methanators,

      • (iii) that is

        • (A) clean ammonia equipment,

        • (B) dual-use electricity and heat equipment,

        • (C) dual-use hydrogen and ammonia equipment, or

        • (D) project support equipment,

      • (iv) that is physically and functionally integrated with equipment described in any of subparagraphs (i) to (iii) and that is ancillary equipment used solely to support the functioning of equipment described in any of subparagraphs (i) to (iii) within a hydrogen or ammonia production process as part of

        • (A) an electrical system,

        • (B) a feed supply system,

        • (C) a fuel supply system,

        • (D) a liquid delivery and distribution system,

        • (E) a cooling system,

        • (F) a process material storage and handling and distribution system,

        • (G) a process venting system,

        • (H) a process waste management system, or

        • (I) a utility air or nitrogen distribution system,

      • (v) that is equipment used for system safety and integrity, or as part of a control or monitoring system, solely to support equipment described in any of subparagraphs (i) to (iv), or

      • (vi) that is property used solely to convert another property that would not otherwise be described in subparagraphs (i) to (v) if the conversion causes the other property to satisfy the description in any of subparagraphs (i) to (v). (bien admissible pour l’hydrogène propre)

    eligible electricity generation source

    eligible electricity generation source means, at any time, an electricity generation source that is

    • (a) wind;

    • (b) solar;

    • (c) hydro;

    • (d) nuclear; or

    • (e) geothermal or tidal, if, at that time,

      • (i) a technology-specific input carbon intensity for the generation source is available in the Fuel LCA Model, and

      • (ii) guidance in respect of the generation source is included in the Clean Hydrogen Investment Tax Credit – Carbon Intensity Modelling Guidance Document published by the Government of Canada. (source admissible de production d’électricité)

    eligible hydrocarbon

    eligible hydrocarbon means, at any time,

    • (a) natural gas;

    • (b) a substance sourced all or substantially all from raw natural gas;

    • (c) an eligible renewable hydrocarbon; or

    • (d) a substance that is

      • (i) a by-product from processing one or more substances described in paragraph (a) or (b), and

      • (ii) included in the Clean Hydrogen Investment Tax Credit – Carbon Intensity Modelling Guidance Document published by the Government of Canada at that time. (hydrocarbure admissible)

    eligible pathway

    eligible pathway means the production of hydrogen

    • (a) from electrolysis of water; or

    • (b) from the reforming or partial oxidation of eligible hydrocarbons, with carbon dioxide captured using a CCUS process. (méthode admissible)

    eligible power purchase agreement

    eligible power purchase agreement means an agreement or other arrangement in writing that

    • (a) allows, or will allow, a taxpayer to purchase electricity from an eligible electricity generation source (including incremental nameplate capacity) that

      • (i) first commenced electricity generation on or after both

        • (A) November 3, 2022, and

        • (B) the earlier of the day that is

          • (I) 24 months before the taxpayer’s first clean hydrogen project plan is filed with the Minister of Natural Resources, and

          • (II) 36 months before the day on which hydrogen is first produced by the relevant clean hydrogen project of the taxpayer, and

      • (ii) is located in

        • (A) the same province as the clean hydrogen project and is connected to the electricity grid of that province,

        • (B) the exclusive economic zone of Canada and is directly connected to the grid of the province in which the project is located, or

        • (C) another province that has a provincial grid that is directly connected to the grid of the province in which the project is located, if the taxpayer has arranged for the necessary interprovincial transmission;

    • (b) grants, or will grant, the taxpayer the sole and exclusive right to the environmental attributes associated with the electricity; and

    • (c) is entered into by the taxpayer for the primary purpose of operating the taxpayer’s clean hydrogen project during all or any portion of the first 20 years of the project’s operations. (entente pour l’achat d’électricité admissible)

    eligible renewable hydrocarbon

    eligible renewable hydrocarbon, in respect of a taxpayer, means a substance

    • (a) that is produced from non-fossil carbon;

    • (b) in respect of which a CFR carbon intensity can be determined under the Clean Fuel Regulations;

    • (c) that is included in the Clean Hydrogen Investment Tax Credit – Carbon Intensity Modelling Guidance Document published by the Government of Canada at the time that the taxpayer files its most recent clean hydrogen project plan with the Minister of Natural Resources;

    • (d) that is sourced from a facility that first commenced production of the substance on or after both

      • (i) November 3, 2022, and

      • (ii) the earlier of the day that is

        • (A) 24 months before the taxpayer’s first clean hydrogen project plan is filed with the Minister of Natural Resources, and

        • (B) 36 months before the day on which hydrogen is first produced by the relevant clean hydrogen project of the taxpayer;

    • (e) that, if acquired by the taxpayer under an agreement, the agreement grants, or will grant, the taxpayer the sole and exclusive right to the environmental attributes associated with the substance; and

    • (f) that is acquired or produced by the taxpayer for the sole purpose of operating the clean hydrogen project during all or any portion of the first 20 years of the project’s operations. (hydrocarbure renouvelable admissible)

    excluded property

    excluded property means property that is 

    • (a) used solely

      • (i) to support a CCUS project, or

      • (ii) for using captured carbon in industrial production (including for enhanced oil recovery);

    • (b) equipment used for the off-site transmission, transportation or distribution of hydrogen or ammonia;

    • (c) equipment used to prepare hydrogen for transport, including liquefaction equipment and equipment used to compress hydrogen to levels suitable for transportation;

    • (d) an automotive vehicle or related refuelling or charging equipment;

    • (e) a building or other structure;

    • (f) construction equipment, furniture or office equipment; or

    • (g) equipment used for off-site storage. (bien exclu)

    expected carbon intensity

    expected carbon intensity means the carbon intensity of hydrogen that is expected to be produced by a particular clean hydrogen project of a taxpayer, as documented in the taxpayer’s clean hydrogen project plan in respect of the project. (intensité carbonique attendue)

    first day of the compliance period

    first day of the compliance period means, in respect of a clean hydrogen project of a taxpayer,

    • (a) unless paragraph (b) or (c) applies, the particular day that is 120 days after the day on which hydrogen is first produced by the project;

    • (b) if the taxpayer files an election in prescribed form and manner with the Minister with its return of income for the taxation year that includes the particular day referred to in paragraph (a), the day that is one year after the particular day; or

    • (c) if the taxpayer has filed an election under paragraph (b) and files a second election in prescribed form and manner with the Minister with its return of income for the taxation year that includes the day referred to in paragraph (b), the day that is two years after the particular day referred to in paragraph (a). (premier jour de la période de conformité)

    Fuel LCA Model

    Fuel LCA Model means the Government of Canada’s Fuel Life Cycle Assessment Model that is published by the Minister of the Environment. (modèle ACV des combustibles)

    government assistance

    government assistance has the same meaning as in subsection 127(9). (aide gouvernementale)

    ineligible use

    ineligible use means

    • (a) the emission of captured carbon into the atmosphere, other than

      • (i) for the purposes of system integrity or safety, or

      • (ii) incidental emission made in the ordinary course of operations;

    • (b) the storage or use of captured carbon for enhanced oil recovery; and

    • (c) any other storage or use that is not

      • (i) the storage of captured carbon in a geological formation located in a jurisdiction within Canada or the United States that has environmental laws and enforcement governing the permanent storage of captured carbon, or

      • (ii) the use of captured carbon in producing concrete in Canada or the United States using a process that mineralizes and permanently stores at least 60% of the captured carbon that is injected into the concrete. (utilisation non admissible)

    input carbon intensity

    input carbon intensity in relation to a fuel, energy source or material input, means the quantity in kilograms of carbon dioxide equivalent per unit of fuel, energy source or material input that is released over the life cycle of that fuel, energy source or material input. (intensité carbonique entrante)

    non-government assistance

    non-government assistance has the same meaning as in subsection 127(9). (aide non gouvernementale)

    non-hydrogen or ammonia use

    non-hydrogen or ammonia use means a use of a particular property at a particular time that would, if the property were acquired at that time, result in the property ceasing to be an eligible clean hydrogen property, determined without reference to paragraph (b) of that definition. (utilisation autre que pour l’hydrogène ou l’ammoniac)

    operating year

    operating year means each cumulative 365-day period, the first of which begins on the first day of the compliance period of a taxpayer’s clean hydrogen project, disregarding any period during which the project is not operating. (année d’exploitation)

    preliminary clean hydrogen work activity

    preliminary clean hydrogen work activity means an activity that is preliminary to the acquisition, construction, fabrication or installation by or on behalf of a taxpayer of eligible clean hydrogen property in respect of the taxpayer’s clean hydrogen project including, but not limited to, a preliminary activity that is

    • (a) obtaining permits or regulatory approvals;

    • (b) performing front-end design or engineering work, including front-end engineering design studies (or equivalent studies as determined by the Minister of Natural Resources) but excluding detailed design or engineering work in relation to eligible clean hydrogen property;

    • (c) conducting feasibility studies or pre-feasibility studies (or equivalent studies as determined by the Minister of Natural Resources);

    • (d) conducting environmental assessments; or

    • (e) clearing or excavating land. (travaux préliminaires pour l’hydrogène propre)

    project support equipment

    project support equipment means equipment that directly supports a qualified clean hydrogen project by

    • (a) transmitting electrical energy from on-site electrical generation equipment directly to the project;

    • (b) distributing electrical energy or heat energy; or

    • (c) delivering, collecting, recovering, treating or recirculating water, or a combination of those activities. (matériel de soutien du projet)

    qualified clean hydrogen project

    qualified clean hydrogen project means a clean hydrogen project of a taxpayer, as described in the taxpayer’s clean hydrogen project plan, where the Minister of Natural Resources has confirmed in writing that

    • (a) the hydrogen will be produced from an eligible pathway;

    • (b) the expected carbon intensity contained in the taxpayer’s most recent clean hydrogen project plan

      • (i) is determined in accordance with subsection (6), and

      • (ii) can reasonably be expected to be achieved based on the project design; and

    • (c) if the project is intended to produce clean ammonia, the taxpayer has demonstrated

      • (i) that the project can reasonably be expected to have sufficient hydrogen production capacity to satisfy the needs of the taxpayer’s ammonia production facility, and

      • (ii) if the taxpayer’s hydrogen production facility and its ammonia production facility are not co-located, the feasibility of transporting hydrogen between the facilities. (projet admissible pour l’hydrogène propre)

    qualified validation firm

    qualified validation firm means, in respect of a clean hydrogen project of a taxpayer, an engineer or engineering firm that

    • (a) is registered and in good standing with a professional association that has the authority or recognition by law of a jurisdiction in Canada to regulate the profession of engineering in

      • (i) the jurisdiction where the project is located, or

      • (ii) if there is no professional association in the jurisdiction described in subparagraph (i), a jurisdiction in Canada where a professional association regulates the profession of engineering;

    • (b) has appropriate insurance coverage;

    • (c) has expertise in modelling using the Fuel LCA Model and engineering expertise in production processes for hydrogen and, if applicable, ammonia;

    • (d) at all times, is independent of, deals at arm’s length with and is not an employee of the taxpayer; and

    • (e) meets the requirements described in guidelines published by the Minister of Natural Resources, including the Clean Hydrogen Investment Tax Credit – Validation and Verification Guidance Document. (firme admissible de validation)

    qualified verification firm

    qualified verification firm means, in respect of a clean hydrogen project of a taxpayer, an individual or firm that

    • (a) is either

      • (i) an engineer or an engineering firm that is registered and in good standing with a professional association that has the authority or recognition by law of a jurisdiction in Canada to regulate the profession of engineering in

        • (A) the jurisdiction where the project is located, or

        • (B) if there is no professional association in the jurisdiction described in clause (A), a jurisdiction in Canada where a professional association regulates the profession of engineering, or

      • (ii) a verification body accredited and in good standing under the Clean Fuel Regulations;

    • (b) has appropriate insurance coverage;

    • (c) has expertise in life-cycle analysis of greenhouse gas emissions;

    • (d) at all times, is independent of, deals at arm’s length with and is not an employee of the taxpayer;

    • (e) is not a qualified validation firm in respect of the project; and

    • (f) meets the requirements described in guidelines published by the Minister of Natural Resources, including the Clean Hydrogen Investment Tax Credit – Validation and Verification Guidance Document. (firme admissible de vérification)

    qualifying taxpayer

    qualifying taxpayer means a taxable Canadian corporation. (contribuable admissible)

    specified greenhouse gas

    specified greenhouse gas means

    • (a) carbon dioxide;

    • (b) methane;

    • (c) nitrous oxide;

    • (d) sulphur hexafluoride; and

    • (e) any other greenhouse gases listed in the Fuel LCA Model and included in the Clean Hydrogen Investment Tax Credit – Carbon Intensity Modelling Guidance Document published by the Government of Canada at the time that a taxpayer files its most recent clean hydrogen project plan with the Minister of Natural Resources. (gaz à effet de serre déterminé)

    specified percentage

    specified percentage means

    • (a) in respect of the capital cost of an eligible clean hydrogen property (other than equipment described in paragraph (b)) that is acquired by a qualifying taxpayer for use in a clean hydrogen project,

      • (i) if the expected carbon intensity of the hydrogen to be produced by the project is less than 0.75 and the property is acquired

        • (A) before 2034, 40%,

        • (B) in 2034, 20%, and

        • (C) after 2034, 0%,

      • (ii) if the expected carbon intensity of the hydrogen to be produced by the project is 0.75 or greater and less than two and the property is acquired

        • (A) before 2034, 25%,

        • (B) in 2034, 12.5%, and

        • (C) after 2034, 0%,

      • (iii) if the expected carbon intensity of the hydrogen to be produced by the project is two or greater and less than four and the property is acquired

        • (A) before 2034, 15%,

        • (B) in 2034, 7.5%, and

        • (C) after 2034, 0%, and

      • (iv) if the expected carbon intensity of the hydrogen to be produced by the project is four or greater, 0%; and

    • (b) in respect of the capital cost of eligible clean hydrogen property that is clean ammonia equipment or equipment described in any of subparagraphs (c)(iv) to (vi) of the definition eligible clean hydrogen property in this subsection that is used solely in connection with clean ammonia equipment acquired by a qualifying taxpayer for use in a clean hydrogen project,

      • (i) subject to subparagraph (ii), if the equipment is acquired

        • (A) before 2034, 15%,

        • (B) in 2034, 7.5%, and

        • (C) after 2034, 0%,

      • (ii) if the expected carbon intensity of the hydrogen to be produced by the project and used in the production of ammonia is four or greater, 0%. (pourcentage déterminé)

  • Marginal note:Clean hydrogen tax credit

    (2) If a qualifying taxpayer files with its return of income for a taxation year a prescribed form containing prescribed information, the taxpayer is deemed to have paid on its balance-due day for the year an amount on account of the taxpayer’s tax payable under this Part for the year equal to the taxpayer’s clean hydrogen tax credit for the year.

  • Marginal note:Deemed deduction

    (3) For the purposes of this section, paragraph 12(1)(t), subsection 13(7.1), variable I of the definition undepreciated capital cost in subsection 13(21), subsection 53(2) and sections 127.49 and 129, the amount deemed under subsection (2) to have been paid by a taxpayer for a taxation year is deemed to have been deducted from the taxpayer’s tax otherwise payable under this Part for the year.

  • Marginal note:Time limit for application

    (4) A payment on account of tax payable shall not be deemed to be paid under subsection (2) if the taxpayer does not file with the Minister the prescribed form containing prescribed information described in subsection (2) in respect of the amount on or before the later of December 31, 2025 and the day that is one year after the taxpayer’s filing-due date for the year and, if the prescribed form is filed after the taxpayer’s filing-due date for the year, no payment by the taxpayer is deemed to arise under that subsection until the prescribed form containing prescribed information has been filed with the Minister.

  • Marginal note:Time of acquisition

    (5) For the purpose of this section, eligible clean hydrogen property is deemed not to have been acquired before the property becomes available for use by the taxpayer, determined without reference to paragraphs 13(27)(c) and (28)(d).

  • Marginal note:Calculation of carbon intensity

    (6) For the purposes of calculating the carbon intensity of hydrogen produced and to be produced by a clean hydrogen project of a taxpayer,

    • (a) the most recent Fuel LCA Model at the time of filing by the taxpayer of the most recent related clean hydrogen project plan with the Minister of Natural Resources shall be used, unless, at the time of filing any compliance report under subsection (16), the taxpayer elects to use a subsequent version of the Fuel LCA Model in calculating the actual carbon intensity of the project;

    • (b) in applying the Fuel LCA Model, an assessment of emissions from the production of hydrogen by the project and upstream emissions from the production of inputs to the hydrogen-production process shall be taken into account;

    • (c) the quantity of hydrogen produced by the project is to be adjusted to take into account any hydrogen that is consumed in the production process;

    • (d) if the taxpayer produces hydrogen from eligible hydrocarbons, any captured carbon that is subject to an ineligible use is deemed not to be captured;

    • (e) if, in connection with the project, the taxpayer generates or purchases, or proposes to generate or purchase, electricity that is

      • (i) generated, or to be generated, by the taxpayer from

        • (A) an eligible electricity generation source, the contribution of the electricity to carbon intensity is to correspond with the input carbon intensity of the technology-specific electricity in the Fuel LCA Model,

        • (B) on-site generation equipment that converts hydrogen, heat recovered from the taxpayer’s hydrogen or ammonia production equipment or eligible hydrocarbons (with carbon dioxide captured using a CCUS process) into electricity that supports the production of hydrogen from eligible hydrocarbons, the contribution of the electricity to carbon intensity is to be modelled as part of the project,

        • (C) a generator used for startup or emergency backup operations, the contribution of the electricity to carbon intensity is to be modelled as part of the project, and

        • (D) a generation source other than as described in any of clauses (A) to (C), the carbon intensity of the project is deemed to be greater than 4.5,

      • (ii) purchased, or to be purchased, pursuant to an eligible power purchase agreement,

        • (A) the contribution of the electricity to carbon intensity is to correspond with the input carbon intensity of the technology-specific electricity in the Fuel LCA Model, and

        • (B) the contribution of the electricity to expected carbon intensity is to be calculated in proportion to the number of years for which the agreement will be in place during the first 20 years of the project’s operations, and

      • (iii) otherwise sourced, or to be sourced, from a provincial grid, the contribution to carbon intensity of the net positive quantity of the electricity (after subtracting any electricity purchased by the taxpayer under an eligible power purchase agreement or generated by the taxpayer in respect of the project that is, in either case, transmitted to the grid by the taxpayer) is to be based on the input carbon intensity of the provincial grid in the Fuel LCA Model;

    • (f) in calculating the quantity of electricity described in paragraph (e), if the sum of the quantities of electricity from sources described in subparagraphs (e)(i) and (ii) exceeds the total electricity consumed or to be consumed by the project, then the electricity consumed or to be consumed by the project is deemed to be generated

      • (i) first, from the source described in subparagraph (e)(i), and

      • (ii) second, from the source described in subparagraph (e)(ii) to the extent of any excess;

    • (g) if the project uses, or proposes to use, eligible hydrocarbons for the purpose of producing hydrogen,

      • (i) where the eligible hydrocarbon is an eligible renewable hydrocarbon in respect of the taxpayer,

        • (A) the contribution of that eligible renewable hydrocarbon to carbon intensity is to be based on the most recent CFR carbon intensity that is determined under the Clean Fuel Regulations, adjusted as necessary, and

        • (B) the contribution of that eligible renewable hydrocarbon to expected carbon intensity is to be calculated in proportion to the number of years for which that hydrocarbon will be used during the first 20 years of the project’s operations, and

      • (ii) in any other case, the input carbon intensity of the relevant eligible hydrocarbon is to be taken into account in applying the Fuel LCA Model;

    • (h) if the taxpayer disposes of any environmental attributes associated with any electricity described in subparagraph (e)(i) or (ii) or any eligible renewable hydrocarbon described in subparagraph (g)(i), the carbon intensity of the project is deemed to be greater than 4.5; and

    • (i) the Clean Hydrogen Investment Tax Credit – Carbon Intensity Modelling Guidance Document published by the Government of Canada at the time of filing by the taxpayer of the most recent related clean hydrogen project plan with the Minister of Natural Resources, is to apply conclusively with respect to the calculation of carbon intensity, except as otherwise provided in this section.

  • Marginal note:Changes to clean hydrogen project

    (7) Subsection (8) applies in respect of a qualified clean hydrogen project of a taxpayer if, before the first day of the compliance period of the project,

    • (a) the Minister of Natural Resources determines that there has been a material change to the project design and requests that the taxpayer file a revised project plan for the project;

    • (b) the taxpayer

      • (i) does not file the final detailed engineering designs with the Minister of Natural Resources in accordance with paragraph (9)(d),

      • (ii) changes the project’s eligible pathway, or

      • (iii) reasonably expects that there will be an increase (as compared to the most recent project plan for the project) of more than 0.5 kilograms of carbon dioxide equivalent per kilogram of hydrogen to be produced by the project;

    • (c) any eligible power purchase agreement referenced in the most recent clean hydrogen project plan of the taxpayer

      • (i) has not been finalized and executed so as to become legally binding, or

      • (ii) has been materially modified or terminated; or

    • (d) any environmental attributes associated with the agreement have been disposed of by the taxpayer.

  • Marginal note:Rules relating to revised project plan

    (8) If this subsection applies,

    • (a) the taxpayer shall file, within 180 days, a revised clean hydrogen project plan in respect of the project with the Minister of Natural Resources, in the form and manner determined by the Minister of Natural Resources;

    • (b) if the Minister of Natural Resources is satisfied that the project will meet the requirements in paragraphs (a) to (c) of the definition qualified clean hydrogen project,

      • (i) the Minister of Natural Resources shall confirm, with all due dispatch, the revised plan,

      • (ii) the taxpayer’s clean hydrogen tax credit shall be redetermined, as of the date of the filing of the revised plan, based on the expected carbon intensity set out in the revised plan, and

      • (iii) if the taxpayer previously deducted an amount in respect of a clean hydrogen tax credit, subsection (18) applies as if the compliance period ended on that date and the average actual carbon intensity of the project was equal to the expected carbon intensity set out in the revised plan;

    • (c) if the Minister of Natural Resources is not satisfied in accordance with paragraph (b) and does not issue a confirmation described in subparagraph (b)(i) within one year after the filing of the taxpayer’s revised plan, then, as of the expiry of that period,

      • (i) the project is deemed not to be a qualified clean hydrogen project,

      • (ii) the average actual carbon intensity of the project is deemed to be greater than 4.5, and

      • (iii) subsection (18) applies as if the compliance period of the project ended on the expiry date of that period; and

    • (d) if the taxpayer fails to file a revised clean hydrogen project plan in accordance with paragraph (a), then, as of the expiry of the 180-day period described in paragraph (a),

      • (i) subject to subparagraph (ii),

        • (A) the project is deemed not to be a qualified clean hydrogen project,

        • (B) the average actual carbon intensity of the project is deemed to be greater than 4.5, and

        • (C) subsection (18) applies as if the compliance period of the project ended on the expiry date of that period, and

      • (ii) once the taxpayer has filed the revised clean hydrogen project plan, subparagraph (i) is deemed never to have applied.

  • Marginal note:Clean hydrogen project determination and rules

    (9) For the purposes of this section,

    • (a) the Minister may, in consultation with the Minister of Natural Resources, determine that one or more clean hydrogen projects is one project or multiple projects

      • (i) at any time before the Minister of Natural Resources confirms the expected carbon intensity of the hydrogen to be produced by a clean hydrogen project, or

      • (ii) if a taxpayer files or is required to file a revised clean hydrogen project plan in accordance with subsection (8), at any time before the Minister of Natural Resources confirms the revised plan;

    • (b) any determination under paragraph (a) is deemed to result in the clean hydrogen project or clean hydrogen projects, as the case may be, being one project or multiple projects, as the case may be;

    • (c) for each project determined under paragraph (a), a taxpayer shall file a separate clean hydrogen project plan with the Minister of Natural Resources (in the form and manner determined by the Minister of Natural Resources) on or before the day that is 180 days after the determination is made;

    • (d) in respect of each clean hydrogen project, the taxpayer shall file final detailed engineering designs with the Minister of Natural Resources by the earlier of the day on which hydrogen is first produced by the project and the day that is 60 days after the final detailed engineering designs are prepared; and

    • (e) the Minister of Natural Resources may request from the taxpayer all documentation and information necessary for the Minister of Natural Resources to fulfill a responsibility under this section and may refuse to confirm the taxpayer’s clean hydrogen project plan or revised clean hydrogen project plan if such documentation or information is not provided by the taxpayer on or before the day that is 180 days after it was requested.

  • Marginal note:Capital cost of clean hydrogen property

    (10) For the purposes of this section, the capital cost of eligible clean hydrogen property to a taxpayer shall

    • (a) not include any amount in respect of a capital property

      • (i) for which an amount was previously deducted under this section by any person,

      • (ii) in respect of which a CTM investment tax credit (as defined in subsection 127.49(1)) was deducted by any person, or

      • (iii) that has, by virtue of section 21, been added to the cost of a property;

    • (b) be determined without reference to subsections 13(7.1) and (7.4);

    • (c) be reduced by the total of all amounts, each of which can reasonably be considered to be in respect of the property and is

      • (i) an amount of any government assistance or non-government assistance received by the taxpayer in or before the taxation year in which the property was acquired, or

      • (ii) an amount not described in subparagraph (i) that, in the taxation year, the taxpayer is entitled to or can reasonably be expected to receive and that would be government assistance or non-government assistance if it were received by the taxpayer in the year;

    • (d) be determined with reference to subsections 127(11.6) to (11.8) in respect of an expenditure or cost to a taxpayer except that

      • (i) the reference in subsection 127(11.6) to subsection 127(11.5) is to be read as a reference to section 127.48,

      • (ii) the reference in subsection 127(11.6) to subsection 127(26) is to be read as a reference to subsection 127.48(13), and

      • (iii) the term “qualified expenditure” is to be read as an expenditure eligible to be added to the capital cost of an eligible clean hydrogen property;

    • (e) not include any amount in respect of an expenditure incurred for a preliminary clean hydrogen work activity;

    • (f) if the property is dual-use electricity and heat equipment, project support equipment or equipment described in any of subparagraphs (c)(iv) to (vi) of the definition eligible clean hydrogen property in subsection (1), excluding equipment used all or substantially all to support a qualified clean hydrogen project, be equal to the proportion of the capital cost of the equipment that

      • (i) if the equipment is described in paragraph (a) of the definition dual-use electricity and heat equipment in subsection (1), the quantity of energy expected to be produced for use in the project over the first 20 years of the project’s operations is of the total quantity of energy expected to be produced by the equipment in that period (determined without regard to energy produced and consumed by the equipment in the process of producing energy), based on the project’s most recent clean hydrogen project plan,

      • (ii) if the equipment is described in paragraph (b) of the definition dual-use electricity and heat equipment in subsection (1) or paragraph (a) of the definition project support equipment in subsection (1), the quantity of electrical energy expected to be transmitted by the equipment for use in the project over the first 20 years of the project’s operations is of the total quantity of electrical energy expected to be transmitted by the equipment in that period (determined without regard to electrical energy consumed by the equipment in the process of transmission), based on the project’s most recent clean hydrogen project plan,

      • (iii) if the equipment is described in paragraph (b) of the definition project support equipment in subsection (1), the quantity of electrical or heat energy expected to be distributed by the equipment (or if it is equipment that expands the capacity of existing equipment, the electrical or heat energy expected to be distributed by the existing and new equipment) for use in the project over the first 20 years of the project’s operations is of the total quantity of electrical or heat energy expected to be distributed by the equipment (or the existing and new equipment) in that period (determined without regard to energy consumed by the equipment in the process of distribution), based on the project’s most recent clean hydrogen project plan,

      • (iv) if the equipment is described in paragraph (c) of the definition project support equipment in subsection (1), the mass of water expected to be supplied to the project over the first 20 years of the project’s operations is of the total mass of water expected to be processed by the equipment in that period, based on the project’s most recent clean hydrogen project plan, and

      • (v) if the equipment is described in any of subparagraphs (c)(iv) to (vi) of the definition eligible clean hydrogen property in subsection (1) and supports equipment described in any of subparagraphs (i) to (iv), is determined under that subparagraph; and

    • (g) after applying paragraph (f), if the property is dual-use hydrogen and ammonia equipment, dual-use electricity and heat equipment, project support equipment or equipment described in any of subparagraphs (c)(iv) to (vi) of the definition eligible clean hydrogen property in subsection (1) and that property is used in the production of hydrogen and ammonia, be allocated between two separate capital cost amounts, with each amount determined based on the percentage of the expected use of the equipment that is attributable to hydrogen production and ammonia production and

      • (i) the capital cost amount that is attributable to hydrogen production is deemed to be in respect of property described in paragraph (a) of the definition specified percentage in subsection (1), and

      • (ii) the capital cost amount that is attributable to ammonia production is deemed to be in respect of property described in paragraph (b) of the definition specified percentage in subsection (1).

  • Marginal note:Repayment of assistance

    (11) Where a taxpayer has, in a particular taxation year, repaid (or has not received and can no longer reasonably be expected to receive) an amount of government assistance or non-government assistance that was applied to reduce the capital cost of an eligible clean hydrogen property under paragraph (10)(c) for a preceding taxation year, the amount repaid (or no longer expected to be received) is to be added to the cost to the taxpayer of a property acquired in the particular year for the purpose of determining the taxpayer’s clean hydrogen tax credit for the year.

  • Marginal note:Partnerships

    (12) Subject to section 127.491, where, in a particular taxation year of a qualifying taxpayer who is a member of a partnership, an amount would be determined under subsection (2) in respect of the partnership, for its taxation year that ends in the particular year, if the partnership were a taxable Canadian corporation and its fiscal period were its taxation year, the portion of that amount that can reasonably be considered to be the taxpayer’s share thereof shall be added in computing the clean hydrogen tax credit of the taxpayer at the end of the particular year.

  • Marginal note:Unpaid amounts

    (13) For the purposes of this section, where any part of the capital cost of a taxpayer’s eligible clean hydrogen property is unpaid on the day that is 180 days after the end of the taxation year in which a deduction in respect of a clean hydrogen tax credit would otherwise be available in respect of the property, such amount is to be

    • (a) excluded from the capital cost of the property in the year; and

    • (b) added to the capital cost of the property at the time it is paid.

  • Marginal note:Tax shelter investment

    (14) Subsection (2) does not apply if an eligible clean hydrogen property – or an interest in a person or partnership that has, directly or indirectly, an interest in, or for civil law, a right in, such property – is a tax shelter investment for the purpose of section 143.2.

  • Marginal note:Annual information reporting requirement

    (15) If a clean hydrogen tax credit was deducted in any taxation year by a taxpayer in respect of a qualified clean hydrogen project, the taxpayer shall file, with its return of income for each taxation year that begins during the compliance period in respect of the project, a prescribed form containing prescribed information in respect of the operations of the project.

  • Marginal note:Compliance — annual carbon intensity reporting

    (16) If a clean hydrogen tax credit was deducted by a taxpayer in respect of a qualified clean hydrogen project, the taxpayer shall file with the Minister and the Minister of Natural Resources, within 180 days after the end of each operating year, a compliance report in prescribed form and manner including

    • (a) the actual carbon intensity of the hydrogen produced by the project during the year;

    • (b) the quantity, in kilograms, of hydrogen that is produced by the project during the year;

    • (c) any shutdown time of the project in respect of the year;

    • (d) for the compliance report in respect of the fifth operating year, a report that verifies the actual carbon intensity of the hydrogen produced during each operating year of the compliance period, prepared by a qualified verification firm in respect of the project; and

    • (e) any information required in guidelines published by the Minister of Natural Resources, including the Clean Hydrogen Investment Tax Credit – Validation and Verification Guidance Document.

  • Marginal note:Failure to report

    (17) Each taxpayer that fails to file a compliance report for a project as described in subsection (16) is liable to a penalty, for each such failure, in an amount, not exceeding the total of all clean hydrogen tax credits deducted by the taxpayer in respect of the project, equal to the amount determined by the formula

    ((4% × A) ÷ 365) × B

    where

    A

    is the total of all amounts, each of which is the amount of a clean hydrogen tax credit in respect of the project deducted by the taxpayer for a taxation year that ended before the applicable date in subsection (16); and

    B

    is the number of days during which the failure continues.

  • Marginal note:Recovery — change in carbon intensity

    (18) In the taxation year of a taxpayer in which the compliance period of the taxpayer’s qualified clean hydrogen project ends, if the average actual carbon intensity of the hydrogen produced is greater than the most recent expected carbon intensity that was used to determine a clean hydrogen tax credit in respect of the project, there shall be added to the taxpayer’s tax otherwise payable under this Part for the taxation year an amount equal to the total of all amounts, each of which is determined by the formula

    (A − B) × C

    where

    A

    is the specified percentage that was applied to the capital cost of the eligible clean hydrogen property forming part of the project in determining a clean hydrogen tax credit of the taxpayer;

    B

    is the specified percentage that would have applied to the capital cost of the property if the expected carbon intensity were equal to the average actual carbon intensity of the project; and

    C

    is the capital cost of the property on which the clean hydrogen tax credit was deducted.

  • Marginal note:Minister’s determination

    (19) For the purpose of subsection (18), the Minister of Natural Resources shall review each of the taxpayer’s compliance reports described in subsection (16) and the Minister may, in consultation with the Minister of Natural Resources, make a determination or redetermination of the actual carbon intensity of the hydrogen produced by a taxpayer’s clean hydrogen project for any operating year during the compliance period of the project.

  • Marginal note:De minimis exception

    (20) Subsection (18) does not apply to a taxpayer if the difference between the average actual carbon intensity of the taxpayer’s qualified clean hydrogen project and the expected carbon intensity of the project is 0.5 or less.

  • Marginal note:Recapture of clean hydrogen tax credit — application

    (21) Subsection (22) applies in a taxation year if

    • (a) a taxpayer acquired an eligible clean hydrogen property in the year or any of the preceding 20 calendar years;

    • (b) the taxpayer became entitled to a clean hydrogen tax credit in respect of the capital cost, or a portion of the capital cost, of the property; and

    • (c) in the year, the property is converted to a non-hydrogen or ammonia use, is exported from Canada or is disposed of without having been previously exported or converted to a non-hydrogen or ammonia use.

  • Marginal note:Recapture of clean hydrogen tax credit

    (22) If this subsection applies for a taxation year in respect of an eligible clean hydrogen property, there shall be added to the taxpayer’s tax otherwise payable under this Part for the year an amount determined by the formula

    (A – B) × (C ÷ D)

    where

    A

    is the amount of the taxpayer’s clean hydrogen tax credit in respect of the property;

    B

    is the total of all amounts, each of which can reasonably be considered to be the portion of any amount previously paid by the taxpayer because of subsection (18) in respect of the property;

    C

    is an amount, not exceeding the amount determined for D, equal to

    • (a) if the property is disposed of to a person or partnership who deals at arm’s length with the taxpayer, the proceeds of disposition of the property, and

    • (b) in any other case, the fair market value of the property; and

    D

    is the capital cost of the property on which the clean hydrogen tax credit was deducted.

  • Marginal note:Election — sale of clean hydrogen project

    (23) If at any time a qualifying taxpayer (referred to in this subsection as the “vendor”) disposes of all or substantially all of its property comprising a qualified clean hydrogen project of the taxpayer to another taxable Canadian corporation (referred to in this subsection as the “purchaser”), and the vendor and the purchaser jointly elect in prescribed form, on or before the day that is the earliest of the days on or before which any taxpayer making the election is required to file a return of income pursuant to section 150 for the taxation year in which the transaction occurred, to have this subsection apply, the following rules apply:

    • (a) the purchaser is deemed to have acquired any eligible clean hydrogen property of the vendor at the times acquired by the vendor;

    • (b) the provisions of this Act that applied to the vendor in respect of the property that are relevant to the application of the Act in respect of the property after that time are deemed to have applied to the purchaser and, for greater certainty, the purchaser is deemed to have claimed the clean hydrogen tax credits determined under subsection (2) that could have been claimed by the vendor, before that time, in respect of the project;

    • (c) any clean hydrogen project plans that were filed by the vendor in respect of the project before that time are deemed to have been filed by the purchaser;

    • (d) the purchaser is or will be liable for amounts in respect of the property for which the vendor would be liable under this section in respect of actions, transactions or events that occur after that time as if the vendor had undertaken them or otherwise participated in them; and

    • (e) subsection (22) does not apply to the vendor in respect of the disposition of property to the purchaser.

  • Marginal note:Recapture event reporting requirement

    (24) If subsection (22) applies to a taxpayer or partnership for a particular year, the taxpayer or partnership, as the case may be, shall notify the Minister in prescribed form and manner on or before the taxpayer’s filing-due date for the year or the day when a return is required by section 229 of the Income Tax Regulations to be filed in respect of the fiscal period of the partnership.

  • Marginal note:Recovery and recapture — partnerships

    (25) If subsection (12) has at any time applied to add an amount in computing the clean hydrogen tax credit of a member of a partnership, subsections (18) to (23) apply to determine amounts in respect of the partnership as if the partnership was a taxable Canadian corporation, its fiscal period were its taxation year and it had deducted all of the clean hydrogen tax credits that were previously added in computing the clean hydrogen tax credit of any member of the partnership because of the application of subsection (12) in respect of its partnership interest.

  • Marginal note:Member’s share of recovery or recapture

    (26) Unless subsection (27) applies, if, in a taxation year, a taxpayer is a member of a partnership, the amount that can reasonably be considered to be the taxpayer’s share of any amount of tax determined because of subsection (25) in respect of the partnership shall be added to the taxpayer’s tax otherwise payable under this Part for the year.

  • Marginal note:Election by member

    (27) A taxable Canadian corporation that is a member of a partnership during a fiscal period of the partnership may elect, in prescribed form and manner, to add to its tax payable under this Part for its taxation year that includes the end of the fiscal period the total amount of tax determined for a taxation year because of subsection (25) in respect of the partnership.

  • Marginal note:Joint, several and solidary liability

    (28) Each member of a partnership is jointly and severally, or solidarily, liable for any portion of the amount of tax – determined because of subsection (25) in respect of the partnership for a taxation year – that is not added to the tax payable

    • (a) of a member of the partnership under subsection (26); or

    • (b) of a taxable Canadian corporation because of subsection (27) and paid by the corporation by its filing-due date for the year.

  • Marginal note:Interest on recovery tax

    (29) For the purpose of applying subsection 161(1) to an amount of tax payable because of subsection (18) (other than an amount payable because of subsection (8)), the balance-due day of a taxpayer is deemed to be the balance-due day of the taxation year for the related clean hydrogen tax credit under subsection (2).

  • Marginal note:Credit after compliance period

    (30) For the purpose of applying subsection (2) in respect of a property acquired after the compliance period of a qualified clean hydrogen project of the taxpayer, the expected carbon intensity of the project is deemed to be the greater of the expected carbon intensity otherwise determined and the average actual carbon intensity for the compliance period of the project.

  • Marginal note:Purpose

    (31) The purpose of this section is to encourage the investment of capital in the production of clean hydrogen and clean ammonia in Canada.

  • Marginal note:Authority of the Minister of Natural Resources

    (32) For the purpose of determining whether a property is an eligible clean hydrogen property, the Clean Hydrogen Investment Tax Credit – Technical and Equipment Guidance Document published by the Department of Natural Resources is to apply conclusively with respect to engineering and scientific matters.

• (2) Subsection (1) is deemed to have come into force immediately after the expiration of March 27, 2023, except that before January 1, 2024, subsection 127.48(3) of the Act (as enacted by subsection (1)) is to be read without reference to section 127.49 and subsection 127.48(10) of the Act (as enacted by subsection (1)) is to be read without reference to its subparagraph (a)(ii).

• 38 (1) The Act is amended by adding the following after section 127.48, as enacted by subsection 37(1):

  Marginal note:Definitions

  • 127.49 (1) The following definitions apply in this section.

    CTM investment tax credit

    CTM investment tax credit of a qualifying taxpayer for a taxation year means  

    • (a) the total of all amounts each of which is the specified percentage of the capital cost to the taxpayer of CTM property acquired by the taxpayer in the year for a CTM use; and

    • (b) the total of all amounts required by subsection (8) to be added in computing the taxpayer’s CTM investment tax credit at the end of the year. (crédit d’impôt à l’investissement pour la FTP)

    CTM property

    CTM property means property of a taxpayer, other than excluded property,

    • (a) situated in Canada and intended for use exclusively in Canada;

    • (b) that has not been used, or acquired for use or lease, for any purpose whatever before it was acquired by the taxpayer;

    • (c) that, if it is to be leased by the taxpayer to another person or a partnership, is

      • (i) leased to a qualifying taxpayer or a partnership all the members of which are qualifying taxpayers, and

      • (ii) leased in the ordinary course of carrying on a business in Canada by the taxpayer whose principal business is selling or servicing property of that type, or whose principal business is leasing property, lending money, purchasing conditional sales contracts, accounts receivable, bills of sale, chattel mortgages or hypothecary claims on movables, bills of exchange or other obligations representing all or part of the sale price of merchandise or services, or any combination thereof; and

    • (d) described in Schedule II to the Income Tax Regulations that

      • (i) is included in

        • (A) paragraph (a) or (c) of Class 8,

        • (B) paragraph (a) of Class 43,

        • (C) Class 43.1 that would otherwise be included in any of clauses (A), (B) and (E),

        • (D) Class 43.2 that would otherwise be included in clause (C), or

        • (E) Class 53,

      • (ii) is included in

        • (A) paragraph (b) of Class 8, or would be included in paragraph (b) of Class 8 if that paragraph were read without reference to the word “solely” and if the word “building” were read as “structure”,

        • (B) Class 43.1 that would otherwise be included in clause (A), or

        • (C) Class 43.2 that would otherwise be included in clause (B),

      • (iii) is included in

        • (A) subparagraph (k)(i) of Class 10, provided that the property would otherwise be in paragraph (a) or (c) of Class 8,

        • (B) subparagraph (k)(ii) of Class 10,

        • (C) paragraph (b) of Class 41, or in paragraph (b) of Class 41.2, that would otherwise be included in clauses (A) or (B),

        • (D) paragraph (b) of Class 43,

        • (E) Class 43.1 that would otherwise be included in any of clauses (A) to (D), or

        • (F) Class 43.2 that would otherwise be included in clause (E),

      • (iv) is included in paragraph (d) or (j) of Class 12,

      • (v) is included in

        • (A) paragraph (a) or (e) of Class 10 or Class 38, but excluding any property that is designed or adapted for use on streets and highways, or

        • (B) Class 56, or

      • (vi) would be described in any of subparagraphs (i) to (v) if the word “mine” in Schedule II of the Income Tax Regulations were read as “mine, well or tailing pond”. (bien de FTP)

    CTM use

    CTM use means the use of a property

    • (a) all or substantially all for activities described in paragraph (a) or (c) of the definition qualified zero-emission technology manufacturing activities in section 5202 of the Income Tax Regulations; or

    • (b) in a qualifying mineral activity producing all or substantially all qualifying materials. (utilisation pour la FTP)

    excluded property

    excluded property means any property used in the production of battery cells or modules if the production has benefitted from, or can reasonably be expected to benefit from, support under a contribution agreement with the Government of Canada referred to in paragraph 7300(e) of the Income Tax Regulations. (bien exclu)

    government assistance

    government assistance has the same meaning as in subsection 127(9). (aide gouvernementale)

    non-CTM use

    non-CTM use means a use of a property other than a CTM use. (utilisation autre que pour la FTP)

    non-government assistance

    non-government assistance has the same meaning as in subsection 127(9). (aide non gouvernementale)

    permitted element

    permitted element means hydrogen, carbon, nitrogen, oxygen, phosphorus, sulfur, selenium, sodium, potassium, a halogen or a noble gas. (élément autorisé)

    qualifying material

    qualifying material means

    • (a) lithium;

    • (b) cobalt;

    • (c) nickel;

    • (d) copper;

    • (e) rare earth elements; and

    • (f) graphite. (matériau admissible)

    qualifying mineral activity

    qualifying mineral activity means

    • (a) the extraction of resources from a mineral deposit or from a tailing pond;

    • (b) a mineral processing activity, including crushing, grinding, milling, separation, sieving, screening, froth floatation, leaching, recrystallization, precipitation, drying, evaporation, heating, calcinating, roasting, smelting, casting of ingots, refining, purification, distillation, electrodeposition and surface roughening of electrodeposited foil, that

      • (i) is performed at a mine site, well site, tailing pond, mill, smelter or refinery, and

      • (ii) occurs prior to or as part of a process intended

        • (A) to increase the purity of at least one qualifying material, or

        • (B) to produce a material with non-trace amounts of a single qualifying material, and without non-trace amounts of any elements other than permitted elements;

    • (c) a recycling activity that is

      • (i) sorting, disassembly or shredding of a recyclable material, or

      • (ii) a material processing activity substantially similar to an activity described in paragraph (b) if that paragraph were read without reference to its subparagraph (i);

    • (d) a synthetic graphite activity that is

      • (i) performed during or after the graphitization stage, and

      • (ii) a material processing activity substantially similar to an activity described in paragraph (b) if that paragraph were read without reference to its subparagraph (i); or

    • (e) spheronization of graphite or coating of spheronized graphite. (activité minière admissible)

    qualifying taxpayer

    qualifying taxpayer means a taxable Canadian corporation. (contribuable admissible)

    specified percentage

    specified percentage means in respect of a CTM property of the taxpayer that is acquired

    • (a) before January 1, 2024, determined without reference to subsection (4), nil;

    • (b) after December 31, 2023 and before January 1, 2032, 30%;

    • (c) after December 31, 2031 and before January 1, 2033, 20%;

    • (d) after December 31, 2032 and before January 1, 2034, 10%;

    • (e) after December 31, 2033 and before January 1, 2035, 5%; and

    • (f) after December 31, 2034, nil. (pourcentage déterminé)

  • Marginal note:CTM investment tax credit

    (2) If a qualifying taxpayer files with its return of income for a taxation year a prescribed form containing prescribed information, the taxpayer is deemed to have paid on its balance-due day for the year an amount on account of the taxpayer’s tax payable under this Part for the year equal to the taxpayer’s CTM investment tax credit for the year.

  • Marginal note:Time limit for application

    (3) A payment on account of tax payable shall not be deemed to be paid under subsection (2) if the taxpayer does not file with the Minister a prescribed form containing prescribed information in respect of the amount on or before the day that is one year after the taxpayer’s filing-due date for the year and, if the prescribed form is filed after the taxpayer’s filing-due date for the year, no payment is deemed to arise under that subsection until the prescribed form containing the prescribed information has been filed with the Minister.

  • Marginal note:Time of acquisition

    (4) For the purpose of this section, CTM property is deemed not to have been acquired by a taxpayer before the property is considered to have become available for use by the taxpayer, determined without reference to paragraphs 13(27)(c) and (28)(d).

  • Marginal note:Special rules — adjustments

    (5) For the purpose of this section, the capital cost of CTM property to a taxpayer shall

    • (a) not include any amount in respect of a capital property

      • (i) for which an amount was previously deducted under this section by any person,

      • (ii) in respect of which a clean hydrogen tax credit (as defined in subsection 127.48(1)) was deducted by any person, or

      • (iii) that has, by virtue of section 21, been added to the cost of a property;

    • (b) be determined without reference to subsections 13(7.1) and (7.4);

    • (c) be reduced by the total of all amounts, each of which can reasonably be considered to be in respect of the property and is

      • (i) an amount of any government assistance or non-government assistance received by the taxpayer in or before the taxation year in which the property was acquired, or

      • (ii) an amount not described in subparagraph (i) that, in the taxation year, the taxpayer is entitled to or can reasonably be expected to receive and that would be government assistance or non-government assistance if it were received by the taxpayer; and

    • (d) be determined with reference to subsections 127(11.6) to (11.8) in respect of an expenditure or cost to a taxpayer except that

      • (i) the reference in subsection 127(11.6) to subsection 127(11.5) is to be read as a reference to section 127.49,

      • (ii) the reference in subsection 127(11.6) to subsection 127(26) is to be read as a reference to subsection 127.49(9), and

      • (iii) the term “qualified expenditure” is to be read as an expenditure eligible to be added to the capital cost of a CTM property.

  • Marginal note:Deemed deduction

    (6) For the purpose of this section, paragraph 12(1)(t), subsection 13(7.1), the description of I in the definition undepreciated capital cost in subsection 13(21), subsection 53(2) and sections 127.48 and 129, the amount deemed under subsection (2) to have been paid by a taxpayer for a taxation year is deemed to have been deducted from the taxpayer’s tax otherwise payable under this Part for the year.

  • Marginal note:Repayment of assistance

    (7) Where a taxpayer has, in a particular taxation year, repaid (or has not received and can no longer reasonably be expected to receive) an amount of government assistance or non-government assistance that was applied to reduce the cost of a property under paragraph (5)(c) for a preceding taxation year, the amount repaid (or no longer expected to be received) is to be added to the cost to the taxpayer of a property acquired in the particular year for the purpose of determining the taxpayer’s CTM investment tax credit for the year.

  • Marginal note:Partnerships

    (8) Subject to section 127.491, where, in a particular taxation year of a qualifying taxpayer that is a member of a partnership, an amount would be determined under subsection (2) in respect of the partnership, for its taxation year that ends in the particular year, if the partnership were a qualifying taxpayer and its fiscal period were its taxation year, the portion of that amount that can reasonably be considered to be the taxpayer’s share thereof shall be added in computing the CTM investment tax credit of the taxpayer at the end of the particular year.

  • Marginal note:Unpaid amounts

    (9) For the purpose of this section, where any part of the capital cost of a taxpayer’s CTM property is unpaid on the day that is 180 days after the end of the taxation year in which a deduction in respect of a CTM investment tax credit would otherwise be available in respect of the property, such amount is to be

    • (a) excluded from the capital cost of such property in the year; and

    • (b) added to the capital cost of such property at the time it is paid.

  • Marginal note:Tax shelter investment

    (10) Subsection (2) does not apply if a CTM property – or an interest in a person or partnership that has, directly or indirectly, an interest in, or for civil law, a right in, such property – is a tax shelter investment for the purpose of section 143.2.

  • Marginal note:Recapture — conditions for application

    (11) Subsection (12) applies in a taxation year if

    • (a) a taxpayer acquired a CTM property in the year or any of the preceding 10 calendar years;

    • (b) the taxpayer became entitled to a CTM investment tax credit in respect of the capital cost, or a portion of the capital cost, of the property; and

    • (c) in the year, the property (or another property that incorporates the property) is converted to a non-CTM use, is exported from Canada or is disposed of without having been previously exported or converted to a non-CTM use.

  • Marginal note:Recapture of credit

    (12) If this subsection applies, there shall be added to the taxpayer’s tax otherwise payable under this Part for the year the lesser of

    • (a) the amount of the taxpayer’s CTM investment tax credit in respect of the property, and

    • (b) the amount determined by the formula

      A × (B ÷ C)

      where

      A

      is the amount of the taxpayer’s CTM investment tax credit in respect of the property,

      B

      is

      • (i) in the case where the property is disposed of to a person or partnership who deals at arm’s length with the taxpayer, the proceeds of disposition of the property, or

      • (ii) in the case where the property is disposed of to a person or partnership who does not deal at arm’s length with the taxpayer, is converted to a non-CTM use or is exported from Canada, the fair market value of the property, and

      C

      is the capital cost of the property on which the CTM investment tax credit was deducted.

  • Marginal note:Certain non-arm’s length transfers

    (13) Subsections (11) and (12) do not apply to a taxpayer (in this subsection referred to as the “transferor”) that disposes of a property to a qualifying taxpayer (in this subsection referred to as the “purchaser”) related to the transferor, if the purchaser acquired the property in circumstances where the property would be CTM property to the purchaser (but for paragraph (b) of the definition CTM property in subsection (1)) and is used by the purchaser for a CTM use.

  • Marginal note:Certain non-arm’s length transfers — recapture deferred

    (14) If subsections (11) and (12) do not apply because of subsection (13), subsection 127(34) applies with such modifications as the circumstances require, including that the reference to subsection 127(33) be read as subsection 127.49(13).

  • Marginal note:Recapture event reporting requirement

    (15) If subsection (12) or (13) applies to a taxpayer for a taxation year, the taxpayer shall notify the Minister in prescribed form and manner on or before the taxpayer’s filing-due date for the year.

  • Marginal note:Recapture of credit for partnerships

    (16) Subsection (17) applies in a fiscal period of a partnership if

    • (a) the partnership acquired a CTM property in the fiscal period or in any of the 10 preceding calendar years;

    • (b) the cost, or a portion of the cost, of the property is included in an amount, a percentage of which can reasonably be considered to have been included in computing the amount determined under subsection (8) in respect of the partnership at the end of a fiscal period; and

    • (c) in the fiscal period, the property (or another property that incorporates the property) is converted to a non-CTM use, is exported from Canada or is disposed of without having been previously exported or converted to a non-CTM use.

  • Marginal note:Addition to tax

    (17) If this subsection applies to a fiscal period of a partnership, where a taxpayer is a member of the partnership during the fiscal period, there shall be added to the taxpayer’s tax otherwise payable under this Part for the taxpayer’s taxation year in which the fiscal period ends the amount that can reasonably be considered to be the taxpayer’s share of the amount, if any, equal to the lesser of

    • (a) the amount that can reasonably be considered to have been included in respect of the property in computing the amount determined under subsection (8) in respect of the partnership, and

    • (b) the percentage described in paragraph (16)(b) of

      • (i) where the property (or the other property) is disposed of to a person who deals at arm’s length with the partnership, the proceeds of disposition of the property, and

      • (ii) in any other case, the fair market value of the property (or the other property) at the time of the conversion, export or disposition.

  • Marginal note:Information return — partnerships

    (18) If subsections (16) and (17) apply with respect to the property of a partnership for a fiscal period, the partnership shall notify the Minister in prescribed form and manner on or before the day when a return is required by section 229 of the Income Tax Regulations to be filed in respect of the period.

  • Marginal note:CTM investment tax credit — purpose

    (19) The purpose of this section is to encourage the investment of capital in Canada for a CTM use.

• (2) Subsection (1) is deemed to have come into force on January 1, 2024.

• 39 (1) The Act is amended by adding the following after section 127.49, as enacted by subsection 38(1):

  Marginal note:Definitions

  • 127.491 (1) The following definitions apply in this section.

    at-risk amount

    at-risk amount has the meaning assigned by subsection 96(2.2). (fraction à risques)

    clean economy allocation provision

    clean economy allocation provision means

    • (a) subsection 127.48(12); or

    • (b) subsection 127.49(8). (disposition d’allocation pour l’économie propre)

    clean economy expenditure

    clean economy expenditure means

    • (a) the capital cost of eligible clean hydrogen property as determined under section 127.48; or

    • (b) the capital cost of CTM property as determined under section 127.49. (dépense pour l’économie propre)

    clean economy provision

    clean economy provision means

    • (a) this section;

    • (b) section 127.48; or

    • (c) section 127.49. (disposition pour l’économie propre)

    clean economy tax credit

    clean economy tax credit means

    • (a) a clean hydrogen tax credit (as defined under section 127.48(1)); or

    • (b) a CTM investment tax credit (as defined under section 127.49(1)). (crédit d’impôt pour l’économie propre)

    limited partner

    limited partner has the meaning assigned by subsection 96(2.4) if that subsection were read without reference to “if the member’s partnership interest is not an exempt interest (within the meaning assigned by subsection (2.5)) at that time and”. (commanditaire)

  • Marginal note:Credits in unreasonable proportions

    (2) If the members of a partnership agree to share the amount of a clean economy tax credit of the partnership and the share of any member of that amount is not reasonable in the circumstances having regard to the capital invested in or work performed for the partnership by the members of the partnership or such other factors as may be relevant, that share shall, notwithstanding any agreement, be deemed to be the amount that is reasonable in the circumstances.

  • Marginal note:Limited partners

    (3) Notwithstanding subsection (2), if a taxpayer is a limited partner of a partnership at the end of a fiscal period of the partnership, the total of all clean economy tax credits allocated to the taxpayer by the partnership in respect of that fiscal period shall not exceed the taxpayer’s at-risk amount in respect of the partnership at the end of that fiscal period.

  • Marginal note:Apportionment rule

    (4) The amount required by any clean economy allocation provision to be added in computing a particular clean economy tax credit of a taxpayer in respect of a partnership for the taxation year in which the partnership’s fiscal period ends is deemed to be the portion of the amount otherwise determined under this section in respect of the taxpayer that is reasonably attributable to each particular clean economy tax credit.

  • Marginal note:Assistance received by member of partnership

    (5) For the purposes of computing a clean economy tax credit, if, at a particular time, a taxpayer that is a member of a partnership has received, is entitled to receive or can reasonably be expected to receive government assistance or non-government assistance (as defined in subsection 127(9)), the amount of that assistance that may reasonably be considered to be in respect of a clean economy expenditure of the partnership shall be deemed to have been received at that time by the partnership as government assistance or non-government assistance, as the case may be, in respect of the expenditure.

  • Marginal note:Credit received by member of partnership

    (6) For the purposes of subsection 13(7.1), if, pursuant to an allocation from a partnership under a clean economy allocation provision, an amount is added in computing a clean economy tax credit of a taxpayer at the end of the taxpayer’s taxation year, the amount shall be deemed to have been received by the partnership at the end of its fiscal period in respect of which the allocation was made as assistance from a government for the acquisition of depreciable property.

  • Marginal note:Tiered partnerships

    (7) For the purposes of each clean economy provision, a person or partnership that is (or is deemed by this subsection to be) a member of a particular partnership that is a member of another partnership is deemed to be a member of the other partnership.

• (2) Subsection (1) is deemed to have come into force immediately after the expiration of March 27, 2023, except that before January 2024, the definitions clean economy allocation provision, clean economy expenditure, clean economy provision and clean economy tax credit in subsection 127.491(1) of the Act, as enacted by subsection (1), are to be read as follows:

  clean economy allocation provision

  clean economy allocation provision means subsection 127.48(12). (disposition d’allocation pour l’économie propre)

  clean economy expenditure

  clean economy expenditure means a capital cost of eligible clean hydrogen property as determined under section 127.48. (dépense pour l’économie propre)

  clean economy provision

  clean economy provision means

  • (a) this section; or

  • (b) section 127.48. (disposition pour l’économie propre)

  clean economy tax credit

  clean economy tax credit means a clean hydrogen tax credit (as defined under section 127.48(1)). (crédit d’impôt pour l’économie propre)

• 40 (1) The description of A in section 127.51 of the Act is replaced by the following:

  A

  is 20.5%;

• (2) Paragraph (a) of the description of C in section 127.51 of the Act is replaced by the following:

  • (a) the first dollar amount for the year referred to in paragraph 117(2)(d), in the case of an individual (other than a trust) or a qualified disability trust (as defined in subsection 122(3)); and

• (3) Subsections (1) and (2) apply to taxation years that begin after December 31, 2023.

• 41 (1) Subparagraph 127.52(1)(d)(i) of the Act is replaced by the following:

  • (i) the references to the fraction applicable to the individual for the year in each of paragraphs 38(a) and (b) and section 41 were read as a reference to “1/1”, and

• (2) The formula in subparagraph 127.52(1)(d)(ii) of the Act is replaced by the following:

  A ÷ B

• (3) Subsection 127.52(1) of the Act is amended by adding the following after paragraph (d):

  • (d.1) in respect of a disposition to which paragraph 38(a.1) applies, the portion of that paragraph before subparagraph (i) were read as “a taxpayer’s taxable capital gain for a taxation year from the disposition of a property is equal to 3/10 of the taxpayer’s capital gain for the year from the disposition of the property if”;

• (4) The portion of subparagraph 127.52(1)(g)(ii) of the Act before clause (A) is replaced by the following:

  • (ii) the total of all amounts each of which is

• (5) Clause 127.52(1)(g)(ii)(A) of the French version of the Act is replaced by the following:

  • (A) un montant attribué par la fiducie en application du paragraphe 104(21) pour l’année,

• (6) The portion of clause 127.52(1)(g)(ii)(B) of the French version of the Act before subclause (I) is replaced by the following:

  • (B) la partie d’un gain en capital imposable net de la fiducie qu’il est raisonnable de considérer :

• (7) Subparagraphs 127.52(1)(h)(i) to (vi) of the Act are replaced by the following:

  • (i) the amounts deducted under subsection 110(2),

  • (ii) 7/5 of the amounts deducted under any of paragraph 110(1)(d.01) and subsections 110.6(2) and (2.1),

  • (iii) the amount that would be deductible under paragraph 110(1)(f) if the individual deducted 1/2 of the amount the individual deducted for the year under subparagraph 110(1)(f)(v),

  • (iv) 1/2 of the amount deducted for the year under subsection 110.7(1), and

  • (v) the amount deducted under paragraph 110(1)(g);

• (8) Clause 127.52(1)(i)(i)(A) of the Act is replaced by the following:

  • (A) 1/2 of all amounts deducted for the year under paragraphs 111(1)(a), (c), (d) and (e), and

• (9) The portion of clause 127.52(1)(i)(i)(B) of the English version of the Act before subclause (I) is replaced by the following:

  • (B) the total of all amounts that would be deductible under those paragraphs for the year if the amount that would be deductible under paragraphs 111(1)(a), (c), (d) and (e) was 1/2 of the amount that would otherwise be deductible under those paragraphs and if

• (10) Clause 127.52(1)(i)(ii)(A) of the Act is replaced by the following:

  • (A) the total of all amounts deducted under paragraph 111(1)(b), and

• (11) Clause 127.52(1)(i)(ii)(B) of the Act is amended by striking out “and” at the end of subclause (II) and by replacing subclause (III) with the following:

  • (III) paragraphs (c.1) and (d) of this subsection applied in computing the individual’s net capital loss for any taxation year that ends after 2011 and begins before 2024, and

  • (IV) paragraph (c.1) of this subsection applied in computing the individual’s net capital loss for any taxation year that begins after 2023; and

• (12) Paragraph 127.52(1)(j) of the Act is replaced by the following:

  • (j) in computing the individual’s income for the year, the individual deducted 1/2 of the amount deducted for the year under

    • (i) paragraphs 8(1)(c) to (e), (g) to (l.2) and (p) to (t),

    • (ii) paragraphs 20(1)(c) to (f) in respect of an amount borrowed to earn income from property for the year, other than an amount described under any of paragraphs (b), (c), (c.2), (c.3) and (e.1),

    • (iii) paragraphs 60(e), (e.1) and (g),

    • (iv) subsections 62(1) and (2),

    • (v) subsections 63(1) and (2.2), and

    • (vi) section 64.

• (13) Subsections (1) to (12) apply to taxation years that begin after December 31, 2023.

• 42 (1) Paragraphs 127.531(a) and (b) of the Act are replaced by the following:

  • (a) 1/2 of an amount deducted under any of subsections 118(1), (2), (3) and (10), sections 118.01 to 118.07, subsections 118.3(1), (2) and (3) and sections 118.5 to 118.9 in computing the individual’s tax payable for the year under this Part;

  • (b) 1/2 of the amount that was claimed under section 118.2 in computing the individual’s tax payable for the year under this Part, determined without reference to this Division, to the extent that the amount claimed does not exceed the maximum amount deductible under that section in computing the individual’s tax payable for the year under this Part, determined without reference to this Division;

  • (c) 4/5 of the amount that was claimed under section 118.1 in computing the individual’s tax payable for the year under this Part, determined without reference to this Division, to the extent that the amount claimed does not exceed the maximum amount deductible under that section in computing the individual’s tax payable for the year under this Part, determined without reference to this Division; and

  • (d) an amount deducted under section 119 or subsection 127(1) in computing the individual’s tax payable for the year under this Part.

• (2) Subsection (1) applies to taxation years that begin after December 31, 2023.

• 43 (1) The definition foreign taxes in subsection 127.54(1) of the English version of the Act is replaced by the following:

  foreign taxes

  foreign taxes of an individual for a taxation year means the total of the business-income taxes, as defined in subsection 126(7), paid by the individual for the year in respect of businesses carried on by the individual in countries other than Canada and 2/3 of the non-business-income taxes, as defined in that subsection, paid by the individual for the year to the governments of countries other than Canada. (impôts payés à l’étranger)

• (2) Paragraph (b) of the definition foreign income in subsection 127.54(1) of the Act is replaced by the following:

  • (b) the individual’s incomes for the year (as would be determined if paragraph 127.52(1)(d) were applicable) from sources in countries other than Canada in respect of which the individual has paid non-business-income taxes, as defined in subsection 126(7), to governments of countries other than Canada; (revenu de source étrangère )

• (3) The description of A in subparagraph 127.54(2)(b)(ii) of the Act is replaced by the following:

  A

  is 20.5%, and

• (4) Subsections (2) and (3) apply to taxation years that begin after December 31, 2023.

• 44 (1) Paragraph 127.55(f) of the Act is replaced by the following:

  • (f) a taxation year of a trust throughout which the trust is

    • (i) a trust referred to in paragraph 150(1.2)(f), (g), (i), (j), (l) or (n),

    • (ii) an investment fund (as defined in subsection 251.2(1)) unless the trust qualifies as an investment fund because of or in connection with a transaction or event or series of transactions or events one of the main purposes of which is to avoid tax under this Division,

    • (iii) a trust

      • (A) all of the beneficiaries of which are any combination of

        • (I) persons exempt from tax under this Division, and

        • (II) trusts described in this subparagraph,

      • (B) under which no person (other than a person described in subclause (A)(I) or (II)) can be added as a beneficiary,

      • (C) in which all interests are fixed interests (as defined in subsection 94(1)), and

      • (D) that is irrevocable,

    • (iv) a trust that is exempt from tax under this Part,

    • (v) a trust described in subsection 143(1), or

    • (vi) a unit trust if the total fair market value of the units of the trust that are listed on a designated stock exchange represents all or substantially all of the total fair market value of all the units of the trust.

• (2) Subsection (1) applies to taxation years that begin after December 31, 2023.

• 45 (1) Subparagraph (g)(i) of the definition excluded right or interest in subsection 128.1(10) of the English version of the Act is replaced by the following:

  • (i) the Canada Pension Plan or a provincial pension plan as defined in section 3 of that Act,

• (2) Subsection (1) is deemed to have come into force on August 4, 2023.

• 46 (1) The definition eligible refundable dividend tax on hand in subsection 129(4) of the Act is amended by striking out “and” at the end of subparagraph (a)(i) and by adding the following after subparagraph (a)(ii):

  • (iii) eligible dividends received by the particular corporation in a taxation year that began after 2018 from corporations (referred to in this subparagraph as “payer corporations”) that are connected with the particular corporation to the extent that such dividends

    • (A) caused a dividend refund to those payer corporations from their refundable dividend tax on hand at the end of their first taxation year that ended after 2018, and

    • (B) are not otherwise included in determining the particular corporation’s eligible refundable dividend tax on hand, and

• (2) Subsection (1) applies to taxation years beginning after 2018.

• 47 (1) Subsection 131(4.1) of the Act is amended by striking out “or” at the end of paragraph (a), by adding “or” at the end of paragraph (b) and by adding the following after paragraph (b):

  • (c) if the old share and the new share are not shares of the same class but are shares of Capital régional et coopératif Desjardins,

    • (i) the old share and the new share derive their value in the same proportion from the same property or group of properties, and

    • (ii) the shares are recognized under securities legislation as or as part of the same investment fund.

• (2) Subsection (1) applies to the exchange or other disposition of a share on or after October 25, 2018.

• 48 (1) Subparagraph (a)(ii) of the definition revenu gagné in subsection 146(1) of the French version of the Act is replaced by the following:

  • (ii) d’une entreprise qu’il exploite soit seul, soit comme associé participant activement à l’exploitation de l’entreprise,

• (2) Paragraph (c) of the definition revenu gagné in subsection 146(1) of the French version of the Act is replaced by the following:

  • c) soit son revenu, sauf un montant visé à l’alinéa 12(1)z), pour une période de l’année tout au long de laquelle il ne résidait pas au Canada tiré, selon le cas, des fonctions d’une charge ou d’un emploi qu’il remplit au Canada, compte non tenu des alinéas 8(1)c), m) et m.2), ou d’une entreprise qu’il exploite au Canada, soit seul, soit comme associé participant activement à l’exploitation de l’entreprise, sauf dans la mesure où ce revenu est exonéré de l’impôt sur le revenu au Canada par l’effet d’une disposition d’un accord ou convention fiscal conclu avec un autre pays et ayant force de loi au Canada;

• (3) Subparagraph (e)(i) of the definition revenu gagné in subsection 146(1) of the French version of the Act is replaced by the following:

  • (i) d’une entreprise qu’il exploite soit seul, soit comme associé participant activement à l’exploitation de l’entreprise,

• (4) Paragraph (g) of the definition revenu gagné in subsection 146(1) of the French version of the Act is replaced by the following:

  • g) soit sa perte pour une période de l’année tout au long de laquelle il n’a pas résidé au Canada, provenant d’une entreprise qu’il exploite au Canada, soit seul, soit comme associé participant activement à l’exploitation de l’entreprise;

• (5) Subsection 146(8.1) of the Act is replaced by the following:

  • Marginal note:Deemed receipt of refund of premiums

    (8.1) An individual and the legal representative of a deceased annuitant of a registered retirement savings plan may jointly designate in prescribed form filed with the Minister that all or a portion of a payment made out of or under the plan to the legal representative is deemed to have been received by the individual at the time it was so paid as a benefit that is a refund of premiums, and not to have been paid to the legal representative, if

    • (a) a payment not less than the designated amount is made from the estate of the deceased annuitant to the individual who is entitled to receive the payment

      • (i) as a beneficiary (as defined in subsection 108(1)) under the estate, or

      • (ii) under a decree, order or judgment of a competent tribunal or under a written agreement, relating to the rights or interests of a spouse or common-law partner in respect of property as a result of marriage or common-law partnership; and

    • (b) the designated amount would have been a refund of premiums if it had been paid to the individual directly from the registered retirement savings plan.

• (6) The portion of subsection 146(8.93) of the French version of the Act before paragraph (a) is replaced by the following:

  • Marginal note:Application du paragraphe (8.92)

    (8.93) À moins que le ministre n’ait renoncé par écrit à appliquer le présent paragraphe à l’égard de tout ou partie de la somme déterminée selon le paragraphe (8.92) relativement à un régime enregistré d’épargne-retraite, ce paragraphe ne s’applique pas dans l’une des circonstances suivantes :

• (7) The portion of subsection 146(16) of the French version of the Act before paragraph (d) is replaced by the following:

  • Marginal note:Transfert de biens

    (16) Malgré les autres dispositions du présent article, un régime enregistré d’épargne-retraite peut, à un moment donné, être révisé ou modifié de façon à prévoir le versement ou le transfert, avant son échéance, par l’émetteur de biens accumulés pour le compte du rentier du régime (appelé « cédant » au présent paragraphe) :

    • a) soit à un régime de pension agréé, au profit du cédant, ou à un régime enregistré d’épargne-retraite ou un fonds enregistré de revenu de retraite dont le cédant est rentier;

    • a.1) soit à un fournisseur de rentes autorisé afin d’acquérir une rente viagère différée à un âge avancé au profit du cédant;

    • b) soit à un régime enregistré d’épargne-retraite ou un fonds enregistré de revenu de retraite dont l’époux ou le conjoint de fait ou l’ex-époux ou ancien conjoint de fait du cédant est rentier, si le cédant et son époux ou conjoint de fait ou ex-époux ou ancien conjoint de fait vivent séparément et si le versement ou le transfert est effectué en vertu d’une ordonnance ou d’un jugement rendus par un tribunal compétent ou en vertu d’un accord écrit de séparation, visant à partager des biens entre le cédant et son époux ou conjoint de fait ou ex-époux ou ancien conjoint de fait, en règlement des droits découlant du mariage ou de l’union de fait ou de son échec.

    Dans le cas où un tel versement ou transfert est effectué pour le compte du cédant avant l’échéance du régime, les règles suivantes s’appliquent :

    • c) le montant du versement ou du transfert ne peut, en raison seulement du versement ou du transfert, être inclus dans le calcul du revenu du cédant ou de son époux ou conjoint de fait ou ex-époux ou ancien conjoint de fait;

• (8) Subsection 146(21.2) of the Act is replaced by the following:

  • Marginal note:Specified pension plan — account

    (21.2) For the purposes of paragraph (8.2)(b), subsection (8.21), paragraphs (16)(a) and (b) and 18(1)(u), section 60.011, subparagraph (a)(i) of the definition excluded right or interest in subsection 128.1(10), paragraph (b) of the definition excluded premium in subsection 146.01(1), paragraph (c) of the definition excluded premium in subsection 146.02(1), subsections 146.3(14) and 147(19), section 147.3 and paragraphs 147.5(21)(c) and 212(1)(j.1) and (m) and for the purposes of any regulations made under subsection 147.1(18), an individual’s account under a specified pension plan is deemed to be a registered retirement savings plan under which the individual is the annuitant.

• (9) Subsection (5) is deemed to have come into force on January 1, 2020.

• (10) Subsection (8) is deemed to have come into force on August 4, 2023.

• 49 (1) Paragraph (h) of the definition regular eligible amount in subsection 146.01(1) of the Act is replaced by the following:

  • (h) the total of the amount and all other eligible amounts received by the individual in the calendar year that includes the particular time does not exceed $60,000, and

• (2) Paragraph (g) of the definition supplemental eligible amount in subsection 146.01(1) of the Act is replaced by the following:

  • (g) the total of the amount and all other eligible amounts received by the individual in the calendar year that includes the particular time does not exceed $60,000, and

• (3) The portion of subsection 146.01(4) of the Act before the formula is replaced by the following:

  • Marginal note:Portion of eligible amount not repaid

    (4) Subject to subsection (4.1), there shall be included in computing an individual’s income for a particular taxation year included in a particular participation period of the individual the amount determined by the formula

• (4) Section 146.01 of the Act is amended by adding the following after subsection (4):

  • Marginal note:Temporary repayment relief — application

    (4.1) If the completion date in respect of an eligible amount received by an individual is after 2022 and before 2027

    • (a) subparagraphs (a)(i) and (ii) of the description of A in subsection (4) are to be read as follows:

      • “(i) the individual died or ceased to be resident in Canada in the particular year,

      • (ii) the completion date in respect of an eligible amount received by the individual was in the particular year, or

      • (iii) subsection (4.2) applies to the particular year and to an eligible amount received by the individual”;

    • (b) paragraph (a) of the description of B in subsection (4) is to be read as follows:

      • “(a) nil, if the amount determined for A, after the application of paragraph (4.1)(a), was nil in the preceding taxation year, and”;

    • (c) the reference to “first calendar year” in paragraph (b) of the description of D in subsection (4) is to be read as a reference to “fourth calendar year”; and

    • (d) paragraph (a) of the description of E in subsection (4) is to be read as follows:

      • “(a) if the preceding taxation year is the year that includes the completion date, or one of the three taxation years immediately following the year that includes the completion date, the total of all amounts each of which is designated under subsection (3) by the individual for the particular taxation year or any preceding taxation year included in the particular period, and”.

  • Marginal note:Temporary repayment relief — conditions

    (4.2) This subsection applies to a taxation year and to an eligible amount received by an individual if

    • (a) the year is 2024 and the completion date in respect of the amount was in 2023;

    • (b) the year is 2025 and the completion date in respect of the amount was in 2023 or 2024;

    • (c) the year is 2026 and the completion date in respect of the amount was in 2023, 2024 or 2025;

    • (d) the year is 2027 and the completion date in respect of the amount was in 2024, 2025 or 2026;

    • (e) the year is 2028 and the completion date in respect of the amount was in 2025 or 2026; and

    • (f) the year is 2029 and the completion date in respect of the amount was in 2026.

• (5) Subsections (1) and (2) apply to the 2024 and subsequent taxation years in respect of amounts received after April 16, 2024.

• (6) Subsections (3) and (4) apply to the 2024 and subsequent taxation years.

50 The portion of subsection 146.3(6.4) of the French version of the Act before paragraph (a) is replaced by the following:

• 51 (1) The portion of paragraph 146.4(4)(f) of the French version of the Act before subparagraph (i) is replaced by the following:

  • f) le régime ne permet pas que des cotisations y soient versées, à un moment donné, dans l’une des circonstances suivantes :

• (2) The portion of paragraph 146.4(4)(g) of the French version of the Act before subparagraph (i) is replaced by the following:

  • g) le régime ne permet pas qu’une cotisation y soit versée, à un moment donné, dans l’une des circonstances suivantes :

• 52 (1) Paragraph 147.4(1)(c) of the Act is replaced by the following:

  • (c) the contract does not permit premiums to be paid at or after that time, other than

    • (i) a premium paid at that time out of or under the plan to purchase the contract, or

    • (ii) a premium paid after that time to acquire additional benefits consequential to proceedings commenced under the Bankruptcy and Insolvency Act or the Companies’ Creditors Arrangement Act,

• (2) Subsection (1) is deemed to have come into force on January 1, 2018.

• 53 (1) Subsection 147.5(12) of the Act is replaced by the following:

  • Marginal note:Member’s account

    (12) For the purposes of paragraph 18(1)(u), section 60.011, subparagraph (a)(i) of the definition excluded right or interest in subsection 128.1(10), paragraph 146(8.2)(b), subsection 146(8.21), paragraphs 146(16)(a) and (b), subparagraph 146(21)(a)(i), paragraph (b) of the definition excluded premium in subsection 146.01(1), paragraph (c) of the definition excluded premium in subsection 146.02(1), subsections 146.3(14) and 147(19) to (21), sections 147.3 and 160.2 and paragraphs 212(1)(j.1) and (m), and of regulations made under subsection 147.1(18), a member’s account under a PRPP is deemed to be a registered retirement savings plan under which the member is the annuitant.

• (2) Subsection (1) is deemed to have come into force on August 4, 2023.

54 Subsection 149.1(14.1) of the French version of the Act is replaced by the following:

• 55 (1) Subsection 150(1.2) of the Act is amended by striking out “or” at the end of paragraph (n), by adding “or” at the end of paragraph (o) and by adding the following after paragraph (o):

  • (p) is an eligible trust, as defined in subsection 135.2(1).

• (2) Subsection (1) applies to taxation years that end after December 30, 2023.

• 56 (1) Paragraph 152(1)(b) of the Act is replaced by the following:

  • (b) the amount of tax, if any, deemed by any of subsections 120(2) or (2.2), 122.5(3) to (3.003), 122.51(2), 122.7(2) or (3), 122.72(1), 122.8(4), 122.9(2), 122.91(1), 125.4(3), 125.5(3), 125.6(2) or (2.1), 127.1(1), 127.41(3), 127.48(2) or 210.2(3) or (4) to be paid on account of the taxpayer’s tax payable under this Part for the year.

• (2) Paragraph 152(1)(b) of the Act, as enacted by subsection (1), is replaced by the following:

  • (b) the amount of tax, if any, deemed by any of subsections 120(2) or (2.2), 122.5(3) to (3.003), 122.51(2), 122.7(2) or (3), 122.72(1), 122.8(4), 122.9(2), 122.91(1), 125.4(3), 125.5(3), 125.6(2) or (2.1), 127.1(1), 127.41(3), 127.48(2), 127.49(2) or 210.2(3) or (4) to be paid on account of the taxpayer’s tax payable under this Part for the year.

• (3) Subsection 152(4) of the Act is amended by adding the following before paragraph (c):

  • (b.92) a prescribed form that is required to be filed by the taxpayer, or a partnership of which the taxpayer is a member, under subsection 127.48(24) is not filed as and when required, and the assessment, reassessment or additional assessment is made in relation to amounts, transactions or events described in any of subsections 127.48(21), (22) or (25) to (28) before the day that is

    • (i) in the case of a taxpayer described in paragraph (3.1)(a), four years after the day on which the form is filed, or

    • (ii) in any other case, three years after the day on which the form is filed;

• (4) Subsection 152(4) of the Act is amended by adding the following after paragraph (b.92), as enacted by subsection (3):

  • (b.93) a prescribed form that is required to be filed by the taxpayer, or a partnership of which the taxpayer is a member, under subsection 127.49(15) or (18) is not filed as and when required, and the assessment, reassessment or additional assessment is made in relation to transactions or events described in any of subsections 127.49(11) to (14) or (16) and (17) before the day that is

    • (i) in the case of a taxpayer described in paragraph (3.1)(a), four years after the day on which the form is filed, or

    • (ii) in any other case, three years after the day on which the form is filed;

• (5) Paragraph 152(4.01)(b) of the Act is amended by striking out “or” at the end of subparagraph (ix) and by adding the following after paragraph (x):

  • (x.1) the amounts, transactions or events referred to in paragraph (4)(b.92), or

  • (x.2) the transactions or events referred to in paragraph (4)(b.93);

• (6) Subsections (1) and (3) are deemed to have come into force immediately after the expiration of March 27, 2023.

• (7) Subsections (2) and (4) are deemed to have come into force on January 1, 2024.

• (8) Subparagraph 152(4.01)(b)(x.1) of the Act, as enacted by subsection (5), is deemed to have come into force immediately after the expiration of March 27, 2023.

• (9) Subparagraph 152(4.01)(b)(x.2) of the Act, as enacted by subsection (5), is deemed to have come into force on January 1, 2024.

• 57 (1) Paragraph 153(1)(d.1) of the Act is replaced by the following:

  • (d.1) an amount described in subparagraph 56(1)(a)(iv), (vii) or (viii),

• (2) Section 153 of the Act is amended by adding the following after subsection (1.04):

  • Marginal note:Canada Emergency Wage Subsidy claimed

    (1.05) Despite subsection (1.02), an amount is not deemed to have been remitted to the Receiver General if

    • (a) the eligible employer made an application in respect of section 125.7 for a qualifying period in respect of which the eligible employer was, without reference to this subsection, deemed under subsection (1.02) to have remitted the amount to the Receiver General; and

    • (b) the amount was not included under the description of B in subsection 125.7(2) for the eligible employer.

• (3) Subsection (1) is deemed to have come into force on April 1, 2019.

• (4) Subsection (2) is deemed to have come into force on March 18, 2020.

• 58 (1) Paragraph 157(3)(e) of the Act is replaced by the following:

  • (e) 1/12 of the total of the amounts each of which is deemed by subsection 125.4(3), 125.5(3), 125.6(2) or (2.1), 127.1(1), 127.41(3) or 127.48(2) to have been paid on account of the corporation’s tax payable under this Part for the year.

• (2) Paragraph 157(3)(e) of the Act, as enacted by subsection (1), is replaced by the following:

  • (e) 1/12 of the total of the amounts each of which is deemed by subsection 125.4(3), 125.5(3), 125.6(2) or (2.1), 127.1(1), 127.41(3), 127.48(2) or 127.49(2) to have been paid on account of the corporation’s tax payable under this Part for the year.

• (3) Paragraph 157(3.1)(c) of the Act is replaced by the following:

  • (c) 1/4 of the total of the amounts each of which is deemed by subsection 125.4(3), 125.5(3), 125.6(2) or (2.1), 127.1(1), 127.41(3)or 127.48(2) to have been paid on account of the corporation’s tax payable under this Part for the taxation year.

• (4) Paragraph 157(3.1)(c) of the Act, as enacted by subsection (3), is replaced by the following:

  • (c) 1/4 of the total of the amounts each of which is deemed by subsection 125.4(3), 125.5(3), 125.6(2) or (2.1), 127.1(1), 127.41(3), 127.48(2) or 127.49(2) to have been paid on account of the corporation’s tax payable under this Part for the taxation year.

• (5) Subsections (1) and (3) are deemed to have come into force immediately after the expiration of March 27, 2023.

• (6) Subsections (2) and (4) are deemed to have come into force on January 1, 2024.

• 59 (1) Subsection 163(2) of the Act is amended by adding the following before paragraph (e):

  • (d.1) the amount, if any, by which

    • (i) the amount that would be deemed by subsection 127.48(2), as the case may be, to be paid for the year by the person if that amount were calculated by reference to the information provided in the return or form filed for the year under that subsection

    exceeds

    • (ii) the amount that is deemed by subsection 127.48(2), as the case may be, to be paid for the year by the person,

• (2) Paragraph 163(2)(d.1) of the Act, as enacted by subsection (1), is replaced by the following:

  • (d.1) the amount, if any, by which

    • (i) the amount that would be deemed by subsection 127.48(2) or 127.49(2), as the case may be, to be paid for the year by the person if that amount were calculated by reference to the information provided in the return or form filed for the year under that subsection

    exceeds

    • (ii) the amount that is deemed by subsection 127.48(2) or 127.49(2), as the case may be, to be paid for the year by the person,

• (3) Subsection (1) is deemed to have come into force immediately after the expiration of March 27, 2023.

• (4) Subsection (2) is deemed to have come into force on January 1, 2024.

• 60 (1) The portion of subsection 164(3) of the Act before paragraph (a) is replaced by the following:

  • Marginal note:Interest on refunds and repayments

    (3) If, under this section, an amount in respect of a taxation year (other than an amount, or a portion of the amount, that can reasonably be considered to arise from the operation of paragraph 60(n.2) or section 122.5, 122.61, 122.72, 122.8 or 125.7) is refunded or repaid to a taxpayer or applied to another liability of the taxpayer, the Minister shall pay or apply interest on it at the prescribed rate for the period that begins on the day that is the latest of the days referred to in the following paragraphs and that ends on the day on which the amount is refunded, repaid or applied:

• (2) The portion of subsection 164(3) of the Act before paragraph (a), as enacted by subsection (1), is replaced by the following:

  • Marginal note:Interest on refunds and repayments

    (3) If, under this section, an amount in respect of a taxation year (other than an amount, or a portion of the amount, that can reasonably be considered to arise from the operation of paragraph 60(n.2) or section 122.5, 122.61, 122.72, 122.8, 125.7 or 127.421) is refunded or repaid to a taxpayer or applied to another liability of the taxpayer, the Minister shall pay or apply interest on it at the prescribed rate for the period that begins on the day that is the latest of the days referred to in the following paragraphs and that ends on the day on which the amount is refunded, repaid or applied:

• (3) Subsection (1) applies to the 2019 and subsequent taxation years.

61 Subsection 204.1(4) of the French version of the Act is replaced by the following:

• 62 (1) Paragraph (b) of the description of H in subsection 204.2(1.2) of the Act is replaced by the following:

  • (b) the total of the amounts, each of which is an amount that is

    • (i) deducted in or before that preceding year, under subsections 146(5) and 146(5.1) in computing the individual’s income for the immediately preceding taxation year, to the extent that each amount was deducted in respect of premiums paid under registered retirement savings plans, or

    • (ii) contributed in the immediately preceding taxation year by the individual’s employer or former employer to an account of the individual under a pooled registered pension plan,

• (2) Subsection (1) applies to the 2012 and subsequent taxation years.

63 The portion of subsection 204.91(2) of the French version of the Act before paragraph (b) is replaced by the following:

64 Subsection 205(3) of the French version of the Act is replaced by the following:

• 65 (1) Subsection 207.01(10) of the Act is amended by striking out “and” after paragraph (c) and by replacing paragraph (d) with the following:

  • (d) the transferor and the recipient — or, if the property is transferred as a consequence of the death of the transferor, the transferor’s legal representative and the recipient — jointly elect in prescribed form that subsection (11) apply in respect of the property and the election is filed with the Minister on or before the day that is 90 days after the end of the

    • (i) recipient’s taxation year that includes the transfer time, if the property is transferred as a consequence of the death of the transferor, or

    • (ii) transferor’s taxation year that includes the transfer time, in any other case; and

  • (e) an amount (in subsection (11) referred to as the “designated amount”) is designated on the prescribed form described in paragraph (d) in respect of the property that

    • (i) is not less than the adjusted cost base to the transferor trust of the property immediately before the transfer time, and

    • (ii) does not exceed the greater of the amount determined under subparagraph (i) and the fair market value of the property at the transfer time.

• (2) Subsection (1) is deemed to have come into force on January 1, 2020.

• 66 (1) The portion of subsection 207.5(2) of the Act before paragraph (a) is replaced by the following:

  • Marginal note:Election

    (2) Despite the definition refundable tax in subsection 207.5(1), where the custodian of a retirement compensation arrangement so elects in the return under this Part for a taxation year of an RCA trust under the arrangement and all the subject property, if any, of the arrangement (other than a right to claim a refund under subsection 164(1) or 207.7(2)) at the end of the year consists only of cash, debt obligations, shares listed on a designated stock exchange, units of a mutual fund trust that are listed on a designated stock exchange, or any combination thereof, an amount equal to the total of

• (2) Paragraph 207.5(2)(c) of the Act is replaced by the following:

  • (c) the fair market value of those shares or units at the end of the year

• (3) Subsections (1) and (2) apply to elections made in respect of the 2020 and subsequent taxation years.

67 Paragraph 207.64(a) of the French version of the Act is replaced by the following:

• 68 (1) Subsection 220(2.2) of the Act is replaced by the following:

  • Marginal note:Exception

    (2.2) Subsection (2.1) does not apply in respect of a prescribed form, receipt or document, or prescribed information, that is filed with the Minister on or after the day specified, in respect of the form, receipt, document or information, in subsection 37(11), paragraph (m) of the definition investment tax credit in subsection 127(9) or subsection 127.48(4).

• (2) Subsection 220(2.2) of the Act, as enacted by subsection (1), is replaced by the following:

  • Marginal note:Exception

    (2.2) Subsection (2.1) does not apply in respect of a prescribed form, receipt or document, or prescribed information, that is filed with the Minister on or after the day specified, in respect of the form, receipt, document or information, in subsection 37(11), paragraph (m) of the definition investment tax credit in subsection 127(9) or subsection 127.48(4) or 127.49(3).

• (3) Subsection (1) is deemed to have come into force immediately after the expiration of March 27, 2023.

• (4) Subsection (2) is deemed to have come into force on January 1, 2024.

69 Paragraph 223(1)(b.1) of the Act is repealed.

70 Subsection 227(9.1) of the Act is replaced by the following:

71 The portion of subsection 231.2(3) of the Act before paragraph (a) is replaced by the following:

72 Paragraph (a) of the description of A in section 235 of the Act is replaced by the following:

• 73 (1) The portion of subsection 238(1) of the Act before paragraph (a) is replaced by the following:

  Marginal note:Offences and punishment

  • 238 (1) Every person who has failed to file or make a return — other than a return under section 237.3 or 237.4 — as and when required by or under this Act or a regulation or who has failed to comply with subsection 116(3), 127(3.1) or (3.2), 147.1(7) or 153(1), any of sections 230 to 232, 244.7 and 267 or a regulation made under subsection 147.1(18) or with an order made under subsection (2) is guilty of an offence and, in addition to any penalty otherwise provided, is liable on summary conviction to

• (2) Subsection (1) is deemed to have come into force on June 22, 2023.

• 74 (1) Paragraph 241(1)(c) of the Act is replaced by the following:

  • (c) knowingly use any taxpayer information otherwise than in the course of the administration or enforcement of this Act, the Canada Pension Plan or the Employment Insurance Act or for the purpose for which it was provided under this section.

• (2) Paragraph 241(3)(b) of the Act is replaced by the following:

  • (b) any legal proceedings relating to the administration or enforcement of this Act, the Canada Pension Plan or the Employment Insurance Act or any other Act of Parliament or law of a province that provides for the imposition or collection of a tax or duty.

• (3) Paragraph 241(4)(a) of the Act is replaced by the following:

  • (a) provide to any person taxpayer information that can reasonably be regarded as necessary for the purposes of the administration or enforcement of this Act, the Canada Pension Plan or the Employment Insurance Act, solely for that purpose;

• (4) Paragraph 241(4)(d) of the Act is amended by adding the following after subparagraph (vi.1):

  • (vi.2) to a person employed or engaged in the service of an office or agency of the Government of Canada solely for the purposes of administering or enforcing sections 127.48, 127.49 and 127.491 or the evaluation or formulation of related policies or guidelines,

• (5) Subparagraph 241(4)(d)(vii.10) of the Act is renumbered as subparagraph 241(4)(d)(vii.91).

• (6) Paragraph 241(4)(h) of the Act is replaced by the following:

  • (h) use, or provide to any person, taxpayer information solely for a purpose relating to the supervision, evaluation or discipline of an authorized person by His Majesty in right of Canada in respect of a period during which the authorized person was employed by or engaged by or on behalf of His Majesty in right of Canada to assist in the administration or enforcement of this Act, the Canada Pension Plan or the Employment Insurance Act, to the extent that the information is relevant for the purpose;

• (7) The definition authorized person in subsection 241(10) of the Act is replaced by the following:

  authorized person

  authorized person means a person who is engaged or employed, or who was formerly engaged or employed, by or on behalf of His Majesty in right of Canada to assist in carrying out the provisions of this Act, the Canada Pension Plan or the Employment Insurance Act; (personne autorisée)

• (8) Subsection (4) is deemed to have come into force on March 28, 2023, except that, before January 1, 2024, subparagraph 241(4)(d)(vi.2) of the Act (as enacted by subsection (4)) is to be read without reference to section 127.49.

• 75 (1) Paragraph (d) of the definition automobile in subsection 248(1) of the Act is replaced by the following:

  • (d) except for the purposes of sections 6 and 15, a motor vehicle acquired to be sold, rented or leased in the course of carrying on a business of selling, renting or leasing motor vehicles or a motor vehicle used for the purpose of transporting passengers in the course of carrying on a business of arranging or managing funerals, and

• (2) Subsection (1) is deemed to have come into force on August 4, 2023.

• 76 (1) Subsection 250(6) of the Act is amended by striking out “and” at the end of paragraph (b), by adding “and” at the end of paragraph (c) and by adding the following after paragraph (c):

  • (d) the corporation files an election in prescribed form and manner in respect of the year.

• (2) The portion of subsection 250(6.03) of the Act before paragraph (a) is replaced by the following:

  • Marginal note:Service providers

    (6.03) If this subsection applies for a taxation year, then for the purposes of subsection (6) and paragraphs 81(1)(c) and (c.1),

• (3) The definition eligible entity in subsection 250(6.04) of the Act is amended by striking out “or” at the end of paragraph (a) and by adding the following after that paragraph:

  • (a.1) a corporation resident in Canada (if this Act were read without reference to subsection (4)) that satisfies the conditions set out in paragraphs (6)(a) and (b); or

• (4) Subsections (1) to (3) apply to taxation years that begin on or after December 31, 2023.

C.R.C., c. 945Income Tax Regulations

• 77 (1) The definition remuneration in subsection 100(1) of the Income Tax Regulations is amended by striking out “or” at the end of paragraph (p), by adding “or” at the end of paragraph (q) and by adding the following after paragraph (q):

  • (r) an amount that is required by subparagraph 56(1)(a)(viii) of the Act to be included in computing the taxpayer’s income; (rémunération)

• (2) Subsection (1) is deemed to have come into force on April 1, 2019.

• 78 (1) Subclause (a)(i)(J)(I) of the definition qualified zero-emission technology manufacturing activities in section 5202 of the Regulations is replaced by the following:

  • (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) to (d)), or

• (2) Subsection (1) is deemed to have come into force on January 1, 2024.

• 79 (1) The portion of clause (d)(xviii)(A) of Class 43.1 in Schedule II to the Regulations before subclause (I) is replaced by the following:

  • (A) is used by the taxpayer, or by a lessee of the taxpayer, primarily for the purpose of storing and discharging electrical energy

• (2) Subclause (d)(xviii)(B)(I) of Class 43.1 in Schedule II to the Regulations is replaced by the following:

  • (I) the electrical energy to be stored and discharged is generated from other property that is described in paragraph (c) or in any other subparagraph of this paragraph, or

• (3) The portion of subparagraph (d)(xix) of Class 43.1 in Schedule II to the Regulations before clause (A) is replaced by the following:

  • (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 and discharge 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

• (4) Subparagraph (e)(i) of Class 43.1 in Schedule II to the Regulations is replaced by the following:

  • (i) is situated in Canada, including property described in subparagraph (d)(v) or (xiv) that is installed in the exclusive economic zone of Canada,

Coordinating Amendments

Marginal note:Bill C-59

• 80 (1) Subsections (2) to (212) apply if Bill C-59, introduced in the 1st session of the 44th Parliament and entitled the Fall Economic Statement Implementation Act, 2023 (in this section referred to as the “other Act”), receives royal assent.

• (2) Paragraph 12(1)(t) of the Income Tax Act, as enacted by subsection 5(1) of this Act, is replaced by the following:

  • Marginal note:Investment tax credit

    (t) the amount deducted under subsection 127(5) or (6), 127.44(3), 127.45(6) or 127.48(3) in respect of a property acquired or an expenditure made in a preceding taxation year in computing the taxpayer’s tax payable for a preceding taxation year to the extent that it was not included in computing the taxpayer’s income for a preceding taxation year under this paragraph or is not included in an amount determined under paragraph 13(7.1)(e) or 37(1)(e), subparagraph 53(2)(c)(vi) to (vi.3) or (h)(ii) or for I in the definition undepreciated capital cost in subsection 13(21) or L in the definition cumulative Canadian exploration expense in subsection 66.1(6);

• (3) Paragraph 12(1)(t) of the Income Tax Act, as enacted by subsection 5(2) of this Act, is replaced by the following:

  • Marginal note:Investment tax credit

    (t) the amount deducted under subsection 127(5) or (6), 127.44(3), 127.45(6), 127.48(3) or 127.49(6) in respect of a property acquired or an expenditure made in a preceding taxation year in computing the taxpayer’s tax payable for a preceding taxation year to the extent that it was not included in computing the taxpayer’s income for a preceding taxation year under this paragraph or is not included in an amount determined under paragraph 13(7.1)(e) or 37(1)(e), subparagraph 53(2)(c)(vi) to (vi.4) or (h)(ii) or for I in the definition undepreciated capital cost in subsection 13(21) or L in the definition cumulative Canadian exploration expense in subsection 66.1(6);

• (4) The portion of subsection 13(7.1) of the Income Tax Act before paragraph (a), as enacted by subsection 6(2) of this Act, is replaced by the following:

  • Marginal note:Deemed capital cost of certain property

    (7.1) For the purposes of this Act, where section 80 applied to reduce the capital cost to a taxpayer of a depreciable property or a taxpayer deducted an amount under subsection 127(5) or (6), 127.44(3), 127.45(6) or 127.48(3) in respect of a depreciable property or received or is entitled to receive assistance from a government, municipality or other public authority in respect of, or for the acquisition of, depreciable property, whether as a grant, subsidy, forgivable loan, deduction from tax, investment allowance or as any other form of assistance other than

• (5) The portion of subsection 13(7.1) of the Income Tax Act before paragraph (a), as enacted by subsection 6(3) of this Act, is replaced by the following:

  • Marginal note:Deemed capital cost of certain property

    (7.1) For the purposes of this Act, where section 80 applied to reduce the capital cost to a taxpayer of a depreciable property or a taxpayer deducted an amount under subsection 127(5) or (6), 127.44(3), 127.45(6), 127.48(3) or 127.49(6) in respect of a depreciable property or received or is entitled to receive assistance from a government, municipality or other public authority in respect of, or for the acquisition of, depreciable property, whether as a grant, subsidy, forgivable loan, deduction from tax, investment allowance or as any other form of assistance other than

• (6) Paragraph 13(7.1)(e) of the Income Tax Act, as enacted by subsection 6(5) of this Act, is replaced by the following:

  • (e) where the property was acquired in a taxation year ending before the particular time, all amounts deducted under subsection 127(5) or (6), 127.44(3), 127.45(6) or 127.48(3) by the taxpayer for a taxation year ending before the particular time,

• (7) Paragraph 13(7.1)(e) of the Income Tax Act, as enacted by subsection 6(6) of this Act, is replaced by the following:

  • (e) where the property was acquired in a taxation year ending before the particular time, all amounts deducted under subsection 127(5) or (6), 127.44(3), 127.45(6), 127.48(3) or 127.49(6) by the taxpayer for a taxation year ending before the particular time,

• (8) The description of I in the definition undepreciated capital cost in subsection 13(21) of the Income Tax Act, as enacted by subsection 6(7) of this Act, is replaced by the following:

  I

  is the total of all amounts deducted under subsection 127(5) or (6), 127.44(3), 127.45(6) or 127.48(3), in respect of a depreciable property of the class of the taxpayer, in computing the taxpayer’s tax payable for a taxation year ending before that time and subsequent to the disposition of that property by the taxpayer,

• (9) The description of I in the definition undepreciated capital cost in subsection 13(21) of the Income Tax Act, as enacted by subsection 6(8) of this Act, is replaced by the following:

  I

  is the total of all amounts deducted under subsection 127(5) or (6), 127.44(3), 127.45(6), 127.48(3) or 127.49(6), in respect of a depreciable property of the class of the taxpayer, in computing the taxpayer’s tax payable for a taxation year ending before that time and subsequent to the disposition of that property by the taxpayer,

• (10) The portion of paragraph 13(24)(a) of the Income Tax Act before subparagraph (i), as enacted by subsection 6(9) of this Act, is replaced by the following:

  • (a) subject to paragraph (b), for the purposes of the description of A in the definition undepreciated capital cost in subsection (21) and of sections 127, 127.1, 127.44, 127.45 and 127.48, the property is deemed

• (11) The portion of paragraph 13(24)(a) of the Income Tax Act before subparagraph (i), as enacted by subsection 6(10) of this Act, is replaced by the following:

  • (a) subject to paragraph (b), for the purposes of the description of A in the definition undepreciated capital cost in subsection (21) and of sections 127, 127.1, 127.44, 127.45, 127.48 and 127.49, the property is deemed

• (12) The portion of paragraph (l) in the description of B in the definition adjusted taxable income in subsection 18.2(1) of the Income Tax Act before subparagraph (ii) is replaced by the following:

  • (l) an amount deducted under subsection 127(5) or (6), 127.44(3), 127.45(6) or 127.48(3) in respect of a property acquired in a preceding taxation year in computing the taxpayer’s tax payable for a preceding taxation year to the extent that it

    • (i) is included in an amount determined under paragraph 13(7.1)(e) or subparagraph 53(2)(c)(vi) to (vi.3) or (h)(ii) or for I in the definition undepreciated capital cost in subsection 13(21), and

• (13) The portion of paragraph (l) in the description of B in the definition adjusted taxable income in subsection 18.2(1) of the Income Tax Act before subparagraph (ii), as enacted by subsection (12), is replaced by the following:

  • (l) an amount deducted under subsection 127(5) or (6), 127.44(3), 127.45(6), 127.48(3) or 127.49(6) in respect of a property acquired in a preceding taxation year in computing the taxpayer’s tax payable for a preceding taxation year to the extent that it

    • (i) is included in an amount determined under paragraph 13(7.1)(e) or subparagraph 53(2)(c)(vi) to (vi.4) or (h)(ii) or for I in the definition undepreciated capital cost in subsection 13(21), and

• (14) Subparagraph 53(1)(e)(xiii) of the Income Tax Act, as enacted by subsection 10(1) of this Act, is replaced by the following:

  • (xiii) any amount required by subsection 127(30) or 127.45(17) or section 127.48 or 211.92 to be added to the taxpayer’s tax otherwise payable under this Part for a taxation year that ended before that time in respect of the interest in the partnership;

• (15) Subparagraph 53(1)(e)(xiii) of the Income Tax Act, as enacted by subsection 10(2) of this Act, is replaced by the following:

  • (xiii) any amount required by subsection 127(30), 127.45(17), section 127.48, subsection 127.49(17) or section 211.92 to be added to the taxpayer’s tax otherwise payable under this Part for a taxation year that ended before that time in respect of the interest in the partnership;

• (16) Subparagraph 53(2)(c)(viii.1) of the Income Tax Act, as enacted by subsection 10(3) of this Act, is renumbered as subparagraph 53(2)(c)(vi.3) and is repositioned accordingly.

• (17) Subparagraph 53(2)(c)(viii.2) of the Income Tax Act, as enacted by subsection 10(4) of this Act, is renumbered as subparagraph 53(2)(c)(vi.4) and is repositioned accordingly.

• (18) Subclause 66.8(1)(a)(ii)(B)(I) of the Income Tax Act, as enacted by subsection 15(1) of this Act, is replaced by the following:

  • (I) the total of all amounts required by subsections 127(8), 127.44(11), 127.45(8) and 127.48(12) in respect of the partnership to be added in computing the investment tax credit, the CCUS tax credit (as defined in subsection 127.44(1)), the clean technology investment tax credit (as defined in subsection 127.45(1)) or the clean hydrogen tax credit (as defined in subsection 127.48(1)) of the taxpayer in respect of the fiscal period, and

• (19) Subclause 66.8(1)(a)(ii)(B)(I) of the Income Tax Act, as enacted by subsection 15(2) of this Act, is replaced by the following:

  • (I) the total of all amounts required by subsections 127(8), 127.44(11), 127.45(8), 127.48(12) and 127.49(8) in respect of the partnership to be added in computing the investment tax credit, the CCUS tax credit (as defined in subsection 127.44(1)), the clean technology investment tax credit (as defined in subsection 127.45(1)), the clean hydrogen tax credit (as defined in subsection 127.48(1)) or the CTM investment tax credit (as defined in subsection 127.49(1)) of the taxpayer in respect of the fiscal period, and

• (20) Paragraph 87(2)(j.6) of the Income Tax Act is replaced by the following:

  • Marginal note:Continuing corporation

    (j.6) for the purposes of paragraphs 12(1)(t) and (x), subsections 12(2.2) and 13(7.1), (7.4) and (24), paragraphs 13(27)(b) and (28)(c), subsections 13(29) and 18(9.1), paragraphs 20(1)(e), (e.1), (v) and (hh), sections 20.1 and 32, paragraph 37(1)(c), subsection 39(13), subparagraphs 53(2)(c)(vi) and (h)(ii), paragraph 53(2)(s), subsections 53(2.1), 66(11.4), 66.7(11) and 84.1(2.31) and (2.32), section 110.61, subsection 127(10.2), section 139.1, subsection 152(4.3), the determination of D in the definition undepreciated capital cost in subsection 13(21), the determination of L in the definition cumulative Canadian exploration expense in subsection 66.1(6) and the definition qualifying business transfer in subsection 248(1), the new corporation is deemed to be the same corporation as, and a continuation of, each predecessor corporation;

• (21) Paragraph 87(2)(qq.1) of the Income Tax Act, as enacted by subsection 18(1) of this Act, is deemed to have been repealed immediately after the expiration of March 27, 2023.

• (22) Paragraph 87(2)(qq.1) of the Income Tax Act, as enacted by subsection 18(2) of this Act, is deemed to have been repealed on January 1, 2024.

• (23) Paragraph 87(2)(qq.1) of the Income Tax Act, as enacted by subsection 18(2) of the other Act, is replaced by the following:

  • Marginal note:Continuation of corporation

    (qq.1) for the purposes of sections 127.44, 127.45 and 127.48 and Part XII.7, the new corporation is deemed to be the same corporation as, and a continuation of, each predecessor corporation;

• (24) Paragraph 87(2)(qq.1) of the Income Tax Act, as enacted by subsection (23), is replaced by the following:

  • Marginal note:Continuation of corporation

    (qq.1) for the purposes of sections 127.44, 127.45, 127.48 and 127.49 and Part XII.7, the new corporation is deemed to be the same corporation as, and a continuation of, each predecessor corporation;

• (25) Paragraph 88(1)(e.31) of the Income Tax Act, as enacted by subsection 19(1) of this Act, is deemed to have been repealed immediately after the expiration of March 27, 2023.

• (26) Paragraph 88(1)(e.31) of the Income Tax Act, as enacted by subsection 19(2) of this Act, is deemed to have been repealed on January 1, 2024.

• (27) Paragraph 88(1)(e.31) of the Income Tax Act, as enacted by subsection 19(1) of the other Act, is replaced by the following:

  • (e.31) for the purposes of sections 127.44, 127.45 and 127.48 and Part XII.7, at the end of any particular taxation year ending after the subsidiary was wound up, the parent is deemed to be the same corporation as, and a continuation of the subsidiary;

• (28) Paragraph 88(1)(e.31) of the Income Tax Act, as enacted by subsection (27), is replaced by the following:

  • (e.31) for the purposes of sections 127.44, 127.45, 127.48 and 127.49 and Part XII.7, at the end of any particular taxation year ending after the subsidiary was wound up, the parent is deemed to be the same corporation as, and a continuation of the subsidiary;

• (29) Paragraph 88(2)(c) of the Income Tax Act, as enacted by subsection 19(3) of this Act, is replaced by the following:

  • (c) for the purpose of computing the income of the corporation for its taxation year that includes the particular time, paragraph 12(1)(t) shall be read as follows:

    • “(t) the amount deducted under subsection 127(5) or (6), 127.44(3), 127.45(6) or 127.48(3) in computing the taxpayer’s tax payable for the year or a preceding taxation year to the extent that it was not included under this paragraph in computing the taxpayer’s income for a preceding taxation year or is not included in an amount determined under paragraph 13(7.1)(e) or 37(1)(e) or subparagraph 53(2)(c)(vi) to (c)(vi.3) or (h)(ii) or the amount determined for I in the definition undepreciated capital cost in subsection 13(21) or L in the definition cumulative Canadian exploration expense in subsection 66.1(6);”.

• (30) Paragraph 88(2)(c) of the Income Tax Act, as enacted by subsection 19(4) of this Act, is replaced by the following:

  • (c) for the purpose of computing the income of the corporation for its taxation year that includes the particular time, paragraph 12(1)(t) shall be read as follows:

    • “(t) the amount deducted under subsection 127(5) or (6), 127.44(3), 127.45(6), 127.48(3) or 127.49(6) in computing the taxpayer’s tax payable for the year or a preceding taxation year to the extent that it was not included under this paragraph in computing the taxpayer’s income for a preceding taxation year or is not included in an amount determined under paragraph 13(7.1)(e) or 37(1)(e) or subparagraph 53(2)(c)(vi) to (c)(vi.4) or (h)(ii) or the amount determined for I in the definition undepreciated capital cost in subsection 13(21) or L in the definition cumulative Canadian exploration expense in subsection 66.1(6);”.

• (31) Subparagraph 96(2.1)(b)(ii) of the Income Tax Act, as enacted by subsection 22(1) of this Act, is replaced by the following:

  • (ii) the amount required by subsection 127(8), 127.44(11), 127.45(8) or 127.48(12) in respect of the partnership to be added in computing the investment tax credit, the CCUS tax credit (as defined in subsection 127.44(1)), the clean technology investment tax credit (as defined in subsection 127.45(1)) or the clean hydrogen tax credit (as defined in subsection 127.48(1)) of the taxpayer for the taxation year,

• (32) Subparagraph 96(2.1)(b)(ii) of the Income Tax Act, as enacted by subsection 22(2) of this Act, is replaced by the following:

  • (ii) the amount required by subsection 127(8), 127.44(11), 127.45(8), 127.48(12) or 127.49(8) in respect of the partnership to be added in computing the investment tax credit, the CCUS tax credit (as defined in subsection 127.44(1)), the clean technology investment tax credit (as defined in subsection 127.45(1)), the clean hydrogen tax credit (as defined in subsection 127.48(1)) or the CTM investment tax credit (as defined in subsection 127.49(1)) of the taxpayer for the taxation year,

• (33) The portion of subsection 96(2.2) of the Income Tax Act before paragraph (a), as enacted by subsection 22(3) of this Act, is replaced by the following:

  • Marginal note:At-risk amount

    (2.2) For the purposes of this section and sections 111, 127, 127.44, 127.45, 127.47 and 127.48, the at-risk amount of a taxpayer, in respect of a partnership of which the taxpayer is a limited partner, at any particular time is the amount, if any, by which the total of

• (34) The portion of subsection 96(2.2) of the Income Tax Act before paragraph (a), as enacted by subsection 22(4) of this Act, is replaced by the following:

  • Marginal note:At-risk amount

    (2.2) For the purposes of this section and sections 111, 127, 127.44, 127.45, 127.47, 127.48 and 127.49, the at-risk amount of a taxpayer, in respect of a partnership of which the taxpayer is a limited partner, at any particular time is the amount, if any, by which the total of

• (35) The portion of subsection 96(2.4) of the Income Tax Act before paragraph (a), as enacted by subsection 22(5) of this Act, is replaced by the following:

  • Marginal note:Limited partner

    (2.4) For the purposes of this section and sections 111, 127, 127.44, 127.45, 127.47 and 127.48, a taxpayer who is a member of a partnership at a particular time is a limited partner of the partnership at that time if the member’s partnership interest is not an exempt interest (within the meaning assigned by subsection (2.5)) at that time and if, at that time or within three years after that time,

• (36) The portion of subsection 96(2.4) of the Income Tax Act before paragraph (a), as enacted by subsection 22(6) of this Act, is replaced by the following:

  • Marginal note:Limited partner

    (2.4) For the purposes of this section and sections 111, 127, 127.44, 127.45, 127.47, 127.48 and 127.49, a taxpayer who is a member of a partnership at a particular time is a limited partner of the partnership at that time if the member’s partnership interest is not an exempt interest (within the meaning assigned by subsection (2.5)) at that time and if, at that time or within three years after that time,

• (37) The Income Tax Act is amended by adding the following after section 110.6:

  Marginal note:Capital gains deduction for qualifying business transfer – conditions

  • 110.61 (1) Subsection (2) applies to an individual (other than a trust) if, at the time of a disposition (referred to in this section as the “disposition time”) of shares of the capital stock (referred to in this section as the “subject shares”) of a corporation (referred to in this section as the “subject corporation”) to a trust (or to a purchaser corporation wholly owned by the trust) that occurred after 2023 and before 2027 under a qualifying business transfer, the following conditions are met:

    • (a) no individual has prior to the disposition time sought a deduction under this section in respect of a disposition of shares that, at the time of that disposition, derived their value from an active business that is also relevant to the determination of whether the disposition of the subject shares satisfies the condition set out in paragraph (a) of the definition qualifying business transfer in subsection 248(1);

    • (b) throughout the 24 months immediately preceding the disposition time,

      • (i) the subject shares were not owned by anyone other than the individual or a person or partnership related to the individual, and

      • (ii) more than 50% of the fair market value of the subject shares was derived from assets which were used principally in an active business;

    • (c) immediately before the disposition time,

      • (i) the subject corporation and each corporation affiliated with the subject corporation in which the subject corporation owns (directly or indirectly) shares is not a professional corporation, and

      • (ii) the trust does not control a corporation whose employees are beneficiaries of the trust;

    • (d) at the disposition time,

      • (i) the individual is at least 18 years of age,

      • (ii) throughout any 24-month period ending before the disposition time, the individual, or a spouse or common-law partner of the individual, was actively engaged on a regular and continuous basis in the business that is relevant to the determination of whether the subject shares satisfy the condition set out in paragraph (a) of the definition qualifying business transfer in subsection 248(1), and

      • (iii) at least 75% of the beneficiaries of the trust are resident in Canada; and

    • (e) the trust, any purchaser corporation owned by the trust, the individual and any other individual entitled to a deduction under subsection (2) in respect of the qualifying business transfer

      • (i) jointly elect, in prescribed form, for the deduction provided under subsection (2) to apply in respect of the disposition of the subject shares,

      • (ii) include the following information in the election:

        • (A) an amount (in this paragraph referred to as the “elected amount”) equal to the total amount of capital gains that the parties agree may be eligible for a deduction under subsection (2) with respect to the qualifying business transfer, not exceeding $10,000,000, and

        • (B) if more than one individual is eligible for a deduction in respect of the qualifying business transfer, the percentage of the elected amount that is assigned to each eligible individual (provided that the total percentages assigned to all individuals cannot exceed 100%), and

      • (iii) file the election with the Minister on or before the trust’s filing-due date for the taxation year that includes the disposition time.

  • Marginal note:Capital gains deduction — qualifying business transfers

    (2) If this subsection applies to an individual, in computing the taxable income for a taxation year of the individual, there may be deducted such amount as the individual may claim not exceeding the least of

    • (a) the amount that would be determined in respect of the individual for the year under paragraph 3(b) (to the extent that that amount is not included in computing an amount determined under paragraph 110.6(2)(d) or (2.1)(d) for the individual) in respect of capital gains and capital losses if the only properties referred to in paragraph 3(b) were the subject shares of the individual, and

    • (b) an amount determined by the formula

      A × B × C − D

      where

      A

      is the elected amount (within the meaning of clause (1)(e)(ii)(A)) included in the joint election referred to in paragraph (1)(e),

      B

      is

      • (i) 1, unless more than one individual is entitled to a deduction under this subsection in respect of the qualifying business transfer,

      • (ii) the percentage assigned to the individual in the joint election referred to in paragraph (1)(e), if a percentage is assigned to the individual in accordance with clause (1)(e)(ii)(B), and

      • (iii) in any other case, nil,

      C

      is the fraction of the taxpayer’s capital gain from the disposition of the subject shares that is a taxable capital gain under paragraph 38(a) that applies to the subject shares in the year, and

      D

      is the total of each amount claimed by the taxpayer under this subsection in a prior taxation year in respect of the disposition of the subject shares multiplied by the amount determined by the formula

      E ÷ F

      where

      E

      is the fraction of a capital gain that is a taxable capital gain under paragraph 38(a) in the current year, and

      F

      is the fraction of a capital gain that is a taxable capital gain under paragraph 38(a) in the prior year in respect of the disposition of the subject shares.

  • Marginal note:Disqualifying event

    (3) For the purposes of this section, a disqualifying event in respect of a qualifying business transfer occurs at the earliest of

    • (a) the time when the trust that participated in the qualifying business transfer ceases to be an employee ownership trust, and

    • (b) the time that is the beginning of the taxation year of a qualifying business of the trust in which less than 50% of the fair market value of the shares of the qualifying business is attributable to assets used principally in an active business carried on by one or more qualifying businesses controlled by the trust at both that time and at the beginning of the preceding taxation year of the qualifying business.

  • Marginal note:Consequences of a disqualifying event

    (4) If a disqualifying event in respect of a qualifying business transfer occurs

    • (a) within 24 months of the disposition time for the qualifying business transfer, subsection (2) is deemed to have never applied in respect of the subject shares disposed of under the qualifying business transfer; or

    • (b) any time after the day that is 24 months after the disposition time for the qualifying business transfer, in computing the income of the trust that participated in the qualifying business transfer, the trust is deemed to have a gain equal to the elected amount (within the meaning of clause (1)(e)(ii)(A)) included in the joint election referred to in paragraph (1)(e), for the year in which the disqualifying event occurs, from the disposition of a capital property.

  • Marginal note:Anti-avoidance

    (5) Despite any other provision in this section, subsection (2) does not apply in respect of a qualifying business transfer if it is reasonable to consider that one of the purposes of any transaction (as defined in subsection 245(1)), or series of transactions, is to

    • (a) involve the trust (or the purchaser corporation) in the qualifying business transfer to accommodate the direct or indirect acquisition of subject shares (or the acquisition of all or substantially all of the risk of loss and opportunity for gain or profit in respect of the subject shares) by another person or partnership (other than the trust or the purchaser corporation) in a manner that permits an individual to claim a deduction under subsection (2) that would otherwise not be available; or

    • (b) organize or reorganize a subject corporation or any other corporation, partnership or trust in a manner that allows a deduction to be claimed under subsection (2) in respect of more than one qualifying business transfer of a business that is relevant to the determination of whether subject shares satisfied the condition set out in paragraph (a) of the definition qualifying business transfer in subsection 248(1).

  • Marginal note:Failure to report capital gain

    (6) Despite subsection (2), no amount may be deducted under this section in respect of a capital gain of an individual for a particular taxation year in computing the individual’s taxable income for the particular taxation year or any subsequent year, if

    • (a) the individual knowingly or under circumstances amounting to gross negligence

      • (i) fails to file the individual’s return of income for the particular taxation year within one year after the taxpayer’s filing-due date for the particular taxation year, or

      • (ii) fails to report the capital gain in the individual’s return of income for the particular taxation year; and

    • (b) the Minister establishes the facts justifying the denial of such an amount under this section.

  • Marginal note:Deduction not permitted

    (7) Despite subsection (2), no amount may be deducted under this section in computing an individual’s taxable income for a taxation year in respect of a capital gain of the individual for the taxation year if the capital gain is from a disposition of property which disposition is part of a series of transactions or events

    • (a) that includes a dividend received by a corporation to which dividend subsection 55(2) does not apply but would apply if this Act were read without reference to paragraph 55(3)(b); or

    • (b) in which any property is acquired by a corporation or partnership for consideration that is significantly less than the fair market value of the property at the time of acquisition (other than an acquisition as the result of an amalgamation or merger of corporations or the winding-up of a corporation or partnership or a distribution of property of a trust in satisfaction of all or part of a corporation’s capital interest in the trust).

  • Marginal note:Deduction not permitted

    (8) Despite subsection (2), if an individual has a capital gain for a taxation year from the disposition of a property and it can reasonably be concluded, having regard to all the circumstances, that a significant part of the capital gain is attributable to the fact that dividends were not paid on a share (other than a prescribed share within the meaning of subsection 110.6(8)) or that dividends paid on such a share in the taxation year or in any preceding taxation year were less than 90% of the average annual rate of return on that share for that year, no amount in respect of that capital gain shall be deducted under this section in computing the individual’s taxable income for the year.

  • Marginal note:Average annual rate of return

    (9) For the purpose of subsection (8), the average annual rate of return on a share (other than a prescribed share within the meaning of subsection 110.6(8)) of a corporation for a taxation year is the annual rate of return by way of dividends that a knowledgeable and prudent investor who purchased the share on the day it was issued would expect to receive in that year, other than the first year after the issue, in respect of the share if

    • (a) there was no delay or postponement of the payment of dividends and no failure to pay dividends in respect of the share;

    • (b) there was no variation from year to year in the amount of dividends payable in respect of the share (other than where the amount of dividends payable is expressed as an invariant percentage of or by reference to an invariant difference between the dividend expressed as a rate of interest and a generally quoted market interest rate); and

    • (c) the proceeds to be received by the investor on the disposition of the share are the same amount the corporation received as consideration on the issue of the share.

  • Marginal note:Deduction not permitted

    (10) If it is reasonable to consider that one of the main reasons for an individual acquiring, holding or having an interest in a partnership or trust (other than an interest in a personal trust) or for the existence of any terms, conditions, rights or other attributes of the interest is to enable the individual to receive or have allocated to the individual a percentage of any capital gain or taxable capital gain of the partnership or trust that is larger than the individual’s percentage of the income of the partnership or trust, as the case may be, despite any other provision of this Act, no amount may be deducted under subsection (2) by the individual in respect of any such gain allocated or distributed to the individual.

  • Marginal note:Related persons, etc.

    (11) For the purposes of this section,

    • (a) a taxpayer shall be deemed to have disposed of shares that are identical properties in the order in which the taxpayer acquired them;

    • (b) a personal trust shall be deemed

      • (i) to be related to a person or partnership for any period throughout which the person or partnership was a beneficiary of the trust, and

      • (ii) in respect of shares of the capital stock of a corporation, to be related to the person from whom it acquired those shares if, at the time the trust disposed of the shares, all of the beneficiaries (other than registered charities) of the trust were related to that person or would have been so related if that person were living at that time;

    • (c) a partnership shall be deemed to be related to a person for any period throughout which the person was a member of the partnership;

    • (d) a person who is a member of a partnership that is a member of another partnership is deemed to be a member of the other partnership;

    • (e) if a corporation acquires shares of a class of the capital stock of another corporation from any person, it shall be deemed in respect of those shares to be related to the person if all or substantially all the consideration received by that person from the corporation in respect of those shares was common shares of the capital stock of the corporation; and

    • (f) shares issued by a corporation to a particular person or partnership shall be deemed to have been owned immediately before their issue by a person who was not related to the particular person or partnership unless the shares were issued

      • (i) as consideration for other shares,

      • (ii) as part of a transaction or series of transactions in which the person or partnership disposed of property to the corporation that consisted of

        • (A) all or substantially all the assets used in an active business carried on by that person or the members of that partnership, or

        • (B) an interest in a partnership all or substantially all the assets of which were used in an active business carried on by the members of the partnership, or

      • (iii) as payment of a stock dividend.

• (38) Clause 111(1)(e)(ii)(A) of the Income Tax Act, as enacted by subsection 24(1) of this Act, is replaced by the following:

  • (A) the amount required by subsection 127(8), 127.44(11), 127.45(8) or 127.48(12) in respect of the partnership to be added in computing the investment tax credit, the CCUS tax credit (as defined in subsection 127.44(1)), the clean technology investment tax credit (as defined in subsection 127.45(1)) or the clean hydrogen tax credit (as defined in subsection 127.48(1)) of the taxpayer for the taxation year,

• (39) Clause 111(1)(e)(ii)(A) of the Income Tax Act, as enacted by subsection 24(2) of this Act, is replaced by the following:

  • (A) the amount required by subsections 127(8), 127.44(11), 127.45(8), 127.48(12) or 127.49(8) in respect of the partnership to be added in computing the investment tax credit, the CCUS tax credit (as defined in subsection 127.44(1)), the clean technology investment tax credit (as defined in subsection 127.45(1)), the clean hydrogen tax credit (as defined in subsection 127.48(1)) or the CTM investment tax credit (as defined in subsection 127.49(1)) of the taxpayer for the taxation year

• (40) Paragraph (b) of the description of E in the definition non-capital loss in subsection 111(8) of the Income Tax Act is replaced by the following:

  • (b) an amount deducted under paragraph (1)(a.1) or (b) or section 110.6, or deductible under any of paragraphs 110(1)(d) to (g) and (k), section 112 and subsections 113(1) and 138(6), in computing the taxpayer’s taxable income for the year, or

• (41) The definition government assistance in subsection 127(9) of the Income Tax Act, as enacted by subsection 34(3) of this Act, is replaced by the following:

  government assistance

  government assistance means assistance from a government, municipality or other public authority whether as a grant, subsidy, forgivable loan, deduction from tax, investment allowance or as any other form of assistance, other than as an excluded loan (as defined in subsection 12(11)) or as a deduction under subsection (5) or (6) or a deemed payment on account of tax payable under subsection 127.44(2); (aide gouvernementale)

• (42) The definition government assistance in subsection 127(9) of the Income Tax Act, as enacted by subsection 34(4) of this Act, is replaced by the following:

  government assistance

  government assistance means assistance from a government, municipality or other public authority whether as a grant, subsidy, forgivable loan, deduction from tax, investment allowance or as any other form of assistance, other than as an excluded loan (as defined in subsection 12(11)) or as a deduction under subsection (5) or (6) or a deemed payment on account of tax payable under subsection 127.44(2), 127.45(2) or 127.48(2); (aide gouvernementale)

• (43) The definition government assistance in subsection 127(9) of the Income Tax Act, as enacted by subsection 34(5) of this Act, is replaced by the following:

  government assistance

  government assistance means assistance from a government, municipality or other public authority whether as a grant, subsidy, forgivable loan, deduction from tax, investment allowance or as any other form of assistance, other than as an excluded loan (as defined in subsection 12(11)) or as a deduction under subsection (5) or (6) or a deemed payment on account of tax payable under subsection 127.44(2), 127.45(2), 127.48(2) or 127.49(2); (aide gouvernementale)

• (44) The definition dedicated geological storage in subsection 127.44(1) of the Income Tax Act is replaced by the following:

  dedicated geological storage

  dedicated geological storage means a geological formation that is

  • (a) located in a designated jurisdiction;

  • (b) capable of permanently storing captured carbon;

  • (c) authorized and regulated for the storage of captured carbon under the laws of the designated jurisdiction; and

  • (d) a formation in which no captured carbon is used for enhanced oil recovery.‍ (stockage géologique dédié)

• (45) The portion of the definition dual-use equipment in subsection 127.44(1) of the Income Tax Act before paragraph (b) is replaced by the following:

  dual-use equipment

  dual-use equipment means property, other than property described in Class 57 or 58 of Schedule II to the Income Tax Regulations, that is part of a CCUS project of a taxpayer that is described in any of the following paragraphs (and, in the case of property acquired before the first day of commercial operations of the CCUS project, that is verified by the Minister of Natural Resources as being described in any of the following paragraphs):

  • (a) equipment that is not used for natural gas processing or acid gas injection and that

    • (i) generates electrical energy, heat energy or a combination of electrical and heat energy, if more than 50% of either the electrical energy or heat energy that is expected to be produced over the total CCUS project review period, based on the most recent project plan, is expected (not including equipment that supports the CCUS project indirectly by way of an electrical utility grid) to directly support

      • (A) a qualified CCUS project, unless the equipment uses fossil fuels and emits carbon dioxide that is not subject to capture by a qualified CCUS project, or

      • (B) hydrogen production from electrolysis or natural gas as long as emissions are abated by a qualified CCUS project, unless the equipment uses fossil fuels and emits carbon dioxide that is not subject to capture by a qualified CCUS project,

    • (ii) delivers, collects, recovers, treats or recirculates water, or a combination of any of those activities, in support of a qualified CCUS project,

    • (iii) is equipment that directly transmits electrical energy from a system described in subparagraph (i) to a qualified CCUS project and more than 50% of the electrical energy to be transmitted by the equipment over the total CCUS project review period, based on the most recent project plan, is expected to support the qualified CCUS project or hydrogen production from electrolysis or natural gas as long as emissions are abated by a qualified CCUS project, or

    • (iv) is equipment that distributes electrical or heat energy;

• (46) The portion of the definition dual-use equipment in subsection 127.44(1) of the Income Tax Act before paragraph (b), as enacted by subsection (45), is replaced by the following:

  dual-use equipment 

  dual-use equipment  means property, other than property described in Class 57 or 58 of Schedule II to the Income Tax Regulations, that is part of a CCUS project of a taxpayer that is described in any of the following paragraphs (and, in the case of property acquired before the first day of commercial operations of the CCUS project, that is verified by the Minister of Natural Resources as being described in any of the following paragraphs):

  • (a) equipment that is not used for natural gas processing or acid gas injection, and that

    • (i) generates electrical energy, heat energy or a combination of electrical and heat energy, if more than 50% of either the electrical energy or heat energy that is expected to be produced over the total CCUS project review period, based on the most recent project plan, is expected (not including equipment that supports the CCUS project indirectly by way of an electrical utility grid) to directly support

      • (A) a qualified CCUS project, unless the equipment uses fossil fuels and emits carbon dioxide that is not subject to capture by a qualified CCUS project, or

      • (B) a qualified clean hydrogen project as defined in subsection 127.48(1), unless the equipment uses fossil fuels and emits carbon dioxide that is not subject to capture by a qualified CCUS project,

    • (ii) delivers, collects, recovers, treats or recirculates water, or a combination of any of those activities, in support of a qualified CCUS project,

    • (iii) is equipment that directly transmits electrical energy from a system described in subparagraph (i) to a qualified CCUS project and more than 50% of the electrical energy to be transmitted by the equipment over the total CCUS project review period, based on the most recent project plan, is expected to support the qualified CCUS project or a qualified clean hydrogen project as defined in subsection 127.48(1), or

    • (iv) is equipment that distributes electrical or heat energy;

• (47) The portion of paragraph (c) of the definition dual-use equipment in subsection 127.44(1) of the Income Tax Act before subparagraph (i) is replaced by the following:

  • (c) property that is

• (48) The portion of the definition preliminary CCUS work activity in subsection 127.44(1) of the Income Tax Act before paragraph (a) is replaced by the following:

  preliminary CCUS work activity

  preliminary CCUS work activity means an activity that is preliminary to the acquisition, construction, fabrication or installation by or on behalf of a taxpayer of property that is described in Class 57 or 58 of Schedule II to the Income Tax Regulations or that is dual-use equipment in respect of the taxpayer’s CCUS project including, but not limited to, a preliminary activity that is

• (49) Paragraph (d) of the definition project plan in subsection 127.44(1) of the Income Tax Act is replaced by the following:

  • (d) is filed with the Minister of Natural Resources, in the form and manner determined by that Minister,

    • (i) before the project’s first day of commercial operations, or

    • (ii) if the project’s first day of commercial operations occurs before the Minister of Natural Resources accepts plan filings, within 90 days after the first day on which such filings are accepted. (plan de projet)

• (50) Subparagraph (b)(iv) of the description of A in the definition qualified carbon capture expenditure in subsection 127.44(1) of the Income Tax Act is replaced by the following:

  • (iv) if the equipment is described in subparagraph (a)(iv) of the definition dual-use equipment in this subsection, or is acquired in relation to such equipment, the amount of electrical or heat energy expected to be distributed by the equipment (or if it is equipment that expands the capacity of existing equipment, the electrical or heat energy expected to be distributed by the existing and new equipment) for use in a qualified CCUS project over the total CCUS project review period is of the total amount of electrical or heat energy expected to be distributed by the equipment (or the existing and new equipment) in that period (determined without regard to energy consumed by the equipment in the process of distribution), based on the project’s most recent project plan;

• (51) The portion of paragraph (a) of the definition specified percentage in subsection 127.44(1) of the Income Tax Act before subparagraph (i) is replaced by the following:

  • (a) qualified carbon capture expenditure if incurred in respect of carbon capture

• (52) Subsection 127.44(3) of the Income Tax Act is replaced by the following:

  • Marginal note:Deemed deduction

    (3) For the purposes of this section, paragraph 12(1)(t), subsection 13(7.1), the description of I in the definition undepreciated capital cost in subsection 13(21), subsection 53(2), section 129 and Part XII.7, the amount deemed under subsection (2) to have been paid by a taxpayer for a taxation year is deemed to have been deducted from the taxpayer’s tax otherwise payable under this Part for the year.

• (53) Subsection 127.44(3) of the Income Tax Act, as enacted by subsection (52), is replaced by the following:

  • Marginal note:Deemed deduction

    (3) For the purposes of this section, paragraph 12(1)(t), subsection 13(7.1), the description of I in the definition undepreciated capital cost in subsection 13(21), subsection 53(2), sections 127.45, 127.48 and 129 and Part XII.7, the amount deemed under subsection (2) to have been paid by a taxpayer for a taxation year is deemed to have been deducted from the taxpayer’s tax otherwise payable under this Part for the year.

• (54) Subsection 127.44(3) of the Income Tax Act, as enacted by subsection (53), is replaced by the following:

  • Marginal note:Deemed deduction

    (3) For the purposes of this section, paragraph 12(1)(t), subsection 13(7.1), the description of I in the definition undepreciated capital cost in subsection 13(21), subsection 53(2), sections 127.45, 127.48, 127.49 and 129 and Part XII.7, the amount deemed under subsection (2) to have been paid by a taxpayer for a taxation year is deemed to have been deducted from the taxpayer’s tax otherwise payable under this Part for the year.

• (55) Subparagraph 127.44(8)(a)(ii) of the Income Tax Act is replaced by the following:

  • (ii) if a taxpayer is required to file a revised project plan because of subsection (6), after the revised project plan has been submitted, but before a revised project evaluation has been issued by the Minister of Natural Resources in respect of the revised project plan,

• (56) The portion of paragraph 127.44(9)(a) of the Income Tax Act before subparagraph (i) is replaced by the following:

  • (a) the capital cost to a taxpayer of a property that is described in Class 57 or 58 of Schedule II to the Income Tax Regulations or that is dual-use equipment shall be

• (57) Subparagraph 127.44(9)(a)(ii) of the Income Tax Act is replaced by the following:

  • (ii) reduced by the total of all amounts, each of which can reasonably be considered to be in respect of the property and is

    • (A) an amount of any non-government assistance received by the taxpayer in or before the taxation year in which the property was acquired, or

    • (B) an amount that is not described in clause (A) that, in the taxation year, the taxpayer is entitled to receive or can reasonably be expected to receive and that would be non-government assistance if it were received by the taxpayer;

• (58) Clause 127.44(9)(b)(ii)(C) of the Income Tax Act is replaced by the following:

  • (C) for which an investment tax credit, a clean technology investment tax credit (as defined in subsection 127.45(1)) or a clean hydrogen tax credit (as defined in subsection 127.48(1)) is claimed,

• (59) Clause 127.44(9)(b)(ii)(C) of the Income Tax Act, as enacted by subsection (58), is replaced by the following:

  • (C) for which an investment tax credit, a clean technology investment tax credit (as defined in subsection 127.45(1)), a clean hydrogen tax credit (as defined in subsection 127.48(1)) or a CTM investment tax credit (as defined in subsection 127.49(1)) is claimed,

• (60) Subsection 127.44(9) of the Income Tax Act is amended by adding the following after paragraph (g):

  • (h) subject to paragraph (e), an expenditure is deemed to have been incurred in respect of a qualified CCUS project during a particular taxation year if

    • (i) it is incurred in the particular taxation year, in respect of a CCUS project that was not a qualified CCUS project at any time during the particular taxation year because the Minister of Natural Resources was not accepting the filing of project plans before or during the particular taxation year, and

    • (ii) in a subsequent taxation year, the project becomes a qualified CCUS project; and

  • (i) a building or other structure is deemed to be property described in paragraph (f) of Class 57 of Schedule II to the Income Tax Regulations, in relation to equipment described in paragraph (a) of Class 57, if

    • (i) the building or other structure is not otherwise described in Class 57 or 58 of that Schedule and is not dual-use equipment, and

    • (ii) all or substantially all of the building or other structure is used for the installation or operation of a combination of property that is described in any of paragraphs (a) to (e) of Class 57 of Schedule II, paragraphs (a) to (c) of Class 58 of that Schedule or paragraph (a) or (b) or subparagraph (c)(i) of the definition dual-use equipment in subsection (1).

• (61) Section 127.44 of the Income Tax Act is amended by adding the following after subsection (14):

  • Marginal note:Jurisdiction not designated

    (14.1) In applying this section and Part XII.7 in respect of a CCUS project of a taxpayer,

    • (a) if an expenditure of the taxpayer is incurred at a time that a geological formation, described in the taxpayer’s most recent project plan in respect of the CCUS project as capable of permanently storing captured carbon, is

      • (i) located in a jurisdiction that is not a designated jurisdiction, that jurisdiction is deemed to be a designated jurisdiction at that time if it was so designated at the time of an earlier qualified CCUS expenditure of the taxpayer in respect of the project, or

      • (ii) not authorized and regulated for the storage of captured carbon under the laws of the designated jurisdiction, that geological formation is deemed to be so authorized and regulated if it was so at the time of an earlier qualified CCUS expenditure of the taxpayer in respect of the project;

    • (b) if neither subparagraph (a)(i) nor subparagraph (a)(ii) apply in respect of a particular expenditure, then

      • (i) for the purposes of calculating a qualified carbon capture expenditure or a qualified carbon transportation expenditure in respect of the particular expenditure, neither the description of A in the definition projected eligible use percentage in subsection (1) nor the description of A in the definition actual eligible use percentage in subsection 211.92(1), for any period, include any quantity of expected or actual storage of carbon in a geological formation located in a jurisdiction that, at the time that the particular expenditure is incurred, is not dedicated geological storage because it is located in a jurisdiction that is not a designated jurisdiction or is not authorized and regulated for the storage of captured carbon under the laws of a designated jurisdiction,

      • (ii) a qualified carbon storage expenditure in respect of a qualified CCUS project does not include the cost of property to the extent that the property is expected to support the storage of carbon in a geological formation located in a jurisdiction that, at the time that the particular expenditure is incurred, is not dedicated geological storage because it is located in a jurisdiction that is not a designated jurisdiction or is not authorized and regulated for the storage of captured carbon under the laws of a designated jurisdiction; and

    • (c) for the purposes of calculating the actual eligible use percentage in respect of the CCUS project for any period, the description of A in the definition actual eligible use percentage in subsection 211.92(1) includes any quantity of carbon stored in a geological formation to which paragraph (a) applies.

• (62) Subsection 127.44(17) of the Income Tax Act is replaced by the following:

  • Marginal note:Late filing

    (17) The Minister may accept the late filing by a qualifying taxpayer of the prescribed form containing prescribed information referred to in subsection (2) until the later of December 31, 2025 and one year after the filing-due date referred to in subsection (2), but no payment by the taxpayer is deemed to arise under that subsection until the prescribed form containing prescribed information has been filed with the Minister.

• (63) Subsection 127.45(3) of the Income Tax Act is replaced by the following:

  • Marginal note:Time limit for application

    (3) A payment on account of tax payable shall not be deemed to be paid under subsection (2) if the taxpayer does not file with the Minister a prescribed form containing prescribed information in respect of the amount on or before the day that is one year after the taxpayer’s filing-due date for the year and, if the prescribed form is filed after the taxpayer’s filing-due date for the year, no payment is deemed to arise under that subsection until the prescribed form containing the prescribed information has been filed with the Minister.

• (64) The portion of subsection 127.45(5) of the Income Tax Act before paragraph (a) is replaced by the following:

  • Marginal note:Special rules — adjustments

    (5) For the purpose of the definition clean technology investment tax credit in subsection (1), the capital cost of clean technology property to a taxpayer shall

• (65) Subparagraph 127.45(5)(a)(ii) of the Income Tax Act is replaced by the following:

  • (ii) in respect of which a CCUS tax credit (as defined in subsection 127.44(1)) or a clean hydrogen tax credit (as defined in subsection 127.48(1)) was deducted by any person, or

• (66) Subparagraph 127.45(5)(a)(ii) of the Income Tax Act, as enacted by subsection (65), is replaced by the following:

  • (ii) in respect of which a CCUS tax credit (as defined in subsection 127.44(1)), a clean hydrogen tax credit (as defined in subsection 127.48(1)) or a CTM investment tax credit (as defined in subsection 127.49(1)) was deducted by any person, or

• (67) Paragraph 127.45(5)(b) of the Income Tax Act is replaced by the following:

  • (b) be determined without reference to subsections 13(7.1) and (7.4);

  • (b.1) be reduced by the total of all amounts, each of which can reasonably be considered to be in respect of the property and is

    • (i) an amount of any government assistance or non-government assistance received by the taxpayer in or before the taxation year in which the property was acquired, or

    • (ii) an amount not described in subparagraph (i) that, in the taxation year, the taxpayer is entitled to or can reasonably be expected to receive and that would be government assistance or non-government assistance if it were received by the taxpayer;

• (68) Subsection 127.45(6) of the Income Tax Act is replaced by the following:

  • Marginal note:Deemed deduction

    (6) For the purposes of this section, paragraph 12(1)(t), subsection 13(7.1), the description of I in the definition undepreciated capital cost in subsection 13(21), subsection 53(2) and sections 127.44, 127.48 and 129, the amount deemed under subsection (2) to have been paid by a taxpayer for a taxation year is deemed to have been deducted from the taxpayer’s tax otherwise payable under this Part for the year.

• (69) Subsection 127.45(6) of the Income Tax Act, as enacted by subsection (68), is replaced by the following:

  • Marginal note:Deemed deduction

    (6) For the purposes of this section, paragraph 12(1)(t), subsection 13(7.1), the description of I in the definition undepreciated capital cost in subsection 13(21) and subsection 53(2) and sections 127.44, 127.48, 127.49 and 129, the amount deemed under subsection (2) to have been paid by a taxpayer for a taxation year is deemed to have been deducted from the taxpayer’s tax otherwise payable under this Part for the year.

• (70) The definitions designated work site, regular tax credit rate and specified tax credit in subsection 127.46(1) of the Income Tax Act are replaced by the following:

  designated work site

  designated work site in a taxation year of an incentive claimant means a work site where specified property of an incentive claimant is located during the year and includes the site of a CCUS project (as defined in section 127.44) or of a clean hydrogen project (as defined in section 127.48) of the incentive claimant. (chantier désigné)

  regular tax credit rate

  regular tax credit rate means the specified percentage (as defined in subsections 127.44(1), 127.45(1) and 127.48(1), as the case may be). (taux du crédit d’impôt régulier)

  specified tax credit

  specified tax credit means the CCUS tax credit under subsection 127.44(1), the clean technology investment tax credit under subsection 127.45(1) and the clean hydrogen tax credit under subsection 127.48(1). (crédit d’impôt déterminé)

• (71) Subsection 127.46(2) of the Income Tax Act is replaced by the following:

  • Marginal note:Reduced or regular rate

    (2) Despite sections 127.44, 127.45 and 127.48, the applicable rate for each specified tax credit of an incentive claimant is the reduced tax credit rate unless the incentive claimant elects in prescribed form and manner to meet the prevailing wage requirements under subsection (3) and the apprenticeship requirements under subsection (5) for each installation taxation year in respect of the specified tax credit.

• (72) The definition clean economy allocation provision in subsection 127.47(1) of the Income Tax Act is amended by striking out “or” at the end of paragraph (a), by adding “or” at the end of paragraph (b) and by adding the following after paragraph (b):

  • (c) subsection 127.48(12). (disposition d’allocation pour l’économie propre)

• (73) The definition clean economy allocation provision in subsection 127.47(1) of the Income Tax Act, as amended by subsection (72), is amended by striking out “or” at the end of paragraph (b), by adding “or” at the end of paragraph (c) and by adding the following after paragraph (c):

  • (d) subsection 127.49(8). (disposition d’allocation pour l’économie propre)

• (74) The definition clean economy expenditure in subsection 127.47(1) of the Income Tax Act is amended by striking out “or” at the end of paragraph (a), by adding “or” at the end of paragraph (b) and by adding the following after paragraph (b):

  • (c) the capital cost of eligible clean hydrogen property as determined under section 127.48. (dépense pour l’économie propre)

• (75) The definition clean economy expenditure in subsection 127.47(1) of the Income Tax Act, as amended by subsection (74), is amended by striking out “or” at the end of paragraph (b), by adding “or” at the end of paragraph (c) and by adding the following after paragraph (c):

  • (d) the capital cost of CTM property as determined under section 127.49. (dépense pour l’économie propre)

• (76) The definition clean economy provision in subsection 127.47(1) of the Income Tax Act is amended by striking out “or” at the end of paragraph (c) and by adding the following after paragraph (d):

  • (e) section 127.48; or

  • (f) section 127.49. (disposition pour l’économie propre)

• (77) The definition clean economy tax credit in subsection 127.47(1) of the Income Tax Act is amended by striking out “or” at the end of paragraph (a), by adding “or” at the end of paragraph (b) and by adding the following after paragraph (b):

  • (c) a clean hydrogen tax credit (as defined under section 127.48(1)). (crédit d’impôt pour l’économie propre)

• (78) The definition clean economy tax credit in subsection 127.47(1) of the Income Tax Act, as amended by subsection (77), is amended by striking out “or” at the end of paragraph (b), by adding “or” at the end of paragraph (c) and by adding the following after paragraph (c):

  • (d) a CTM investment tax credit (as defined under section 127.49(1)). (crédit d’impôt pour l’économie propre)

• (79) Section 127.48 of the Income Tax Act, as enacted by subsection 37(1) of this Act, is deemed to have been repealed immediately after the expiration of March 27, 2023.

• (80) The Income Tax Act is amended by adding the following after section 127.47:

  Marginal note:Definitions

  • 127.48 (1) The following definitions apply in this section.

    actual carbon intensity

    actual carbon intensity means the carbon intensity of hydrogen that is produced by a qualified clean hydrogen project of a taxpayer, based on the actual inputs to the production of hydrogen and actual emissions from the production of hydrogen by the project. (intensité carbonique réelle)

    average actual carbon intensity

    average actual carbon intensity means, for the compliance period of a clean hydrogen project, the number determined by the formula 

    ((A × B) + (C × D) + (E × F) + (G × H) + (I × J)) ÷ K

    where

    A

    is the actual carbon intensity of the project for the first operating year of the compliance period;

    B

    is the quantity, in kilograms, of hydrogen produced by the project in the first operating year of the compliance period;

    C

    is the actual carbon intensity of the project for the second operating year of the compliance period;

    D

    is the quantity, in kilograms, of hydrogen produced by the project in the second operating year of the compliance period;

    E

    is the actual carbon intensity of the project for the third operating year of the compliance period;

    F

    is the quantity, in kilograms, of hydrogen produced by the project in the third operating year of the compliance period;

    G

    is the actual carbon intensity of the project for the fourth operating year of the compliance period;

    H

    is the quantity, in kilograms, of hydrogen produced by the project in the fourth operating year of the compliance period;

    I

    is the actual carbon intensity of the project for the fifth operating year of the compliance period;

    J

    is the quantity, in kilograms, of hydrogen produced by the project in the fifth operating year of the compliance period; and

    K

    is the total quantity, in kilograms, of hydrogen produced by the project during the compliance period. (intensité carbonique réelle moyenne)

    captured carbon

    captured carbon has the same meaning as in subsection 127.44(1). (carbone capté)

    carbon dioxide equivalent

    carbon dioxide equivalent means the carbon dioxide emissions that would be required to produce a warming effect equivalent to the emissions of any specified greenhouse gas, as determined in accordance with the Clean Hydrogen Investment Tax Credit – Carbon Intensity Modelling Guidance Document published by the Government of Canada over an assessment period of 100 years. (équivalent en dioxyde de carbone)

    carbon intensity

    carbon intensity means the quantity in kilograms of carbon dioxide equivalent per kilogram of hydrogen produced. (intensité carbonique)

    CCUS process

    CCUS process has the same meaning as in subsection 127.44(1). (processus de CUSC)

    CFR carbon intensity

    CFR carbon intensity means carbon intensity as defined in subsection 1(1) of the Clean Fuel Regulations. (intensité carbonique selon le RCP)

    clean ammonia

    clean ammonia means ammonia produced from clean hydrogen. (ammoniac propre)

    clean ammonia equipment

    clean ammonia equipment means equipment that is used solely for the purpose of producing ammonia, including equipment for

    • (a) converting hydrogen into ammonia;

    • (b) heat recovery and conversion;

    • (c) nitrogen generation;

    • (d) feed storage (unless the feed is stored hydrogen) and feed compression; and

    • (e) on-site refrigeration, transportation and storage of ammonia. (matériel pour ammoniac propre)

    clean hydrogen

    clean hydrogen means hydrogen produced, whether solely or in conjunction with other gases, that has a carbon intensity of less than four. (hydrogène propre)

    clean hydrogen project

    clean hydrogen project of a taxpayer means a project involving

    • (a) the operation of eligible clean hydrogen property;

    • (b) the production of clean hydrogen; and

    • (c) if applicable, the production of clean ammonia that uses a feedstock of clean hydrogen produced by the project. (projet pour l’hydrogène propre)

    clean hydrogen project plan

    clean hydrogen project plan means a plan for a clean hydrogen project of a taxpayer that

    • (a) includes a front-end engineering design study (or an equivalent study as determined by the Minister of Natural Resources) for the project;

    • (b) sets out the expected sources of electricity to be consumed in connection with the project, including sources described in any eligible power purchase agreements;

    • (c) sets out the expected carbon intensity of the hydrogen to be produced by the project

      • (i) determined in accordance with subsection (6), and

      • (ii) supported by a report prepared by a qualified validation firm in respect of the project that includes attestations by the firm that

        • (A) the assumptions in the modelling of the expected carbon intensity are reasonable, and

        • (B) the expected carbon intensity has been determined in accordance with the Clean Hydrogen Investment Tax Credit – Carbon Intensity Modelling Guidance Document published by the Government of Canada;

    • (d) if the project is intended to produce clean ammonia, demonstrates

      • (i) that the project can reasonably be expected to have sufficient hydrogen production capacity to satisfy the needs of the taxpayer’s ammonia production facility, and

      • (ii) if the taxpayer’s hydrogen production facility and its ammonia production facility are not co-located, the feasibility of transporting hydrogen between the facilities;

    • (e) contains any information required in guidelines published by the Minister of Natural Resources, including the Clean Hydrogen Investment Tax Credit – Validation and Verification Guidance Document; and

    • (f) is filed by the taxpayer with the Minister of Natural Resources, in the form and manner determined by the Minister of Natural Resources. (plan de projet pour l’hydrogène propre)

    clean hydrogen tax credit

    clean hydrogen tax credit of a qualifying taxpayer for a taxation year means

    • (a) the total of all amounts each of which is the specified percentage of the capital cost to the taxpayer of an eligible clean hydrogen property that is acquired by the taxpayer in the year; and

    • (b) the total of all amounts required by subsection (12) to be added in computing the taxpayer’s clean hydrogen tax credit at the end of the year. (crédit d’impôt pour l’hydrogène propre)

    compliance period

    compliance period in respect of a clean hydrogen project of a taxpayer, means the period of time beginning on the first day of the compliance period of the project and ending on the last day of the fifth operating year of the project. (période de conformité)

    dual-use electricity and heat equipment

    dual-use electricity and heat equipment means equipment that is part of a clean hydrogen project (excluding electricity generation equipment that supports the project indirectly by way of an electrical utility grid), that supports the production of hydrogen from eligible hydrocarbons and that

    • (a) generates electrical energy, heat energy or a combination of electrical and heat energy, and more than 50% of either the electrical energy or heat energy that is expected to be produced over the first 20 years of the project’s operations, based on the most recent clean hydrogen project plan, is expected to support

      • (i) a qualified CCUS project, unless the equipment uses fossil fuels and emits carbon dioxide that is not subject to capture by a CCUS process, or

      • (ii) a qualified clean hydrogen project, unless the equipment uses fossil fuels and emits carbon dioxide that is not subject to capture by a CCUS process; or

    • (b) is equipment that directly transmits electrical energy from equipment described in paragraph (a) to a qualified clean hydrogen project and more than 50% of the electrical energy to be transmitted by the equipment over the first 20 years of the project’s operations, based on the most recent clean hydrogen project plan, is expected to support the qualified CCUS project or qualified clean hydrogen project. (matériel pour électricité et chaleur à double usage)

    dual-use hydrogen and ammonia equipment

    dual-use hydrogen and ammonia equipment means equipment that is part of a clean hydrogen project and that is used for the generation of oxygen or nitrogen to be used all or substantially all in hydrogen and ammonia production for the project. (matériel pour hydrogène et ammoniac à double usage)

    eligible clean hydrogen property

    eligible clean hydrogen property means property, other than excluded property, that

    • (a) is acquired by a qualifying taxpayer and becomes available for use in respect of a qualified clean hydrogen project of the taxpayer in Canada on or after March 28, 2023, determined without reference to subsection (5);

    • (b) has not been used, or acquired for use or lease, by any person or partnership for any purpose whatever before it was acquired by the taxpayer; and

    • (c) is property situated in Canada

      • (i) that is used all or substantially all to produce hydrogen through electrolysis of water, including electrolysers, rectifiers, purification equipment, water treatment and conditioning equipment and equipment used for hydrogen compression and storage,

      • (ii) that is used all or substantially all to produce hydrogen from eligible hydrocarbons, including pre-reformers, auto-thermal reformers, steam methane reformers, pre-heating equipment, syngas coolers, shift reactors, purification equipment, fired heaters, water treatment and conditioning equipment, equipment used in hydrogen compression and storage of hydrogen, oxygen production equipment and methanators,

      • (iii) that is

        • (A) clean ammonia equipment,

        • (B) dual-use electricity and heat equipment,

        • (C) dual-use hydrogen and ammonia equipment, or

        • (D) project support equipment,

      • (iv) that is physically and functionally integrated with equipment described in any of subparagraphs (i) to (iii) and that is ancillary equipment used solely to support the functioning of equipment described in any of subparagraphs (i) to (iii) within a hydrogen or ammonia production process as part of

        • (A) an electrical system,

        • (B) a feed supply system,

        • (C) a fuel supply system,

        • (D) a liquid delivery and distribution system,

        • (E) a cooling system,

        • (F) a process material storage and handling and distribution system,

        • (G) a process venting system,

        • (H) a process waste management system, or

        • (I) a utility air or nitrogen distribution system,

      • (v) that is equipment used for system safety and integrity, or as part of a control or monitoring system, solely to support equipment described in any of subparagraphs (i) to (iv), or

      • (vi) that is property used solely to convert another property that would not otherwise be described in subparagraphs (i) to (v) if the conversion causes the other property to satisfy the description in any of subparagraphs (i) to (v). (bien admissible pour l’hydrogène propre)

    eligible electricity generation source

    eligible electricity generation source means, at any time, an electricity generation source that is

    • (a) wind;

    • (b) solar;

    • (c) hydro;

    • (d) nuclear; or

    • (e) geothermal or tidal, if, at that time,

      • (i) a technology-specific input carbon intensity for the generation source is available in the Fuel LCA Model, and

      • (ii) guidance in respect of the generation source is included in the Clean Hydrogen Investment Tax Credit – Carbon Intensity Modelling Guidance Document published by the Government of Canada. (source admissible de production d’électricité)

    eligible hydrocarbon

    eligible hydrocarbon means, at any time,

    • (a) natural gas;

    • (b) a substance sourced all or substantially all from raw natural gas;

    • (c) an eligible renewable hydrocarbon; or

    • (d) a substance that is

      • (i) a by-product from processing one or more substances described in paragraph (a) or (b), and

      • (ii) included in the Clean Hydrogen Investment Tax Credit – Carbon Intensity Modelling Guidance Document published by the Government of Canada at that time. (hydrocarbure admissible)

    eligible pathway

    eligible pathway means the production of hydrogen

    • (a) from electrolysis of water; or

    • (b) from the reforming or partial oxidation of eligible hydrocarbons, with carbon dioxide captured using a CCUS process. (méthode admissible)

    eligible power purchase agreement

    eligible power purchase agreement means an agreement or other arrangement in writing that

    • (a) allows, or will allow, a taxpayer to purchase electricity from an eligible electricity generation source (including incremental nameplate capacity) that

      • (i) first commenced electricity generation on or after both

        • (A) November 3, 2022, and

        • (B) the earlier of the day that is

          • (I) 24 months before the taxpayer’s first clean hydrogen project plan is filed with the Minister of Natural Resources, and

          • (II) 36 months before the day on which hydrogen is first produced by the relevant clean hydrogen project of the taxpayer, and

      • (ii) is located in

        • (A) the same province as the clean hydrogen project and is connected to the electricity grid of that province,

        • (B) the exclusive economic zone of Canada and is directly connected to the grid of the province in which the project is located, or

        • (C) another province that has a provincial grid that is directly connected to the grid of the province in which the project is located, if the taxpayer has arranged for the necessary interprovincial transmission;

    • (b) grants, or will grant, the taxpayer the sole and exclusive right to the environmental attributes associated with the electricity; and

    • (c) is entered into by the taxpayer for the primary purpose of operating the taxpayer’s clean hydrogen project during all or any portion of the first 20 years of the project’s operations. (entente pour l’achat d’électricité admissible)

    eligible renewable hydrocarbon

    eligible renewable hydrocarbon, in respect of a taxpayer, means a substance

    • (a) that is produced from non-fossil carbon;

    • (b) in respect of which a CFR carbon intensity can be determined under the Clean Fuel Regulations;

    • (c) that is included in the Clean Hydrogen Investment Tax Credit – Carbon Intensity Modelling Guidance Document published by the Government of Canada at the time that the taxpayer files its most recent clean hydrogen project plan with the Minister of Natural Resources;

    • (d) that is sourced from a facility that first commenced production of the substance on or after both

      • (i) November 3, 2022, and

      • (ii) the earlier of the day that is

        • (A) 24 months before the taxpayer’s first clean hydrogen project plan is filed with the Minister of Natural Resources, and

        • (B) 36 months before the day on which hydrogen is first produced by the relevant clean hydrogen project of the taxpayer;

    • (e) that, if acquired by the taxpayer under an agreement, the agreement grants, or will grant, the taxpayer the sole and exclusive right to the environmental attributes associated with the substance; and

    • (f) that is acquired or produced by the taxpayer for the sole purpose of operating the clean hydrogen project during all or any portion of the first 20 years of the project’s operations. (hydrocarbure renouvelable admissible)

    excluded property

    excluded property means property that is 

    • (a) included in Class 57 or 58 of Schedule II to the Income Tax Regulations;

    • (b) equipment used for the off-site transmission, transportation or distribution of hydrogen or ammonia;

    • (c) equipment used to prepare hydrogen for transport, including liquefaction equipment and equipment used to compress hydrogen to levels suitable for transportation;

    • (d) an automotive vehicle or related refuelling or charging equipment;

    • (e) a building or other structure;

    • (f) construction equipment, furniture or office equipment; or

    • (g) equipment used for off-site storage. (bien exclu)

    expected carbon intensity

    expected carbon intensity means the carbon intensity of hydrogen that is expected to be produced by a particular clean hydrogen project of a taxpayer, as documented in the taxpayer’s clean hydrogen project plan in respect of the project. (intensité carbonique attendue)

    first day of the compliance period

    first day of the compliance period means, in respect of a clean hydrogen project of a taxpayer,

    • (a) unless paragraph (b) or (c) applies, the particular day that is 120 days after the day on which hydrogen is first produced by the project;

    • (b) if the taxpayer files an election in prescribed form and manner with the Minister with its return of income for the taxation year that includes the particular day referred to in paragraph (a), the day that is one year after the particular day; or

    • (c) if the taxpayer has filed an election under paragraph (b) and files a second election in prescribed form and manner with the Minister with its return of income for the taxation year that includes the day referred to in paragraph (b), the day that is two years after the particular day referred to in paragraph (a). (premier jour de la période de conformité)

    Fuel LCA Model

    Fuel LCA Model means the Government of Canada’s Fuel Life Cycle Assessment Model that is published by the Minister of the Environment. (modèle ACV des combustibles)

    government assistance

    government assistance has the same meaning as in subsection 127(9). (aide gouvernementale)

    ineligible use

    ineligible use has the same meaning as in subsection 127.44(1). (utilisation non admissible)

    input carbon intensity

    input carbon intensity in relation to a fuel, energy source or material input, means the quantity in kilograms of carbon dioxide equivalent per unit of fuel, energy source or material input that is released over the life cycle of that fuel, energy source or material input. (intensité carbonique entrante)

    non-government assistance

    non-government assistance has the same meaning as in subsection 127(9). (aide non gouvernementale)

    non-hydrogen or ammonia use

    non-hydrogen or ammonia use means a use of a particular property at a particular time that would, if the property were acquired at that time, result in the property ceasing to be an eligible clean hydrogen property, determined without reference to paragraph (b) of that definition. (utilisation autre que pour l’hydrogène ou l’ammoniac)

    operating year

    operating year means each cumulative 365-day period, the first of which begins on the first day of the compliance period of a taxpayer’s clean hydrogen project, disregarding any period during which the project is not operating. (année d’exploitation)

    preliminary clean hydrogen work activity

    preliminary clean hydrogen work activity means an activity that is preliminary to the acquisition, construction, fabrication or installation by or on behalf of a taxpayer of eligible clean hydrogen property in respect of the taxpayer’s clean hydrogen project including, but not limited to, a preliminary activity that is

    • (a) obtaining permits or regulatory approvals;

    • (b) performing front-end design or engineering work, including front-end engineering design studies (or equivalent studies as determined by the Minister of Natural Resources) but excluding detailed design or engineering work in relation to eligible clean hydrogen property;

    • (c) conducting feasibility studies or pre-feasibility studies (or equivalent studies as determined by the Minister of Natural Resources);

    • (d) conducting environmental assessments; or

    • (e) clearing or excavating land. (travaux préliminaires pour l’hydrogène propre)

    project support equipment

    project support equipment means equipment that directly supports a qualified clean hydrogen project by

    • (a) transmitting electrical energy from on-site electrical generation equipment directly to the project;

    • (b) distributing electrical energy or heat energy; or

    • (c) delivering, collecting, recovering, treating or recirculating water, or a combination of those activities. (matériel de soutien du projet)

    qualified CCUS project

    qualified CCUS project has the same meaning as in subsection 127.44(1). (projet de CUSC admissible)

    qualified clean hydrogen project

    qualified clean hydrogen project means a clean hydrogen project of a taxpayer, as described in the taxpayer’s clean hydrogen project plan, where the Minister of Natural Resources has confirmed in writing that

    • (a) the hydrogen will be produced from an eligible pathway;

    • (b) the expected carbon intensity contained in the taxpayer’s most recent clean hydrogen project plan

      • (i) is determined in accordance with subsection (6), and

      • (ii) can reasonably be expected to be achieved based on the project design; and

    • (c) if the project is intended to produce clean ammonia, the taxpayer has demonstrated

      • (i) that the project can reasonably be expected to have sufficient hydrogen production capacity to satisfy the needs of the taxpayer’s ammonia production facility, and

      • (ii) if the taxpayer’s hydrogen production facility and its ammonia production facility are not co-located, the feasibility of transporting hydrogen between the facilities. (projet admissible pour l’hydrogène propre)

    qualified validation firm

    qualified validation firm means, in respect of a clean hydrogen project of a taxpayer, an engineer or engineering firm that

    • (a) is registered and in good standing with a professional association that has the authority or recognition by law of a jurisdiction in Canada to regulate the profession of engineering in

      • (i) the jurisdiction where the project is located, or

      • (ii) if there is no professional association in the jurisdiction described in subparagraph (i), a jurisdiction in Canada where a professional association regulates the profession of engineering;

    • (b) has appropriate insurance coverage;

    • (c) has expertise in modelling using the Fuel LCA Model and engineering expertise in production processes for hydrogen and, if applicable, ammonia;

    • (d) at all times, is independent of, deals at arm’s length with and is not an employee of the taxpayer; and

    • (e) meets the requirements described in guidelines published by the Minister of Natural Resources, including the Clean Hydrogen Investment Tax Credit – Validation and Verification Guidance Document. (firme admissible de validation)

    qualified verification firm

    qualified verification firm means, in respect of a clean hydrogen project of a taxpayer, an individual or firm that

    • (a) is either

      • (i) an engineer or an engineering firm that is registered and in good standing with a professional association that has the authority or recognition by law of a jurisdiction in Canada to regulate the profession of engineering in

        • (A) the jurisdiction where the project is located, or

        • (B) if there is no professional association in the jurisdiction described in clause (A), a jurisdiction in Canada where a professional association regulates the profession of engineering, or

      • (ii) a verification body accredited and in good standing under the Clean Fuel Regulations;

    • (b) has appropriate insurance coverage;

    • (c) has expertise in life-cycle analysis of greenhouse gas emissions;

    • (d) at all times, is independent of, deals at arm’s length with and is not an employee of the taxpayer;

    • (e) is not a qualified validation firm in respect of the project; and

    • (f) meets the requirements described in guidelines published by the Minister of Natural Resources, including the Clean Hydrogen Investment Tax Credit – Validation and Verification Guidance Document. (firme admissible de vérification)

    qualifying taxpayer

    qualifying taxpayer means a taxable Canadian corporation. (contribuable admissible)

    specified greenhouse gas

    specified greenhouse gas means

    • (a) carbon dioxide;

    • (b) methane;

    • (c) nitrous oxide;

    • (d) sulphur hexafluoride; and

    • (e) any other greenhouse gases listed in the Fuel LCA Model and included in the Clean Hydrogen Investment Tax Credit – Carbon Intensity Modelling Guidance Document published by the Government of Canada at the time that a taxpayer files its most recent clean hydrogen project plan with the Minister of Natural Resources. (gaz à effet de serre déterminé)

    specified percentage

    specified percentage means

    • (a) in respect of the capital cost of an eligible clean hydrogen property (other than equipment described in paragraph (b)) that is acquired by a qualifying taxpayer for use in a clean hydrogen project,

      • (i) if the expected carbon intensity of the hydrogen to be produced by the project is less than 0.75 and the property is acquired

        • (A) before 2034, 40%,

        • (B) in 2034, 20%, and

        • (C) after 2034, 0%,

      • (ii) if the expected carbon intensity of the hydrogen to be produced by the project is 0.75 or greater and less than two and the property is acquired

        • (A) before 2034, 25%,

        • (B) in 2034, 12.5%, and

        • (C) after 2034, 0%,

      • (iii) if the expected carbon intensity of the hydrogen to be produced by the project is two or greater and less than four and the property is acquired

        • (A) before 2034, 15%,

        • (B) in 2034, 7.5%, and

        • (C) after 2034, 0%, and

      • (iv) if the expected carbon intensity of the hydrogen to be produced by the project is four or greater, 0%; and

    • (b) in respect of the capital cost of eligible clean hydrogen property that is clean ammonia equipment or equipment described in any of subparagraphs (c)(iv) to (vi) of the definition eligible clean hydrogen property in this subsection that is used solely in connection with clean ammonia equipment acquired by a qualifying taxpayer for use in a clean hydrogen project,

      • (i) subject to subparagraph (ii), if the equipment is acquired

        • (A) before 2034, 15%,

        • (B) in 2034, 7.5%, and

        • (C) after 2034, 0%,

      • (ii) if the expected carbon intensity of the hydrogen to be produced by the project and used in the production of ammonia is four or greater, 0%. (pourcentage déterminé)

  • Marginal note:Clean hydrogen tax credit

    (2) If a qualifying taxpayer files with its return of income for a taxation year a prescribed form containing prescribed information, the taxpayer is deemed to have paid on its balance-due day for the year an amount on account of the taxpayer’s tax payable under this Part for the year equal to the taxpayer’s clean hydrogen tax credit for the year.

  • Marginal note:Deemed deduction

    (3) For the purposes of this section, paragraph 12(1)(t), subsection 13(7.1), variable I of the definition undepreciated capital cost in subsection 13(21), subsection 53(2) and sections 127.44, 127.45, 127.49 and 129, the amount deemed under subsection (2) to have been paid by a taxpayer for a taxation year is deemed to have been deducted from the taxpayer’s tax otherwise payable under this Part for the year.

  • Marginal note:Time limit for application

    (4) A payment on account of tax payable shall not be deemed to be paid under subsection (2) if the taxpayer does not file with the Minister the prescribed form containing prescribed information described in subsection (2) in respect of the amount on or before the later of December 31, 2025 and the day that is one year after the taxpayer’s filing-due date for the year and, if the prescribed form is filed after the taxpayer’s filing-due date for the year, no payment by the taxpayer is deemed to arise under that subsection until the prescribed form containing prescribed information has been filed with the Minister.

  • Marginal note:Time of acquisition

    (5) For the purpose of this section, eligible clean hydrogen property is deemed not to have been acquired before the property becomes available for use by the taxpayer, determined without reference to paragraphs 13(27)(c) and (28)(d).

  • Marginal note:Calculation of carbon intensity

    (6) For the purposes of calculating the carbon intensity of hydrogen produced and to be produced by a clean hydrogen project of a taxpayer,

    • (a) the most recent Fuel LCA Model at the time of filing by the taxpayer of the most recent related clean hydrogen project plan with the Minister of Natural Resources shall be used, unless, at the time of filing any compliance report under subsection (16), the taxpayer elects to use a subsequent version of the Fuel LCA Model in calculating the actual carbon intensity of the project;

    • (b) in applying the Fuel LCA Model, an assessment of emissions from the production of hydrogen by the project and upstream emissions from the production of inputs to the hydrogen-production process shall be taken into account;

    • (c) the quantity of hydrogen produced by the project is to be adjusted to take into account any hydrogen that is consumed in the production process;

    • (d) if the taxpayer produces hydrogen from eligible hydrocarbons, any captured carbon that is subject to an ineligible use is deemed not to be captured;

    • (e) if, in connection with the project, the taxpayer generates or purchases, or proposes to generate or purchase, electricity that is

      • (i) generated, or to be generated, by the taxpayer from

        • (A) an eligible electricity generation source, the contribution of the electricity to carbon intensity is to correspond with the input carbon intensity of the technology-specific electricity in the Fuel LCA Model,

        • (B) on-site generation equipment that converts hydrogen, heat recovered from the taxpayer’s hydrogen or ammonia production equipment or eligible hydrocarbons (with carbon dioxide captured using a CCUS process) into electricity that supports the production of hydrogen from eligible hydrocarbons, the contribution of the electricity to carbon intensity is to be modelled as part of the project,

        • (C) a generator used for startup or emergency backup operations, the contribution of the electricity to carbon intensity is to be modelled as part of the project, and

        • (D) a generation source other than as described in any of clauses (A) to (C), the carbon intensity of the project is deemed to be greater than 4.5,

      • (ii) purchased, or to be purchased, pursuant to an eligible power purchase agreement,

        • (A) the contribution of the electricity to carbon intensity is to correspond with the input carbon intensity of the technology-specific electricity in the Fuel LCA Model, and

        • (B) the contribution of the electricity to expected carbon intensity is to be calculated in proportion to the number of years for which the agreement will be in place during the first 20 years of the project’s operations, and

      • (iii) otherwise sourced, or to be sourced, from a provincial grid, the contribution to carbon intensity of the net positive quantity of the electricity (after subtracting any electricity purchased by the taxpayer under an eligible power purchase agreement or generated by the taxpayer in respect of the project that is, in either case, transmitted to the grid by the taxpayer) is to be based on the input carbon intensity of the provincial grid in the Fuel LCA Model;

    • (f) in calculating the quantity of electricity described in paragraph (e), if the sum of the quantities of electricity from sources described in subparagraphs (e)(i) and (ii) exceeds the total electricity consumed or to be consumed by the project, then the electricity consumed or to be consumed by the project is deemed to be generated

      • (i) first, from the source described in subparagraph (e)(i), and

      • (ii) second, from the source described in subparagraph (e)(ii) to the extent of any excess;

    • (g) if the project uses, or proposes to use, eligible hydrocarbons for the purpose of producing hydrogen,

      • (i) where the eligible hydrocarbon is an eligible renewable hydrocarbon in respect of the taxpayer,

        • (A) the contribution of that eligible renewable hydrocarbon to carbon intensity is to be based on the most recent CFR carbon intensity that is determined under the Clean Fuel Regulations, adjusted as necessary, and

        • (B) the contribution of that eligible renewable hydrocarbon to expected carbon intensity is to be calculated in proportion to the number of years for which that hydrocarbon will be used during the first 20 years of the project’s operations, and

      • (ii) in any other case, the input carbon intensity of the relevant eligible hydrocarbon is to be taken into account in applying the Fuel LCA Model;

    • (h) if the taxpayer disposes of any environmental attributes associated with any electricity described in subparagraph (e)(i) or (ii) or any eligible renewable hydrocarbon described in subparagraph (g)(i), the carbon intensity of the project is deemed to be greater than 4.5; and

    • (i) the Clean Hydrogen Investment Tax Credit – Carbon Intensity Modelling Guidance Document published by the Government of Canada at the time of filing by the taxpayer of the most recent related clean hydrogen project plan with the Minister of Natural Resources, is to apply conclusively with respect to the calculation of carbon intensity, except as otherwise provided in this section.

  • Marginal note:Changes to clean hydrogen project

    (7) Subsection (8) applies in respect of a qualified clean hydrogen project of a taxpayer if, before the first day of the compliance period of the project,

    • (a) the Minister of Natural Resources determines that there has been a material change to the project design and requests that the taxpayer file a revised project plan for the project;

    • (b) the taxpayer

      • (i) does not file the final detailed engineering designs with the Minister of Natural Resources in accordance with paragraph (9)(d),

      • (ii) changes the project’s eligible pathway, or

      • (iii) reasonably expects that there will be an increase (as compared to the most recent project plan for the project) of more than 0.5 kilograms of carbon dioxide equivalent per kilogram of hydrogen to be produced by the project;

    • (c) any eligible power purchase agreement referenced in the most recent clean hydrogen project plan of the taxpayer

      • (i) has not been finalized and executed so as to become legally binding, or

      • (ii) has been materially modified or terminated; or

    • (d) any environmental attributes associated with the agreement have been disposed of by the taxpayer.

  • Marginal note:Rules relating to revised project plan

    (8) If this subsection applies,

    • (a) the taxpayer shall file, within 180 days, a revised clean hydrogen project plan in respect of the project with the Minister of Natural Resources, in the form and manner determined by the Minister of Natural Resources;

    • (b) if the Minister of Natural Resources is satisfied that the project will meet the requirements in paragraphs (a) to (c) of the definition qualified clean hydrogen project,

      • (i) the Minister of Natural Resources shall confirm, with all due dispatch, the revised plan,

      • (ii) the taxpayer’s clean hydrogen tax credit shall be redetermined, as of the date of the filing of the revised plan, based on the expected carbon intensity set out in the revised plan, and

      • (iii) if the taxpayer previously deducted an amount in respect of a clean hydrogen tax credit, subsection (18) applies as if the compliance period ended on that date and the average actual carbon intensity of the project was equal to the expected carbon intensity set out in the revised plan;

    • (c) if the Minister of Natural Resources is not satisfied in accordance with paragraph (b) and does not issue a confirmation described in subparagraph (b)(i) within one year after the filing of the taxpayer’s revised plan, then, as of the expiry of that period,

      • (i) the project is deemed not to be a qualified clean hydrogen project,

      • (ii) the average actual carbon intensity of the project is deemed to be greater than 4.5, and

      • (iii) subsection (18) applies as if the compliance period of the project ended on the expiry date of that period; and

    • (d) if the taxpayer fails to file a revised clean hydrogen project plan in accordance with paragraph (a), then, as of the expiry of the 180-day period described in paragraph (a),

      • (i) subject to subparagraph (ii),

        • (A) the project is deemed not to be a qualified clean hydrogen project,

        • (B) the average actual carbon intensity of the project is deemed to be greater than 4.5, and

        • (C) subsection (18) applies as if the compliance period of the project ended on the expiry date of that period, and

      • (ii) once the taxpayer has filed the revised clean hydrogen project plan, subparagraph (i) is deemed never to have applied.

  • Marginal note:Clean hydrogen project determination and rules

    (9) For the purposes of this section,

    • (a) the Minister may, in consultation with the Minister of Natural Resources, determine that one or more clean hydrogen projects is one project or multiple projects

      • (i) at any time before the Minister of Natural Resources confirms the expected carbon intensity of the hydrogen to be produced by a clean hydrogen project, or

      • (ii) if a taxpayer files or is required to file a revised clean hydrogen project plan in accordance with subsection (8), at any time before the Minister of Natural Resources confirms the revised plan;

    • (b) any determination under paragraph (a) is deemed to result in the clean hydrogen project or clean hydrogen projects, as the case may be, being one project or multiple projects, as the case may be;

    • (c) for each project determined under paragraph (a), a taxpayer shall file a separate clean hydrogen project plan with the Minister of Natural Resources (in the form and manner determined by the Minister of Natural Resources) on or before the day that is 180 days after the determination is made;

    • (d) in respect of each clean hydrogen project, the taxpayer shall file final detailed engineering designs with the Minister of Natural Resources by the earlier of the day on which hydrogen is first produced by the project and the day that is 60 days after the final detailed engineering designs are prepared; and

    • (e) the Minister of Natural Resources may request from the taxpayer all documentation and information necessary for the Minister of Natural Resources to fulfill a responsibility under this section and may refuse to confirm the taxpayer’s clean hydrogen project plan or revised clean hydrogen project plan if such documentation or information is not provided by the taxpayer on or before the day that is 180 days after it was requested.

  • Marginal note:Capital cost of clean hydrogen property

    (10) For the purposes of this section, the capital cost of eligible clean hydrogen property to a taxpayer shall

    • (a) not include any amount in respect of a capital property

      • (i) for which an amount was previously deducted under this section by any person,

      • (ii) in respect of which a CCUS tax credit (as defined in subsection 127.44(1)), a clean technology investment tax credit (as defined in subsection 127.45(1)) or a CTM investment tax credit (as defined in subsection 127.49(1)) was deducted by any person, or

      • (iii) that has, by virtue of section 21, been added to the cost of a property;

    • (b) be determined without reference to subsections 13(7.1) and (7.4);

    • (c) be reduced by the total of all amounts, each of which can reasonably be considered to be in respect of the property and is

      • (i) an amount of any government assistance or non-government assistance received by the taxpayer in or before the taxation year in which the property was acquired, or

      • (ii) an amount not described in subparagraph (i) that, in the taxation year, the taxpayer is entitled to or can reasonably be expected to receive and that would be government assistance or non-government assistance if it were received by the taxpayer;

    • (d) be determined with reference to subsections 127(11.6) to (11.8) in respect of an expenditure or cost to a taxpayer except that

      • (i) the reference in subsection 127(11.6) to subsection 127(11.5) is to be read as a reference to section 127.48,

      • (ii) the reference in subsection 127(11.6) to subsection 127(26) is to be read as a reference to subsection 127.48(13), and

      • (iii) the term “qualified expenditure” is to be read as an expenditure eligible to be added to the capital cost of an eligible clean hydrogen property;

    • (e) not include any amount in respect of an expenditure incurred for a preliminary clean hydrogen work activity;

    • (f) if the property is dual-use electricity and heat equipment, project support equipment or equipment described in any of subparagraphs (c)(iv) to (vi) of the definition eligible clean hydrogen property in subsection (1), excluding equipment used all or substantially all to support a qualified clean hydrogen project, be equal to the proportion of the capital cost of the equipment that

      • (i) if the equipment is described in paragraph (a) of the definition dual-use electricity and heat equipment in subsection (1), the quantity of energy expected to be produced for use in the project over the first 20 years of the project’s operations is of the total quantity of energy expected to be produced by the equipment in that period (determined without regard to energy produced and consumed by the equipment in the process of producing energy), based on the project’s most recent clean hydrogen project plan,

      • (ii) if the equipment is described in paragraph (b) of the definition dual-use electricity and heat equipment in subsection (1) or paragraph (a) of the definition project support equipment in subsection (1), the quantity of electrical energy expected to be transmitted by the equipment for use in the project over the first 20 years of the project’s operations is of the total quantity of electrical energy expected to be transmitted by the equipment in that period (determined without regard to electrical energy consumed by the equipment in the process of transmission), based on the project’s most recent clean hydrogen project plan,

      • (iii) if the equipment is described in paragraph (b) of the definition project support equipment in subsection (1), the quantity of electrical or heat energy expected to be distributed by the equipment (or if it is equipment that expands the capacity of existing equipment, the electrical or heat energy expected to be distributed by the existing and new equipment) for use in the project over the first 20 years of the project’s operations is of the total quantity of electrical or heat energy expected to be distributed by the equipment (or the existing and new equipment) in that period (determined without regard to energy consumed by the equipment in the process of distribution), based on the project’s most recent clean hydrogen project plan,

      • (iv) if the equipment is described in paragraph (c) of the definition project support equipment in subsection (1), the mass of water expected to be supplied to the project over the first 20 years of the project’s operations is of the total mass of water expected to be processed by the equipment in that period, based on the project’s most recent clean hydrogen project plan, and

      • (v) if the equipment is described in any of subparagraphs (c)(iv) to (vi) of the definition eligible clean hydrogen property in subsection (1) and supports equipment described in any of subparagraphs (i) to (iv), is determined under that subparagraph; and

    • (g) after applying paragraph (f), if the property is dual-use hydrogen and ammonia equipment, dual-use electricity and heat equipment, project support equipment or equipment described in any of subparagraphs (c)(iv) to (vi) of the definition eligible clean hydrogen property in subsection (1) and that property is used in the production of hydrogen and ammonia, be allocated between two separate capital cost amounts, with each amount determined based on the percentage of the expected use of the equipment that is attributable to hydrogen production and ammonia production, and

      • (i) the capital cost amount that is attributable to hydrogen production is deemed to be in respect of property described in paragraph (a) of the definition specified percentage in subsection (1) and

      • (ii) the capital cost amount that is attributable to ammonia production is deemed to be in respect of property described in paragraph (b) of the definition specified percentage in subsection (1).

  • Marginal note:Repayment of assistance

    (11) Where a taxpayer has, in a particular taxation year, repaid (or has not received and can no longer reasonably be expected to receive) an amount of government assistance or non-government assistance that was applied to reduce the capital cost of an eligible clean hydrogen property under paragraph (10)(c) for a preceding taxation year, the amount repaid (or no longer expected to be received) is to be added to the cost to the taxpayer of a property acquired in the particular year for the purpose of determining the taxpayer’s clean hydrogen tax credit for the year.

  • Marginal note:Partnerships

    (12) Subject to section 127.47, where, in a particular taxation year of a qualifying taxpayer who is a member of a partnership, an amount would be determined under subsection (2) in respect of the partnership, for its taxation year that ends in the particular year, if the partnership were a taxable Canadian corporation and its fiscal period were its taxation year, the portion of that amount that can reasonably be considered to be the taxpayer’s share thereof shall be added in computing the clean hydrogen tax credit of the taxpayer at the end of the particular year.

  • Marginal note:Unpaid amounts

    (13) For the purposes of this section, where any part of the capital cost of a taxpayer’s eligible clean hydrogen property is unpaid on the day that is 180 days after the end of the taxation year in which a deduction in respect of a clean hydrogen tax credit would otherwise be available in respect of the property, such amount is to be

    • (a) excluded from the capital cost of the property in the year; and

    • (b) added to the capital cost of the property at the time it is paid.

  • Marginal note:Tax shelter investment

    (14) Subsection (2) does not apply if an eligible clean hydrogen property – or an interest in a person or partnership that has, directly or indirectly, an interest in, or for civil law, a right in, such property – is a tax shelter investment for the purpose of section 143.2.

  • Marginal note:Annual information reporting requirement

    (15) If a clean hydrogen tax credit was deducted in any taxation year by a taxpayer in respect of a qualified clean hydrogen project, the taxpayer shall file, with its return of income for each taxation year that begins during the compliance period in respect of the project, a prescribed form containing prescribed information in respect of the operations of the project.

  • Marginal note:Compliance — annual carbon intensity reporting

    (16) If a clean hydrogen tax credit was deducted by a taxpayer in respect of a qualified clean hydrogen project, the taxpayer shall file with the Minister and the Minister of Natural Resources, within 180 days after the end of each operating year, a compliance report in prescribed form and manner including

    • (a) the actual carbon intensity of the hydrogen produced by the project during the year;

    • (b) the quantity, in kilograms, of hydrogen that is produced by the project during the year;

    • (c) any shutdown time of the project in respect of the year;

    • (d) for the compliance report in respect of the fifth operating year, a report that verifies the actual carbon intensity of the hydrogen produced during each operating year of the compliance period, prepared by a qualified verification firm in respect of the project; and

    • (e) any information required in guidelines published by the Minister of Natural Resources, including the Clean Hydrogen Investment Tax Credit – Validation and Verification Guidance Document.

  • Marginal note:Failure to report

    (17) Each taxpayer that fails to file a compliance report for a project as described in subsection (16) is liable to a penalty, for each such failure, in an amount, not exceeding the total of all clean hydrogen tax credits deducted by the taxpayer in respect of the project, equal to the amount determined by the formula

    ((4% × A) ÷ 365) × B

    where

    A

    is the total of all amounts, each of which is the amount of a clean hydrogen tax credit in respect of the project deducted by the taxpayer for a taxation year that ended before the applicable date in subsection (16); and

    B

    is the number of days during which the failure continues.

  • Marginal note:Recovery — change in carbon intensity

    (18) In the taxation year of a taxpayer in which the compliance period of the taxpayer’s qualified clean hydrogen project ends, if the average actual carbon intensity of the hydrogen produced is greater than the most recent expected carbon intensity that was used to determine a clean hydrogen tax credit in respect of the project, there shall be added to the taxpayer’s tax otherwise payable under this Part for the taxation year an amount equal to the total of all amounts, each of which is determined by the formula

    (A − B) × C

    where

    A

    is the specified percentage that was applied to the capital cost of the eligible clean hydrogen property forming part of the project in determining a clean hydrogen tax credit of the taxpayer;

    B

    is the specified percentage that would have applied to the capital cost of the property if the expected carbon intensity were equal to the average actual carbon intensity of the project; and

    C

    is the capital cost of the property on which the clean hydrogen tax credit was deducted.

  • Marginal note:Minister’s determination

    (19) For the purpose of subsection (18), the Minister of Natural Resources shall review each of the taxpayer’s compliance reports described in subsection (16) and the Minister may, in consultation with the Minister of Natural Resources, make a determination or redetermination of the actual carbon intensity of the hydrogen produced by a taxpayer’s clean hydrogen project for any operating year during the compliance period of the project.

  • Marginal note:De minimis exception

    (20) Subsection (18) does not apply to a taxpayer if the difference between the average actual carbon intensity of the taxpayer’s qualified clean hydrogen project and the expected carbon intensity of the project is 0.5 or less.

  • Marginal note:Recapture of clean hydrogen tax credit — application

    (21) Subsection (22) applies in a taxation year if

    • (a) a taxpayer acquired an eligible clean hydrogen property in the year or any of the preceding 20 calendar years;

    • (b) the taxpayer became entitled to a clean hydrogen tax credit in respect of the capital cost, or a portion of the capital cost, of the property; and

    • (c) in the year, the property is converted to a non-hydrogen or ammonia use, is exported from Canada or is disposed of without having been previously exported or converted to a non-hydrogen or ammonia use.

  • Marginal note:Recapture of clean hydrogen tax credit

    (22) If this subsection applies for a taxation year in respect of an eligible clean hydrogen property, there shall be added to the taxpayer’s tax otherwise payable under this Part for the year an amount determined by the formula

    (A – B) × (C ÷ D)

    where

    A

    is the amount of the taxpayer’s clean hydrogen tax credit in respect of the property;

    B

    is the total of all amounts, each of which can reasonably be considered to be the portion of any amount previously paid by the taxpayer because of subsection (18) in respect of the property;

    C

    is an amount, not exceeding the amount determined for D, equal to

    • (a) if the property is disposed of to a person or partnership who deals at arm’s length with the taxpayer, the proceeds of disposition of the property, and

    • (b) in any other case, the fair market value of the property; and

    D

    is the capital cost of the property on which the clean hydrogen tax credit was deducted.

  • Marginal note:Election — sale of clean hydrogen project

    (23) If at any time a qualifying taxpayer (referred to in this subsection as the “vendor”) disposes of all or substantially all of its property comprising a qualified clean hydrogen project of the taxpayer to another taxable Canadian corporation (referred to in this subsection as the “purchaser”), and the vendor and the purchaser jointly elect in prescribed form, on or before the day that is the earliest of the days on or before which any taxpayer making the election is required to file a return of income pursuant to section 150 for the taxation year in which the transaction occurred, to have this subsection apply, the following rules apply:

    • (a) the purchaser is deemed to have acquired any eligible clean hydrogen property of the vendor at the times acquired by the vendor;

    • (b) the provisions of this Act that applied to the vendor in respect of the property that are relevant to the application of the Act in respect of the property after that time are deemed to have applied to the purchaser and, for greater certainty, the purchaser is deemed to have claimed the clean hydrogen tax credits determined under subsection (2) that could have been claimed by the vendor, before that time, in respect of the project;

    • (c) any clean hydrogen project plans that were filed by the vendor in respect of the project before that time are deemed to have been filed by the purchaser;

    • (d) the purchaser is or will be liable for amounts in respect of the property for which the vendor would be liable under this section in respect of actions, transactions or events that occur after that time as if the vendor had undertaken them or otherwise participated in them; and

    • (e) subsection (22) does not apply to the vendor in respect of the disposition of property to the purchaser.

  • Marginal note:Recapture event reporting requirement

    (24) If subsection (22) applies to a taxpayer or partnership for a particular year, the taxpayer or partnership, as the case may be, shall notify the Minister in prescribed form and manner on or before the taxpayer’s filing-due date for the year or the day when a return is required by section 229 of the Income Tax Regulations to be filed in respect of the fiscal period of the partnership.

  • Marginal note:Recovery and recapture — partnerships

    (25) If subsection (12) has at any time applied to add an amount in computing the clean hydrogen tax credit of a member of a partnership, subsections (18) to (23) apply to determine amounts in respect of the partnership as if the partnership was a taxable Canadian corporation, its fiscal period were its taxation year and it had deducted all of the clean hydrogen tax credits that were previously added in computing the clean hydrogen tax credit of any member of the partnership because of the application of subsection (12) in respect of its partnership interest.

  • Marginal note:Member’s share of recovery or recapture

    (26) Unless subsection (27) applies, if, in a taxation year, a taxpayer is a member of a partnership, the amount that can reasonably be considered to be the taxpayer’s share of any amount of tax determined because of subsection (25) in respect of the partnership shall be added to the taxpayer’s tax otherwise payable under this Part for the year.

  • Marginal note:Election by member

    (27) A taxable Canadian corporation that is a member of a partnership during a fiscal period of the partnership may elect, in prescribed form and manner, to add to its tax payable under this Part for its taxation year that includes the end of the fiscal period the total amount of tax determined for a taxation year because of subsection (25) in respect of the partnership.

  • Marginal note:Joint, several and solidary liability

    (28) Each member of a partnership is jointly and severally, or solidarily, liable for any portion of the amount of tax – determined because of subsection (25) in respect of the partnership for a taxation year – that is not added to the tax payable

    • (a) of a member of the partnership under subsection (26); or

    • (b) of a taxable Canadian corporation because of subsection (27) and paid by the corporation by its filing-due date for the year.

  • Marginal note:Interest on recovery tax

    (29) For the purpose of applying subsection 161(1) to an amount of tax payable because of subsection (18) (other than an amount payable because of subsection (8)), the balance-due day of a taxpayer is deemed to be the balance-due day of the taxation year for the related clean hydrogen tax credit under subsection (2).

  • Marginal note:Credit after compliance period

    (30) For the purpose of applying subsection (2) in respect of a property acquired after the compliance period of a qualified clean hydrogen project of the taxpayer, the expected carbon intensity of the project is deemed to be the greater of the expected carbon intensity otherwise determined and the average actual carbon intensity for the compliance period of the project.

  • Marginal note:Purpose

    (31) The purpose of this section is to encourage the investment of capital in the production of clean hydrogen and clean ammonia in Canada.

  • Marginal note:Authority of the Minister of Natural Resources

    (32) For the purpose of determining whether a property is an eligible clean hydrogen property, the Clean Hydrogen Investment Tax Credit – Technical and Equipment Guidance Document published by the Department of Natural Resources is to apply conclusively with respect to engineering and scientific matters.

• (81) Section 127.49 of the Income Tax Act, as enacted by subsection 38(1) of this Act, is deemed to have been repealed on January 1, 2024.

• (82) The Income Tax Act is amended by adding the following after section 127.48, as enacted by subsection (80):

  Marginal note:Definitions

  • 127.49 (1) The following definitions apply in this section.

    CTM investment tax credit

    CTM investment tax credit of a qualifying taxpayer for a taxation year means  

    • (a) the total of all amounts each of which is the specified percentage of the capital cost to the taxpayer of CTM property acquired by the taxpayer in the year for a CTM use; and

    • (b) the total of all amounts required by subsection (8) to be added in computing the taxpayer’s CTM investment tax credit at the end of the year. (crédit d’impôt à l’investissement pour la FTP)

    CTM property

    CTM property means property of a taxpayer, other than excluded property,

    • (a) situated in Canada and intended for use exclusively in Canada;

    • (b) that has not been used, or acquired for use or lease, for any purpose whatever before it was acquired by the taxpayer;

    • (c) that, if it is to be leased by the taxpayer to another person or a partnership, is

      • (i) leased to a qualifying taxpayer or a partnership all the members of which are qualifying taxpayers, and

      • (ii) leased in the ordinary course of carrying on a business in Canada by the taxpayer whose principal business is selling or servicing property of that type, or whose principal business is leasing property, lending money, purchasing conditional sales contracts, accounts receivable, bills of sale, chattel mortgages or hypothecary claims on movables, bills of exchange or other obligations representing all or part of the sale price of merchandise or services, or any combination thereof; and

    • (d) described in Schedule II to the Income Tax Regulations that

      • (i) is included in

        • (A) paragraph (a) or (c) of Class 8,

        • (B) paragraph (a) of Class 43,

        • (C) Class 43.1 that would otherwise be included in any of clauses (A), (B) and (E),

        • (D) Class 43.2 that would otherwise be included in clause (C), or

        • (E) Class 53,

      • (ii) is included in

        • (A) paragraph (b) of Class 8, or would be included in paragraph (b) of Class 8 if that paragraph were read without reference to the word “solely” and if the word “building” were read as “structure”,

        • (B) Class 43.1 that would otherwise be included in clause (A), or

        • (C) Class 43.2 that would otherwise be included in clause (B),

      • (iii) is included in

        • (A) subparagraph (k)(i) of Class 10, provided that the property would otherwise be in paragraph (a) or (c) of Class 8,

        • (B) subparagraph (k)(ii) of Class 10,

        • (C) paragraph (b) of Class 41, or in paragraph (b) of Class 41.2, that would otherwise be included in clauses (A) or (B),

        • (D) paragraph (b) of Class 43,

        • (E) Class 43.1 that would otherwise be included in any of clauses (A) to (D), or

        • (F) Class 43.2 that would otherwise be included in clause (E),

      • (iv) is included in paragraph (d) or (j) of Class 12,

      • (v) is included in

        • (A) paragraph (a) or (e) of Class 10 or Class 38, but excluding any property that is designed or adapted for use on streets and highways, or

        • (B) Class 56, or

      • (vi) would be described in any of subparagraphs (i) to (v) if the word “mine” in Schedule II of the Income Tax Regulations were read as “mine, well or tailing pond”. (bien de FTP)

    CTM use

    CTM use means the use of a property

    • (a) all or substantially all for activities described in paragraph (a) or (c) of the definition qualified zero-emission technology manufacturing activities in section 5202 of the Income Tax Regulations; or

    • (b) in a qualifying mineral activity producing all or substantially all qualifying materials. (utilisation pour la FTP)

    excluded property

    excluded property means any property used in the production of battery cells or modules if the production has benefitted from, or can reasonably be expected to benefit from, support under a contribution agreement with the Government of Canada referred to in section 7300 of the Income Tax Regulations. (bien exclu)

    government assistance

    government assistance has the same meaning as in subsection 127(9). (aide gouvernementale)

    non-CTM use

    non-CTM use means a use of a property other than a CTM use. (utilisation autre que pour la FTP)

    non-government assistance

    non-government assistance has the same meaning as in subsection 127(9). (aide non gouvernementale)

    permitted element

    permitted element means hydrogen, carbon, nitrogen, oxygen, phosphorus, sulfur, selenium, sodium, potassium, a halogen or a noble gas. (élément autorisé)

    qualifying material

    qualifying material means

    • (a) lithium;

    • (b) cobalt;

    • (c) nickel;

    • (d) copper;

    • (e) rare earth elements; and

    • (f) graphite. (matériau admissible)

    qualifying mineral activity

    qualifying mineral activity means

    • (a) the extraction of resources from a mineral deposit or from a tailing pond;

    • (b) a mineral processing activity, including crushing, grinding, milling, separation, sieving, screening, froth floatation, leaching, recrystallization, precipitation, drying, evaporation, heating, calcinating, roasting, smelting, casting of ingots, refining, purification, distillation, electrodeposition and surface roughening of electrodeposited foil, that

      • (i) is performed at a mine site, well site, tailing pond, mill, smelter or refinery, and

      • (ii) occurs prior to or as part of a process intended

        • (A) to increase the purity of at least one qualifying material, or

        • (B) to produce a material with non-trace amounts of a single qualifying material, and without non-trace amounts of any elements other than permitted elements;

    • (c) a recycling activity that is

      • (i) sorting, disassembly or shredding of a recyclable material, or

      • (ii) a material processing activity substantially similar to an activity described in paragraph (b) if that paragraph were read without reference to its subparagraph (i);

    • (d) a synthetic graphite activity that is

      • (i) performed during or after the graphitization stage, and

      • (ii) a material processing activity substantially similar to an activity described in paragraph (b) if that paragraph were read without reference to its subparagraph (i); or

    • (e) spheronization of graphite or coating of spheronized graphite. (activité minière admissible)

    qualifying taxpayer

    qualifying taxpayer means a taxable Canadian corporation. (contribuable admissible)

    specified percentage

    specified percentage means in respect of a CTM property of the taxpayer that is acquired

    • (a) before January 1, 2024, determined without reference to subsection (4), nil;

    • (b) after December 31, 2023 and before January 1, 2032, 30%;

    • (c) after December 31, 2031 and before January 1, 2033, 20%;

    • (d) after December 31, 2032 and before January 1, 2034, 10%;

    • (e) after December 31, 2033 and before January 1, 2035, 5%; and

    • (f) after December 31, 2034, nil. (pourcentage déterminé)

  • Marginal note:CTM investment tax credit

    (2) If a qualifying taxpayer files with its return of income for a taxation year a prescribed form containing prescribed information, the taxpayer is deemed to have paid on its balance-due day for the year an amount on account of the taxpayer’s tax payable under this Part for the year equal to the taxpayer’s CTM investment tax credit for the year.

  • Marginal note:Time limit for application

    (3) A payment on account of tax payable shall not be deemed to be paid under subsection (2) if the taxpayer does not file with the Minister a prescribed form containing prescribed information in respect of the amount on or before the day that is one year after the taxpayer’s filing-due date for the year and, if the prescribed form is filed after the taxpayer’s filing-due date for the year, no payment is deemed to arise under that subsection until the prescribed form containing the prescribed information has been filed with the Minister.

  • Marginal note:Time of acquisition

    (4) For the purpose of this section, CTM property is deemed not to have been acquired by a taxpayer before the property is considered to have become available for use by the taxpayer, determined without reference to paragraphs 13(27)(c) and (28)(d).

  • Marginal note:Special rules — adjustments

    (5) For the purpose of this section, the capital cost of CTM property to a taxpayer shall

    • (a) not include any amount in respect of a capital property

      • (i) for which an amount was previously deducted under this section by any person,

      • (ii) in respect of which a CCUS tax credit (as defined in subsection 127.44(1)), a clean technology investment tax credit (as defined in subsection 127.45(1)) or a clean hydrogen tax credit (as defined in subsection 127.48(1)) was deducted by any person, or

      • (iii) that has, by virtue of section 21, been added to the cost of a property;

    • (b) be determined without reference to subsections 13(7.1) and (7.4);

    • (c) be reduced by the total of all amounts, each of which can reasonably be considered to be in respect of the property and is

      • (i) an amount of any government assistance or non-government assistance received by the taxpayer in or before the taxation year in which the property was acquired, or

      • (ii) an amount not described in subparagraph (i) that, in the taxation year, the taxpayer is entitled to or can reasonably be expected to receive and that would be government assistance or non-government assistance if it were received by the taxpayer; and

    • (d) be determined with reference to subsections 127(11.6) to (11.8) in respect of an expenditure or cost to a taxpayer except that

      • (i) the reference in subsection 127(11.6) to subsection 127(11.5) is to be read as a reference to section 127.49,

      • (ii) the reference in subsection 127(11.6) to subsection 127(26) is to be read as a reference to subsection 127.49(9), and

      • (iii) the term “qualified expenditure” is to be read as an expenditure eligible to be added to the capital cost of a CTM property.

  • Marginal note:Deemed deduction

    (6) For the purpose of this section, paragraph 12(1)(t), subsection 13(7.1), the description of I in the definition undepreciated capital cost in subsection 13(21), subsection 53(2) and sections 127.44, 127.45, 127.48 and 129, the amount deemed under subsection (2) to have been paid by a taxpayer for a taxation year is deemed to have been deducted from the taxpayer’s tax otherwise payable under this Part for the year.

  • Marginal note:Repayment of assistance

    (7) Where a taxpayer has, in a particular taxation year, repaid (or has not received and can no longer reasonably be expected to receive) an amount of government assistance or non-government assistance that was applied to reduce the cost of a property under paragraph (5)(c) for a preceding taxation year, the amount repaid (or no longer expected to be received) is to be added to the cost to the taxpayer of a property acquired in the particular year for the purpose of determining the taxpayer’s CTM investment tax credit for the year.

  • Marginal note:Partnerships

    (8) Subject to section 127.47, where, in a particular taxation year of a qualifying taxpayer that is a member of a partnership, an amount would be determined under subsection (2) in respect of the partnership, for its taxation year that ends in the particular year, if the partnership were a qualifying taxpayer and its fiscal period were its taxation year, the portion of that amount that can reasonably be considered to be the taxpayer’s share thereof shall be added in computing the CTM investment tax credit of the taxpayer at the end of the particular year.

  • Marginal note:Unpaid amounts

    (9) For the purpose of this section, where any part of the capital cost of a taxpayer’s CTM property is unpaid on the day that is 180 days after the end of the taxation year in which a deduction in respect of a CTM investment tax credit would otherwise be available in respect of the property, such amount is to be

    • (a) excluded from the capital cost of such property in the year; and

    • (b) added to the capital cost of such property at the time it is paid.

  • Marginal note:Tax shelter investment

    (10) Subsection (2) does not apply if a CTM property – or an interest in a person or partnership that has, directly or indirectly, an interest in, or for civil law, a right in, such property – is a tax shelter investment for the purpose of section 143.2.

  • Marginal note:Recapture — conditions for application

    (11) Subsection (12) applies in a taxation year if

    • (a) a taxpayer acquired a CTM property in the year or any of the preceding 10 calendar years;

    • (b) the taxpayer became entitled to a CTM investment tax credit in respect of the capital cost, or a portion of the capital cost, of the property; and

    • (c) in the year, the property (or another property that incorporates the property) is converted to a non-CTM use, is exported from Canada or is disposed of without having been previously exported or converted to a non-CTM use.

  • Marginal note:Recapture of credit

    (12) If this subsection applies, there shall be added to the taxpayer’s tax otherwise payable under this Part for the year the lesser of

    • (a) the amount of the taxpayer’s CTM investment tax credit in respect of the property, and

    • (b) the amount determined by the formula

      A × (B ÷ C)

      where

      A

      is the amount of the taxpayer’s CTM investment tax credit in respect of the property,

      B

      is

      • (i) in the case where the property is disposed of to a person or partnership who deals at arm’s length with the taxpayer, the proceeds of disposition of the property, or

      • (ii) in the case where the property is disposed of to a person or partnership who does not deal at arm’s length with the taxpayer, is converted to a non-CTM use or is exported from Canada, the fair market value of the property, and

      C

      is the capital cost of the property on which the CTM investment tax credit was deducted.

  • Marginal note:Certain non-arm’s length transfers

    (13) Subsections (11) and (12) do not apply to a taxpayer (in this subsection referred to as the “transferor”) that disposes of a property to a qualifying taxpayer (in this subsection referred to as the “purchaser”) related to the transferor, if the purchaser acquired the property in circumstances where the property would be CTM property to the purchaser (but for paragraph (b) of the definition CTM property in subsection (1)) and is used by the purchaser for a CTM use.

  • Marginal note:Certain non-arm’s length transfers — recapture deferred

    (14) If subsections (11) and (12) do not apply because of subsection (13), subsection 127(34) applies with such modifications as the circumstances require, including that the reference to subsection 127(33) be read as subsection 127.49(13).

  • Marginal note:Recapture event reporting requirement

    (15) If subsection (12) or (13) applies to a taxpayer for a taxation year, the taxpayer shall notify the Minister in prescribed form and manner on or before the taxpayer’s filing-due date for the year.

  • Marginal note:Recapture of credit for partnerships

    (16) Subsection (17) applies in a fiscal period of a partnership if

    • (a) the partnership acquired a CTM property in the fiscal period or in any of the 10 preceding calendar years;

    • (b) the cost, or a portion of the cost, of the property is included in an amount, a percentage of which can reasonably be considered to have been included in computing the amount determined under subsection (8) in respect of the partnership at the end of a fiscal period; and

    • (c) in the fiscal period, the property (or another property that incorporates the property) is converted to a non-CTM use, is exported from Canada or is disposed of without having been previously exported or converted to a non-CTM use.

  • Marginal note:Addition to tax

    (17) If this subsection applies to a fiscal period of a partnership, where a taxpayer is a member of the partnership during the fiscal period, there shall be added to the taxpayer’s tax otherwise payable under this Part for the taxpayer’s taxation year in which the fiscal period ends the amount that can reasonably be considered to be the taxpayer’s share of the amount, if any, equal to the lesser of

    • (a) the amount that can reasonably be considered to have been included in respect of the property in computing the amount determined under subsection (8) in respect of the partnership, and

    • (b) the percentage described in paragraph (16)(b) of

      • (i) where the property (or the other property) is disposed of to a person who deals at arm’s length with the partnership, the proceeds of disposition of the property, and

      • (ii) in any other case, the fair market value of the property (or the other property) at the time of the conversion, export or disposition.

  • Marginal note:Information return — partnerships

    (18) If subsections (16) and (17) apply with respect to the property of a partnership for a fiscal period, the partnership shall notify the Minister in prescribed form and manner on or before the day when a return is required by section 229 of the Income Tax Regulations to be filed in respect of the period.

  • Marginal note:CTM investment tax credit — purpose

    (19) The purpose of this section is to encourage the investment of capital in Canada for a CTM use.

• (83) Section 127.491 of the Income Tax Act, as enacted by subsection 39(1) of this Act, is deemed to have been repealed immediately after the expiration of March 27, 2023.

• (84) Paragraph 127.52(1)(h) of the Income Tax Act, as amended by subsection 41(7) of this Act, is amended by striking out “and” at the end of subparagraph (iv), by adding “and” after subparagraph (v) and by adding the following after subparagraph (v):

  • (vi) twice the amount deducted under subsection 110.61(2);

• (85) Paragraph 127.55(f) of the Income Tax Act, as enacted by subsection 44(1) of this Act, is amended by striking out “or” at the end of subparagraph (v), by adding “or” after subparagraph (vi) and by adding the following after subparagraph (vi):

  • (vii) an employee ownership trust.

• (86) Paragraph 152(1)(b) of the Income Tax Act, as enacted by subsection 56(1) of this Act, is replaced by the following:

  • (b) the amount of tax, if any, deemed by any of subsections 120(2) or (2.2), 122.5(3) to (3.003), 122.51(2), 122.7(2) or (3), 122.72(1), 122.8(4), 122.9(2), 122.91(1), 125.4(3), 125.5(3), 125.6(2) or (2.1), 127.1(1), 127.41(3), 127.44(2), 127.45(2), 127.48(2) or 210.2(3) or (4) to be paid on account of the taxpayer’s tax payable under this Part for the year.

• (87) Paragraph 152(1)(b) of the Income Tax Act, as enacted by subsection 56(2) of this Act, is replaced by the following:

  • (b) the amount of tax, if any, deemed by any of subsections 120(2) or (2.2), 122.5(3) to (3.003), 122.51(2), 122.7(2) or (3), 122.72(1), 122.8(4), 122.9(2), 122.91(1), 125.4(3), 125.5(3), 125.6(2) or (2.1), 127.1(1), 127.41(3), 127.44(2), 127.45(2), 127.48(2), 127.49(2) or 210.2(3) or (4) to be paid on account of the taxpayer’s tax payable under this Part for the year.

• (88) Paragraph 152(4)(b.10) of the Income Tax Act, as enacted by subsection 47(7) of the other Act, is renumbered as paragraph 152(4)(b.91) and that paragraph is repositioned accordingly.

• (89) Subsection 152(4) of the Income Tax Act is amended by adding the following after paragraph (b.93), as enacted by subsection 56(4) of this Act:

  • (b.94) the assessment, reassessment or additional assessment is made before the day that is 36 months after the end of the normal reassessment period for the taxpayer in respect of the year and is made in respect of a disposition, in the year, of shares of the capital stock of a corporation in respect of which the taxpayer claimed a deduction under subsection 110.61(2);

• (90) Subparagraph 152(4.01)(b)(x.1) of the Income Tax Act, as enacted by subsection 56(5) of this Act, is deemed to have been repealed immediately after the expiration of March 27, 2023.

• (91) Subparagraph 152(4.01)(b)(x.2) of the Income Tax Act, as enacted by subsection 56(5) of this Act, is deemed to have been repealed on January 1, 2024.

• (92) Paragraph 152(4.01)(b) of the Income Tax Act, as enacted by subsection 47(8) of the other Act, is amended by striking out “or” at the end of subparagraph (xi) and by replacing subparagraph (xii) with the following:

  • (xii) the transactions or events referred to in paragraph (4)(b.91),

  • (xiii) the amounts, transactions or events referred to in paragraph (4)(b.92), or

  • (xiv) the transactions or events referred to in paragraph (4)(b.93);

• (93) Paragraph 157(3)(e) of the Income Tax Act, as enacted by subsection 58(1) of this Act, is replaced by the following:

  • (e) 1/12 of the total of the amounts each of which is deemed by subsection 125.4(3), 125.5(3), 125.6(2) or (2.1), 127.1(1), 127.41(3), 127.44(2), 127.45(2) or 127.48(2) to have been paid on account of the corporation’s tax payable under this Part for the year.

• (94) Paragraph 157(3)(e) of the Income Tax Act, as enacted by subsection 58(2) of this Act, is replaced by the following:

  • (e) 1/12 of the total of the amounts each of which is deemed by subsection 125.4(3), 125.5(3), 125.6(2) or (2.1), 127.1(1), 127.41(3), 127.44(2), 127.45(2), 127.48(2) or 127.49(2) to have been paid on account of the corporation’s tax payable under this Part for the year.

• (95) Paragraph 157(3.1)(c) of the Income Tax Act, as enacted by subsection 58(3) of this Act, is replaced by the following:

  • (c) 1/4 of the total of the amounts each of which is deemed by subsection 125.4(3), 125.5(3), 125.6(2) or (2.1), 127.1(1), 127.41(3), 127.44(2), 127.45(2) or 127.48(2) to have been paid on account of the corporation’s tax payable under this Part for the taxation year.

• (96) Paragraph 157(3.1)(c) of the Income Tax Act, as enacted by subsection 58(4) of this Act, is replaced by the following:

  • (c) 1/4 of the total of the amounts each of which is deemed by subsection 125.4(3), 125.5(3), 125.6(2) or (2.1), 127.1(1), 127.41(3), 127.44(2), 127.45(2), 127.48(2) or 127.49(2) to have been paid on account of the corporation’s tax payable under this Part for the taxation year.

• (97) Section 160 of the Income Tax Act is amended by adding the following after subsection (1.5):

  • Marginal note:Joint and several, or solidary, liability — qualifying business transfers

    (1.6) If a trust, any purchaser corporation owned by the trust and a taxpayer have jointly elected under paragraph 110.61(1)(e) in respect of a disposition of shares of the capital stock of a corporation and paragraph 110.61(4)(a) applies, the trust, the purchaser corporation (if applicable) and the taxpayer are jointly and severally, or solidarily, liable for the tax payable by the taxpayer under this Part to the extent that the tax payable by the taxpayer is greater than it would have been if the disposition had satisfied the conditions of section 110.61.

• (98) Paragraph 163(2)(d.1) of the Income Tax Act, as enacted by subsection 59(1) of this Act, is deemed to have been repealed immediately after the expiration of March 27, 2023.

• (99) Paragraph 163(2)(d.1) of the Income Tax Act, as enacted by subsection 59(2) of this Act, is deemed to have been repealed on January 1, 2024.

• (100) Paragraph 163(2)(d.1) of the Income Tax Act, as enacted by subsection 52(2) of the other Act, is replaced by the following:

  • (d.1) the amount, if any, by which

    • (i) the amount that would be deemed by subsection 127.44(2), 127.45(2) or 127.48(2), as the case may be, to be paid for the year by the person if that amount were calculated by reference to the information provided in the return or form filed for the year under that subsection

    exceeds

    • (ii) the amount that is deemed by subsection 127.44(2), 127.45(2) or 127.48(2), as the case may be, to be paid for the year by the person,

• (101) Paragraph 163(2)(d.1) of the Income Tax Act, as enacted by subsection (100), is replaced by the following:

  • (d.1) the amount, if any, by which

    • (i) the amount that would be deemed by subsection 127.44(2), 127.45(2), 127.48(2) or 127.49(2), as the case may be, to be paid for the year by the person if that amount were calculated by reference to the information provided in the return or form filed for the year under that subsection

    exceeds

    • (ii) the amount that is deemed by subsection 127.44(2), 127.45(2), 127.48(2) or 127.49(2), as the case may be, to be paid for the year by the person,

• (102) The definition reorganization transaction in subsection 183.3(1) of the Income Tax Act is amended by adding the following after paragraph (b):

  • (b.1) on an amalgamation (as defined in subsection 87(1)) to which subsection 87(11) applies;

• (103) The portion of the definition reporting-due day in subsection 211.92(1) of the Income Tax Act before paragraph (a) is replaced by the following:

  reporting-due day

  reporting-due day means the later of December 31, 2025 and 

• (104) Subsection 220(2.2) of the Income Tax Act, as enacted by subsection 68(1) of this Act, is replaced by the following:

  • Marginal note:Exception

    (2.2) Subsection (2.1) does not apply in respect of a prescribed form, receipt or document, or prescribed information, that is filed with the Minister on or after the day specified, in respect of the form, receipt, document or information, in subsection 37(11), paragraph (m) of the definition investment tax credit in subsection 127(9) or subsection 127.44(17), 127.45(3) or 127.48(4).

• (105) Subsection 220(2.2) of the Income Tax Act, as enacted by subsection 68(2) of this Act, is replaced by the following:

  • Marginal note:Exception

    (2.2) Subsection (2.1) does not apply in respect of a prescribed form, receipt or document, or prescribed information, that is filed with the Minister on or after the day specified, in respect of the form, receipt, document or information, in subsection 37(11), paragraph (m) of the definition investment tax credit in subsection 127(9) or subsection 127.44(17), 127.45(3), 127.48(4) or 127.49(3).

• (106) Section 241 of the Income Tax Act is amended by adding the following after subsection (3.4):

  • Marginal note:Clean economy tax credits

    (3.41) The Minister or the Minister of Finance may communicate or otherwise make available to the public, in any manner that the particular Minister considers appropriate, the following taxpayer information that reasonably relates to the claim or receipt of a clean economy tax credit (as defined in subsection 127.47(1)) by a corporation or trust:

    • (a) the name, including any business name, of

      • (i) the corporation or trust, and

      • (ii) a partnership of which a person described in subparagraph (i) is or was a member, or is or was deemed to be a member under subsection 127.47(7), in respect of the tax credit;

    • (b) the specific type of tax credit; and

    • (c) the period to which the tax credit relates.

• (107) Paragraph 241(4)(d) of the Income Tax Act is amended by adding the following after subparagraph (i):

  • (i.1) to any person solely for the purposes of subsection (3.41),

• (108) Subparagraph 241(4)(d)(vi.2) of the Income Tax Act, as enacted by subsection 74(4) of this Act, is replaced by the following:

  • (vi.2) to a person employed or engaged in the service of an office or agency of the Government of Canada solely for the purposes of administering or enforcing sections 127.44, 127.45, 127.47, 127.48 and 211.92 to 211.95 or the evaluation or formulation of related policies or guidelines,

• (109) Subparagraph 241(4)(d)(vi.2) of the Income Tax Act, as enacted by subsection (108), is replaced by the following:

  • (vi.2) to a person employed or engaged in the service of an office or agency of the Government of Canada solely for the purposes of administering or enforcing sections 127.44 to 127.48 and 211.92 to 211.95 or the evaluation or formulation of related policies or guidelines,

• (110) Subparagraph 241(4)(d)(vi.2) of the Income Tax Act, as enacted by subsection (109), is replaced by the following:

  • (vi.2) to a person employed or engaged in the service of an office or agency of the Government of Canada solely for the purposes of administering or enforcing sections 127.44 to 127.49 and 211.92 to 211.95 or the evaluation or formulation of related policies or guidelines,

• (111) Paragraph (b) of the definition employee ownership trust in subsection 248(1) of the Income Tax Act is amended by striking out “and” at the end of subparagraph (iii), by adding “and” at the end of subparagraph (iv) and by adding the following after subparagraph (iv):

  • (v) is not an individual who claimed, or is related to an individual who claimed, a deduction under subsection 110.61(2) in respect of a qualifying business controlled by the trust;

• (112) Subparagraphs (a)(iii) and (iv) of Class 57 of Schedule II to the Income Tax Regulations are replaced by the following:

  • (iii) generates or distributes electrical energy, heat energy or a combination of electrical and heat energy, that directly and solely supports a qualified CCUS project, unless the equipment uses fossil fuels and emits carbon dioxide that is not subject to capture by a qualified CCUS project, and, for greater certainty, not including equipment that

    • (A) supports the qualified CCUS project indirectly by way of an electrical utility grid, or

    • (B) expands the capacity of existing equipment that supports the qualified CCUS project and that distributes electrical energy, heat energy or a combination of electrical and heat energy,

  • (iv) is equipment that solely supports a qualified CCUS project and transmits electrical energy from electrical generation equipment described in subparagraph (iii) to the qualified CCUS project, or

• (113) Paragraph 12(1)(t) of the Income Tax Act, as enacted by subsection (2), is deemed to have come into force immediately after the expiration of March 27, 2023.

• (114) Paragraph 12(1)(t) of the Income Tax Act, as enacted by subsection (3), is deemed to have come into force on January 1, 2024.

• (115) The portion of subsection 13(7.1) of the Income Tax Act before paragraph (a), as enacted by subsection (4), is deemed to have come into force immediately after the expiration of March 27, 2023.

• (116) The portion of subsection 13(7.1) of the Income Tax Act before paragraph (a), as enacted by subsection (5), is deemed to have come into force on January 1, 2024.

• (117) Paragraph 13(7.1)(e) of the Income Tax Act, as enacted by subsection (6), is deemed to have come into force immediately after the expiration of March 27, 2023.

• (118) Paragraph 13(7.1)(e) of the Income Tax Act, as enacted by subsection (7), is deemed to have come into force on January 1, 2024.

• (119) The description of I in the definition undepreciated capital cost in subsection 13(21) of the Income Tax Act, as enacted by subsection (8), is deemed to have come into force immediately after the expiration of March 27, 2023.

• (120) The description of I in the definition undepreciated capital cost in subsection 13(21) of the Income Tax Act, as enacted by subsection (9), is deemed to have come into force on January 1, 2024.

• (121) The portion of paragraph 13(24)(a) of the Income Tax Act before subparagraph (i), as enacted by subsection (10), is deemed to have come into force immediately after the expiration of March 27, 2023.

• (122) The portion of paragraph 13(24)(a) of the Income Tax Act before subparagraph (i), as enacted by subsection (11), is deemed to have come into force on January 1, 2024.

• (123) The portion of paragraph (l) in the description of B in the definition adjusted taxable income in subsection 18.2(1) of the Income Tax Act before subparagraph (ii), as enacted by subsection (12), is deemed to have come into force immediately after the expiration of September 30, 2023.

• (124) The portion of paragraph (l) in the description of B in the definition adjusted taxable income in subsection 18.2(1) of the Act before subparagraph (ii) of the Income Tax Act, as enacted by subsection (13), is deemed to have come into force on January 1, 2024.

• (125) Subparagraph 53(1)(e)(xiii) of the Income Tax Act, as enacted by subsection (14), is deemed to have come into force immediately after the expiration of March 27, 2023.

• (126) Subparagraph 53(1)(e)(xiii) of the Income Tax Act, as enacted by subsection (15), is deemed to have come into force on January 1, 2024.

• (127) Subparagraph 53(2)(c)(vi.3) of the Income Tax Act, as amended by subsection (16), is deemed to have come into force immediately after the expiration of March 27, 2023.

• (128) Subparagraph 53(2)(c)(vi.4) of the Income Tax Act, as amended by subsection (17), is deemed to have come into force on January 1, 2024.

• (129) Subclause 66.8(1)(a)(ii)(B)(I) of the Income Tax Act, as enacted by subsection (18), is deemed to have come into force immediately after the expiration of March 27, 2023.

• (130) Subclause 66.8(1)(a)(ii)(B)(I) of the Income Tax Act, as enacted by subsection (19), is deemed to have come into force on January 1, 2024.

• (131) Paragraph 87(2)(j.6) of the Income Tax Act, as enacted by subsection (20), is deemed to have come into force immediately after the expiration of December 31, 2023.

• (132) Paragraph 87(2)(qq.1) of the Income Tax Act, as enacted by subsection (23), is deemed to have come into force immediately after the expiration of March 27, 2023.

• (133) Paragraph 87(2)(qq.1) of the Income Tax Act, as enacted by subsection (24), is deemed to have come into force on January 1, 2024.

• (134) Paragraph 88(1)(e.31) of the Income Tax Act, as enacted by subsection (27), is deemed to have come into force immediately after the expiration of March 27, 2023.

• (135) Paragraph 88(1)(e.31) of the Income Tax Act, as enacted by subsection (28), is deemed to have come into force on January 1, 2024.

• (136) Paragraph 88(2)(c) of the Income Tax Act, as enacted by subsection (29), is deemed to have come into force immediately after the expiration of March 27, 2023.

• (137) Paragraph 88(2)(c) of the Income Tax Act, as enacted by subsection (30), is deemed to have come into force on January 1, 2024.

• (138) Subparagraph 96(2.1)(b)(ii) of the Income Tax Act, as enacted by subsection (31), is deemed to have come into force immediately after the expiration of March 27, 2023.

• (139) Subparagraph 96(2.1)(b)(ii) of the Income Tax Act, as enacted by subsection (32), is deemed to have come into force on January 1, 2024.

• (140) The portion of subsection 96(2.2) of the Income Tax Act before paragraph (a), as enacted by subsection (33), is deemed to have come into force immediately after the expiration of March 27, 2023.

• (141) The portion of subsection 96(2.2) of the Income Tax Act before paragraph (a), as enacted by subsection (34), is deemed to have come into force on January 1, 2024.

• (142) The portion of subsection 96(2.4) of the Income Tax Act before paragraph (a), as enacted by subsection (35), is deemed to have come into force immediately after the expiration of March 27, 2023.

• (143) The portion of subsection 96(2.4) of the Income Tax Act before paragraph (a), as enacted by subsection (36), is deemed to have come into force on January 1, 2024.

• (144) Section 110.61 of the Income Tax Act, as enacted by subsection (37), is deemed to have come into force on January 1, 2024.

• (145) Clause 111(1)(e)(ii)(A) of the Income Tax Act, as enacted by subsection (38), is deemed to have come into force immediately after the expiration of March 27, 2023.

• (146) Clause 111(1)(e)(ii)(A) of the Income Tax Act, as enacted by subsection (39), is deemed to have come into force on January 1, 2024.

• (147) Paragraph (b) of the description of E in the definition non-capital loss in subsection 111(8) of the Income Tax Act, as enacted by subsection (40), applies in respect of taxation years of a taxpayer that begin immediately after the expiration of September 30, 2023 (in this subsection referred to as the “applicable time”). However, that paragraph, as enacted by subsection (40), also applies in respect of a taxation year of a taxpayer that begins before, and ends after, the applicable time if

  • (a) any of the taxpayer’s three immediately preceding taxation years was, because of a transaction or event or a series of transactions or events, shorter than it would have been in the absence of that transaction, event or series; and

  • (b) it can reasonably be considered that one of the purposes of the transaction, event or series was to defer the application of paragraph 12(1)(l.2) or section 18.2 or 18.21 of the Income Tax Act to the taxpayer.

• (148) The definition government assistance in subsection 127(9) of the Income Tax Act, as enacted by subsection (41), is deemed to have come into force immediately after the expiration of December 31, 2021.

• (149) The definition government assistance in subsection 127(9) of the Income Tax Act, as enacted by subsection (42), is deemed to have come into force immediately after the expiration of March 27, 2023.

• (150) The definition government assistance in subsection 127(9) of the Income Tax Act, as enacted by subsection (43), is deemed to have come into force on January 1, 2024.

• (151) The definition dedicated geological storage in subsection 127.44(1) of the Income Tax Act, as enacted by subsection (44), is deemed to have come into force immediately after the expiration of December 31, 2021.

• (152) The portion of the definition dual-use equipment in subsection 127.44(1) of the Income Tax Act before paragraph (b), as enacted by subsection (45), is deemed to have come into force immediately after the expiration of December 31, 2021.

• (153) The portion of the definition dual-use equipment in subsection 127.44(1) of the Income Tax Act before paragraph (b), as enacted by subsection (46), is deemed to have come into force immediately after the expiration of March 27, 2023.

• (154) The portion of paragraph (c) of the definition dual-use equipment in subsection 127.44(1) of the Income Tax Act before subparagraph (i), as enacted by subsection (47), is deemed to have come into force immediately after the expiration of December 31, 2021.

• (155) The portion of the definition preliminary CCUS work activity in subsection 127.44(1) of the Income Tax Act before paragraph (a), as enacted by subsection (48), is deemed to have come into force immediately after the expiration of December 31, 2021.

• (156) Paragraph (d) of the definition project plan in subsection 127.44(1) of the Income Tax Act, as enacted by subsection (49), is deemed to have come into force immediately after the expiration of December 31, 2021.

• (157) Subparagraph (b)(iv) of the description of A in the definition qualified carbon capture expenditure in subsection 127.44(1) of the Income Tax Act, as enacted by subsection (50), is deemed to have come into force immediately after the expiration of December 31, 2021.

• (158) The portion of paragraph (a) of the definition specified percentage in subsection 127.44(1) of the Income Tax Act before subparagraph (i), as enacted by subsection (51), is deemed to have come into force immediately after the expiration of December 31, 2021.

• (159) Subsection 127.44(3) of the Income Tax Act, as enacted by subsection (52), is deemed to have come into force immediately after the expiration of December 31, 2021.

• (160) Subsection 127.44(3) of the Income Tax Act, as enacted by subsection (53), is deemed to have come into force immediately after the expiration of March 27, 2023.

• (161) Subsection 127.44(3) of the Income Tax Act, as enacted by subsection (54), is deemed to have come into force on January 1, 2024.

• (162) Subparagraph 127.44(8)(a)(ii) of the Income Tax Act, as enacted by subsection (55), is deemed to have come into force immediately after the expiration of December 31, 2021.

• (163) The portion of paragraph 127.44(9)(a) of the Income Tax Act before subparagraph (i), as enacted by subsection (56), is deemed to have come into force immediately after the expiration of December 31, 2021.

• (164) Subparagraph 127.44(9)(a)(ii) of the Income Tax Act, as enacted by subsection (57), is deemed to have come into force immediately after the expiration of December 31, 2021.

• (165) Clause 127.44(9)(b)(ii)(C) of the Income Tax Act, as enacted by subsection (58), is deemed to have come into force immediately after the expiration of March 27, 2023.

• (166) Clause 127.44(9)(b)(ii)(C) of the Income Tax Act, as enacted by subsection (59), is deemed to have come into force on January 1, 2024.

• (167) Paragraphs 127.44(9)(h) and (i) of the Income Tax Act, as enacted by subsection (60), are deemed to have come into force on January 1, 2022.

• (168) Subsection 127.44(14.1) of the Income Tax Act, as enacted by subsection (61), is deemed to have come into force on January 1, 2022.

• (169) Subsection 127.44(17) of the Income Tax Act, as enacted by subsection (62), is deemed to have come into force immediately after the expiration of December 31, 2021.

• (170) Subsection 127.45(3) of the Income Tax Act, as enacted by subsection (63), is deemed to have come into force immediately after the expiration of March 27, 2023.

• (171) The portion of subsection 127.45(5) of the Income Tax Act before paragraph (a), as enacted by subsection (64), is deemed to have come into force immediately after the expiration of March 27, 2023.

• (172) Subparagraph 127.45(5)(a)(ii) of the Income Tax Act, as enacted by subsection (65), is deemed to have come into force immediately after the expiration of March 27, 2023.

• (173) Subparagraph 127.45(5)(a)(ii) of the Income Tax Act, as enacted by subsection (66), is deemed to have come into force on January 1, 2024.

• (174) Paragraphs 127.45(5)(b) and (b.1) of the Income Tax Act, as enacted by subsection (67), are deemed to have come into force immediately after the expiration of March 27, 2023.

• (175) Subsection 127.45(6) of the Income Tax Act, as enacted by subsection (68), is deemed to have come into force immediately after the expiration of March 27, 2023.

• (176) Subsection 127.45(6) of the Income Tax Act, as enacted by subsection (69), is deemed to have come into force on January 1, 2024.

• (177) The definitions designated work site, regular tax credit rate and specified tax credit in subsection 127.46(1) of the Income Tax Act, as enacted by subsection (70), apply in respect of specified property prepared or installed on or after the time that is immediately after the expiration of November 27, 2023.

• (178) Subsection 127.46(2) of the Income Tax Act, as enacted by subsection (71), applies in respect of specified property prepared or installed on or after the time that is immediately after the expiration of November 27, 2023.

• (179) Paragraph (c) of the definition clean economy allocation provision in subsection 127.47(1) of the Income Tax Act, as enacted by subsection (72), is deemed to have come into force immediately after the expiration of March 27, 2023.

• (180) Paragraph (d) of the definition clean economy allocation provision in subsection 127.47(1) of the Income Tax Act, as enacted by subsection (73), is deemed to have come into force on January 1, 2024.

• (181) Paragraph (c) of the definition clean economy expenditure in subsection 127.47(1) of the Income Tax Act, as enacted by subsection (74), is deemed to have come into force immediately after the expiration of March 27, 2023.

• (182) Paragraph (d) of the definition clean economy expenditure in subsection 127.47(1) of the Income Tax Act, as enacted by subsection (75), is deemed to have come into force on January 1, 2024.

• (183) The definition clean economy provision in subsection 127.47(1) of the Income Tax Act, as enacted by subsection (76), is deemed to have come into force immediately after the expiration of March 27, 2023, except that

  • (a) before November 28, 2023, the definition clean economy provision in subsection 127.47(1) of the Income Tax Act, as enacted by subsection (76), is to be read as follows:

    clean economy provision

    clean economy provision means

    • (a) this section;

    • (b) section 127.44 and Part XII.7;

    • (c) section 127.45; or

    • (d) section 127.48. (disposition pour l’économie propre)

  • (b) for the period that begins on November 28, 2023 and ends on December 31, 2023, the definition clean economy provision in subsection 127.47(1) of the Income Tax Act, as enacted by subsection (76), is to be read as follows:

    clean economy provision

    clean economy provision means

    • (a) this section;

    • (b) section 127.44 and Part XII.7;

    • (c) section 127.45;

    • (d) section 127.46; or

    • (e) section 127.48. (disposition pour l’économie propre)

• (184) Paragraph (c) of the definition clean economy tax credit in subsection 127.47(1) of the Income Tax Act, as enacted by subsection (77), is deemed to have come into force immediately after the expiration of March 27, 2023.

• (185) Paragraph (d) of the definition clean economy tax credit in subsection 127.47(1) of the Income Tax Act, as enacted by subsection (78), is deemed to have come into force on January 1, 2024.

• (186) Section 127.48 of the Income Tax Act, as enacted by subsection (80), is deemed to have come into force immediately after the expiration of March 27, 2023, except that before January 1, 2024, subsection 127.48(3) of the Income Tax Act, as enacted by subsection (80), is to be read without reference to section 127.49 and subparagraph 127.48(10)(a)(ii) of the Income Tax Act, as enacted by subsection (80), is to be read as follows:

  • (ii) in respect of which a CCUS tax credit (as defined in subsection 127.44(1)) or a clean technology investment tax credit (as defined in subsection 127.45(1)) was deducted by any person, or

• (187) Section 127.49 of the Income Tax Act, as enacted by subsection (82), is deemed to have come into force on January 1, 2024.

• (188) Subparagraph 127.52(1)(h)(vi) of the Income Tax Act, as enacted by subsection (84), is deemed to have come into force immediately after the expiration of December 31, 2023.

• (189) Subparagraph 127.55(f)(vii) of the Income Tax Act, as enacted by subsection (85), applies to taxation years that begin after December 31, 2023.

• (190) Paragraph 152(1)(b) of the Income Tax Act, as enacted by subsection (86), is deemed to have come into force immediately after the expiration of March 27, 2023.

• (191) Paragraph 152(1)(b) of the Income Tax Act, as enacted by subsection (87), is deemed to have come into force on January 1, 2024.

• (192) Paragraph 152(4)‍(b.91)‍ of the Income Tax Act, as renumbered by subsection (88), comes into force or is deemed to have come into force immediately after the expiration of the day immediately before the day on which the other Act receives royal assent.

• (193) Paragraph 152(4)(b.94) of the Income Tax Act, as enacted by subsection (89), is deemed to have come into force on January 1, 2024.

• (194) Subparagraph 152(4.‍01)‍(b)‍(xii) of the Income Tax Act, as enacted by subsection (92), comes into force or is deemed to have come into force immediately after the expiration of the day immediately before the day on which the other Act receives royal assent.

• (195) Subparagraph 152(4.‍01)‍(b)‍(xiii) of the Income Tax Act, as enacted by subsection (92), is deemed to have come into force immediately after the expiration of March 27, 2023.

• (196) Subparagraph 152(4.‍01)‍(b)‍(xiv) of the Income Tax Act, as enacted by subsection (92), is deemed to have come into force on January 1, 2024.

• (197) Paragraph 157(3)(e) of the Income Tax Act, as enacted by subsection (93), is deemed to have come into force immediately after the expiration of March 27, 2023.

• (198) Paragraph 157(3)(e) of the Income Tax Act, as enacted by subsection (94), is deemed to have come into force on January 1, 2024.

• (199) Paragraph 157(3.1)(c) of the Income Tax Act, as enacted by subsection (95), is deemed to have come into force immediately after the expiration of March 27, 2023.

• (200) Paragraph 157(3.1)(c) of the Income Tax Act, as enacted by subsection (96), is deemed to have come into force on January 1, 2024.

• (201) Subsection 160(1.6) of the Income Tax Act, as enacted by subsection (97), is deemed to have come into force on January 1, 2024.

• (202) Paragraph 163(2)(d.1) of the Income Tax Act, as enacted by subsection (100), is deemed to have come into force immediately after the expiration of March 27, 2023.

• (203) Paragraph 163(2)(d.1) of the Income Tax Act, as enacted by subsection (101), is deemed to have come into force on January 1, 2024.

• (204) Paragraph (b.1) of definition reorganization transaction in subsection 183.3(1) of the Income Tax Act, as enacted by subsection (102), is deemed to have come into force on January 1, 2024.

• (205) The portion of the definition reporting-due day in subsection 211.92(1) of the Income Tax Act before paragraph (a), as enacted by subsection (103), is deemed to have come into force immediately after the expiration of December 31, 2021.

• (206) Subsection 220(2.2) of the Income Tax Act, as enacted by subsection (104), is deemed to have come into force immediately after the expiration of March 27, 2023.

• (207) Subsection 220(2.2) of the Income Tax Act, as enacted by subsection (105), is deemed to have come into force on January 1, 2024.

• (208) Subparagraph 241(4)(d)(vi.2) of the Income Tax Act, as enacted by subsection (108), is deemed to have come into force on March 28, 2023.

• (209) Subparagraph 241(4)(d)(vi.2) of the Income Tax Act, as enacted by subsection (109), is deemed to have come into force on November 28, 2023.

• (210) Subparagraph 241(4)(d)(vi.2) of the Income Tax Act, as enacted by subsection (110), is deemed to have come into force on January 1, 2024.

• (211) Subparagraph (b)(v) of the definition employee ownership trust in subsection 248(1) of the Income Tax Act, as enacted by subsection (111) is deemed to have come into force immediately after the expiration of December 31, 2023.

• (212) Subparagraphs (a)(iii) and (iv) of Class 57 of Schedule II to the Income Tax Regulations, as enacted by subsection (112), are deemed to have come into force immediately after the expiration of December 31, 2021.