Budget 2025 Implementation Act, No. 1 (S.C. 2026, c. 3)

• 94 (1) The definitions recognized derivatives exchange, specified mutual fund trust, specified synthetic equity arrangement, synthetic equity arrangement chain and tax-indifferent investor in subsection 248(1) of the Act are repealed.

• (2) The definition superannuation or pension benefit in subsection 248(1) of the Act is replaced by the following:

  superannuation or pension benefit

  superannuation or pension benefit includes any amount received out of or under a superannuation or pension fund or plan (including, except for the purposes of subparagraph 56(1)(a)(i), a pooled registered pension plan) and, without restricting the generality of the foregoing, includes

  • (a) any payment made to a beneficiary under the fund or plan or to an employer or former employer of the beneficiary under the fund or plan

    • (i) in accordance with the terms of the fund or plan,

    • (ii) resulting from an amendment to or modification of the fund or plan, or

    • (iii) resulting from the termination of the fund or plan, and

  • (b) any payment made to an individual by an unclaimed property authority, if an amount in respect of the payment had been paid to the unclaimed property authority directly from a registered pension plan, an RRSP or a RRIF in respect of an unlocated individual; (prestation de retraite ou de pension)

• (3) Subclause (b)(i)(B)(I) of the definition derivative forward agreement in subsection 248(1) of the Act is replaced by the following:

  • (I) a tax-indifferent (as defined in subsection 18.2(1)), or

• (4) The definition dividend rental arrangement in subsection 248(1) of the Act is amended by adding “and” at the end of paragraph (b.1), by striking out “and” at the end of paragraph (c) and by repealing paragraph (d).

• (5) Paragraph (j) of the definition employee ownership trust in subsection 248(1) of the Act is replaced by the following:

  • (j) all or substantially all the fair market value of the property of the trust is derived, directly or indirectly, from shares of the capital stock or indebtedness of one or more qualifying businesses that the trust controls and that carry on an active business; (fiducie collective des employés)

• (6) Paragraph (c) of the definition qualifying business in subsection 248(1) of the Act is replaced by the following:

  • (c) that deals at arm’s length and is not affiliated with any person (other than a subject corporation referred to in paragraph (a) of the definition qualifying business transfer that controlled and wholly-owned the corporation immediately before the time the trust acquired control of the corporation) or partnership that owned, directly or indirectly, 50% or more of the fair market value of the shares of the capital stock or indebtedness of the corporation immediately before the time the trust acquired control of the corporation; (entreprise admissible)

• (7) Paragraph (a) of the definition qualifying business transfer in subsection 248(1) of the Act is replaced by the following:

  • (a) immediately before the disposition, all or substantially all the fair market value of the assets of the subject corporation is derived, directly or indirectly, from assets (other than an interest in a partnership) that are used principally in an active business (referred to in this definition as the “business”) carried on by the subject corporation or a corporation that is controlled and wholly-owned by the subject corporation,

• (8) Subparagraphs (a)(i) and (ii) of the definition synthetic equity arrangement in subsection 248(1) of the Act are replaced by the following:

  • (i) are entered into by the particular person, by a person or partnership that does not deal at arm’s length with, or is affiliated with, the particular person (referred to in this definition as a “connected person”) or, for greater certainty, by any combination of the particular person and connected persons, with one or more persons or partnerships (referred to in this definition as a “counterparty”),

  • (ii) have the effect, or would have the effect, if each agreement entered into by a connected person were entered into by the particular person, of eliminating all or substantially all the particular person’s risk of loss and opportunity for gain or profit in respect of the DRA share, and, for greater certainty, opportunity for gain or profit includes rights to, benefits from and distributions on a share, and

• (9) Subparagraph (b)(i) of the definition synthetic equity arrangement in subsection 248(1) of the Act is repealed.

• (10) Paragraph (b) of the definition zero-emission vehicle in subsection 248(1) of the Act is replaced by the following:

  • (b) is acquired, and becomes available for use, by the taxpayer after March 18, 2019 and before 2034,

• (11) Paragraph (d) of the definition zero-emission vehicle in subsection 248(1) of the Act is replaced by the following:

  • (d) would be an accelerated investment incentive property or a reaccelerated investment incentive property of the taxpayer if subsections 1104(4) and (4.01) of the Income Tax Regulations were read without their exclusions for property included in Class 54 or Class 55 of Schedule II to those Regulations. (véhicule zéro émission)

• (12) Subparagraph (b)(iv) of the definition fiducie collective des employés in subsection 248(1) of the French version of the Act is replaced by the following:

  • (iv) immédiatement avant le moment d’un transfert admissible d’entreprise à la fiducie, ne détenait pas, directement ou indirectement, seule ou avec une personne ou société de personnes liée ou affiliée, des actions du capital-actions ou des dettes de l’entreprise admissible, dont la valeur est égale ou supérieure à 50 % de la juste valeur marchande des actions du capital-actions et des dettes de l’entreprise admissible,

• (13) Subsection 248(1) of the Act is amended by adding the following in alphabetical order:

  qualifying cooperative business

  qualifying cooperative business, at a particular time, means a corporation, controlled by a worker cooperative,

  • (a) that is a Canadian-controlled private corporation,

  • (b) of which not more than 40% of the directors consist of individuals that, immediately before the time that the worker cooperative acquired control of the corporation, owned, directly or indirectly, together with any person or partnership that is related to or affiliated with the director, 50% or more of the fair market value of the shares of the capital stock or indebtedness of the corporation, and

  • (c) that deals at arm’s length and is not affiliated with any person (other than a subject corporation referred to in paragraph (a) of the definition “qualifying cooperative conversion” that controlled and wholly-owned the corporation immediately before the time the worker cooperative acquired control of the corporation) or partnership that owned, directly or indirectly, 50% or more of the fair market value of the shares of the capital stock or indebtedness of the corporation immediately before the time the worker cooperative acquired control of the corporation; (entreprise coopérative admissible)

  qualifying cooperative conversion

  qualifying cooperative conversion means a disposition by a taxpayer of shares of the capital stock of a corporation (in this definition referred to as the “subject corporation”) to another corporation (in this definition referred to as the “purchaser corporation”), if

  • (a) immediately before the disposition, all or substantially all the fair market value of the assets of the subject corporation is derived, directly or indirectly, from assets (other than an interest in a partnership) that are used principally in an active business carried on by the subject corporation or a corporation that is controlled and wholly-owned by the subject corporation,

  • (b) at the time of the disposition,

    • (i) the taxpayer deals at arm’s length with the purchaser corporation,

    • (ii) the purchaser corporation acquires control of the subject corporation, and

    • (iii) the purchaser corporation is a worker cooperative, and

  • (c) at all times after the disposition,

    • (i) the taxpayer deals at arm’s length with the purchaser corporation and subject corporation, and

    • (ii) the taxpayer does not retain any right or influence that, if exercised, would allow the taxpayer (whether alone or together with any person or partnership that is related to or affiliated with the taxpayer) to control, directly or indirectly in any manner whatever, the purchaser corporation or subject corporation; (conversion admissible de coopérative)

  qualifying cooperative worker

  qualifying cooperative worker means an individual who

  • (a) holds a membership share of a corporation that was incorporated or continued by or under the provisions of a law, of Canada or of a province, that provide for the establishment of the corporation as a cooperative corporation or that provide for the establishment of cooperative corporations,

  • (b) is an employee of the corporation or a qualifying cooperative business controlled by the corporation,

  • (c) does not represent, together with any person or partnership that is related to or affiliated with the individual, more than 50% of the members of the worker cooperative,

  • (d) immediately before the time of a qualifying cooperative conversion that involved the corporation, did not own, directly or indirectly, together with any person or partnership that is related to or affiliated with the individual, shares of the capital stock or indebtedness of the corporation or a qualifying cooperative business controlled by the corporation, the value of which is equal to or greater than 50% of the fair market value of the shares of the capital stock and indebtedness of the corporation or the qualifying cooperative business controlled by the corporation, and

  • (e) has not claimed, and is not related to an individual who claimed, a deduction under subsection 110.62(2) in respect of a disposition of shares of the corporation or a qualifying cooperative business controlled by the corporation; (travailleur admissible de coopérative)

  worker cooperative

  worker cooperative means a corporation that, at all relevant times, satisfies the following conditions:

  • (a) the corporation is resident in Canada,

  • (b) the corporation was incorporated or continued by or under the provisions of a law, of Canada or of a province, that provide for the establishment of the corporation as a cooperative corporation or that provide for the establishment of cooperative corporations,

  • (c) the corporation is established for the purpose of providing employment to its members,

  • (d) the corporation would be controlled by a particular person if each membership share of the capital stock of the corporation that is owned by a qualifying cooperative worker were owned by the particular person,

  • (e) at least 75% of all individuals employed by the corporation and all qualifying cooperative businesses controlled by the corporation (other than an employee who has not completed an applicable probationary period, which may not exceed 12 months) are holders of a membership share of the corporation,

  • (f) each initial membership share provided to an employee of the corporation and any qualifying cooperative business controlled by the corporation is

    • (i) issued in exchange for a payment of a nominal amount determined in the same manner for all members described in the definition qualifying cooperative worker, and

    • (ii) offered to each employee following their completion of an applicable probationary period, which may not exceed 12 months,

  • (g) at least one-third of the directors of the corporation are qualifying cooperative workers of the corporation,

  • (h) not more than 40% of the directors of the corporation consist of individuals each of whom, immediately before the time of a qualifying cooperative conversion that involved the corporation, owned, directly or indirectly, together with any person or partnership that is related to or affiliated with the director, 50% or more of the fair market value of the shares of the capital stock or indebtedness of the corporation or a qualifying cooperative business controlled by the corporation, and

  • (i) the by-laws of the corporation provide a procedure for allocating, crediting or distributing any surplus earnings of the corporation, including that not less than 50% of those earnings must be paid on the basis of the remuneration earned by the qualifying cooperative workers from the corporation or the labour contributed by those members to the corporation; (coopérative de travailleurs)

• (14) Subsection 248(1) of the Act is amended by adding the following in alphabetical order:

  unclaimed property authority

  unclaimed property authority means an entity that receives and holds property on behalf of individuals that cannot be located, as authorized under the provisions of

  • (a) the Pension Benefits Standards Act, 1985,

  • (b) the Unclaimed Property Act, CQLR, c. B-5.1,

  • (c) the Unclaimed Property Act, S.B.C. 1999, c. 48, or

  • (d) a prescribed law or a law designated by the Minister of Finance for the purpose of this definition that is published in such a manner as the Minister of Finance deems appropriate; (autorité des biens non réclamés)

  unlocated individual

  unlocated individual means an individual in respect of whom property held under a registered pension plan, RRIF or RRSP can be paid or transferred to an unclaimed property authority in accordance with the laws of Canada or a province; (particulier introuvable)

• (15) Subsection 248(42) of the Act is replaced by the following:

  • Marginal note:Synthetic equity arrangements — disaggregation

    (42) For the purposes of the definition synthetic equity arrangement in subsection (1), paragraph (c) of the definition dividend rental arrangement in subsection (1) and subsection 112(10), an arrangement that reflects the fair market value of more than one type of identical share (within the meaning of subsection 112(10)) is considered to be a separate arrangement with respect to each type of identical share the value of which the arrangement reflects.

• (16) Subsections (1), (3), (4), (8) to (11) and (15) are deemed to have come into force on January 1, 2025.

• (17) Subsection (2) applies in respect of amounts paid to an individual by an unclaimed property authority if an amount in respect of the payment was paid to the unclaimed property authority after December 31, 2026.

• (18) Subsections (5) to (7) are deemed to have come into force on January 1, 2024.

• (19) Subsection (13) is deemed to have come into force on January 1, 2024.

• (20) Subsection (14) comes into force on January 1, 2027.

• 95 (1) Paragraph 251(1)(b) of the Act is replaced by the following:

  • (b) a taxpayer and a personal trust (other than a trust described in any of paragraphs (a) to (e.1) and (h) of the definition trust in subsection 108(1)) are deemed not to deal with each other at arm’s length if the taxpayer, or any person not dealing at arm’s length with the taxpayer, would be beneficially interested in the trust if subsection 248(25) were read without reference to subclauses 248(25)(b)(iii)(A)(II) to (IV); and

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

• 96 (1) The definition specified provision in subsection 256.1(1) of the Act is replaced by the following:

  specified provision

  specified provision means any of subsections 10(10) and 13(24), paragraph 37(1)(h), subsections 66(11.4) and (11.5), 66.7(10) and (11), 69(11) and 111(4), (5), (5.01), (5.1) and (5.3), paragraphs (j) and (k) of the definition investment tax credit in subsection 127(9), subsections 181.1(7) and 190.1(6), section 251.2 and any provision of similar effect. (dispositions déterminées)

• (2) Subsection (1) is deemed to have come into force on August 9, 2022.

R.S., c. E-15Excise Tax Act

97 Paragraph 295(5)(d) of the Excise Tax Act is amended by adding the following after subparagraph (v.1):