Budget Implementation Act, 2022, No. 1 (S.C. 2022, c. 10)

• 35 (1) Subsection 1102(20.1) of the Regulations is replaced by the following:

  • (20.1) For the purposes of subsections 1100(0.3) and (2.02) and 1104(3.1) and (4), a particular person or partnership and another person or partnership shall be considered not to be dealing at arm’s length with each other in respect of the acquisition or ownership of a property if, in the absence of this subsection, they would be considered to be dealing at arm’s length with each other and it may reasonably be considered that the principal purpose of any transaction or event, or a series of transactions or events, is to cause

    • (a) the property to qualify as accelerated investment incentive property or immediate expensing property; or

    • (b) the particular person or partnership and the other person or partnership to satisfy the condition in subclause 1100(2.02)(a)(i)(C)(I) or subparagraph 1100(0.3)(c)(i).

• (2) Subsection (1) is deemed to have come into force on April 19, 2021.

• 36 (1) Section 1104 of the Regulations is amended by adding the following after subsection (3):

  • Marginal note:Definitions

    (3.1) The following definitions apply in this Part and Schedules II to VI.

    designated immediate expensing property

    designated immediate expensing property for a taxation year, means property of an eligible person or partnership that

    • (a) is immediate expensing property of the eligible person or partnership;

    • (b) became available for use by the eligible person or partnership in the taxation year; and

    • (c) is designated as designated immediate expensing property in prescribed form filed by the eligible person or partnership with the Minister for the taxation year

      • (i) if the eligible person or partnership is a partnership, on or before the day that is 12 months after the day on which any member of the partnership is required to file an information return under section 229 for the fiscal period to which the designation relates, and

      • (ii) in any other case, on or before the day that is 12 months after the eligible person or partnership’s filing-due date for the taxation year to which the designation relates. (bien relatif à la passation en charges immédiate désigné)

    eligible person or partnership

    eligible person or partnership for a taxation year, means

    • (a) a corporation that was a Canadian-controlled private corporation throughout the year;

    • (b) an individual (other than a trust) who was resident in Canada throughout the year; or

    • (c) a Canadian partnership all of the members of which were, throughout the period, persons described in paragraph (a) or (b). (personne ou société de personnes admissible)

    immediate expensing property

    immediate expensing property for a taxation year, means property of a prescribed class (other than property included in any of Classes 1 to 6, 14.1, 17, 47, 49 and 51 in Schedule II) of an eligible person or partnership that

    • (a) is acquired by the eligible person or partnership

      • (i) if the eligible person or partnership is a Canadian-controlled private corporation, after April 18, 2021, or

      • (ii) if the eligible person or partnership is an individual or a Canadian partnership, after December 31, 2021;

    • (b) becomes available for use

      • (i) if the eligible person or partnership is an individual or a Canadian partnership all the members of which are individuals throughout the taxation year, before 2025, and

      • (ii) in any other case, before 2024; and

    • (c) meets either of the following conditions:

      • (i) the property

        • (A) has not been used for any purpose before it was acquired by the eligible person or partnership, and

        • (B) is not a property in respect of which an amount has been deducted under paragraph 20(1)(a) or subsection 20(16) of the Act by any person or partnership for a taxation year ending before the time the property was acquired by the eligible person or partnership, or

      • (ii) the property was not

        • (A) acquired in circumstances where

          • (I) the eligible person or partnership was deemed to have been allowed or deducted an amount under paragraph 20(1)(a) of the Act in respect of the property in computing income for previous taxation years, or

          • (II) the undepreciated capital cost of depreciable property of a prescribed class of the eligible person or partnership was reduced by an amount determined by reference to the amount by which the capital cost of the property to the eligible person or partnership exceeds its cost amount, or

        • (B) previously owned or acquired by the eligible person or partnership or by a person or partnership with which the eligible person or partnership did not deal at arm’s length at any time when the property was owned or acquired by the person or partnership. (bien relatif à la passation en charges immédiate)

    taxpayer

    taxpayer unless the context otherwise requires, includes an eligible person or partnership. (contribuable)

  • Marginal note:Immediate expensing limit

    (3.2) For the purposes of this Part and Schedules II to VI, an eligible person or partnership’s immediate expensing limit for a taxation year is $1,500,000 unless the eligible person or partnership is associated (within the meaning of section 256 of the Act, as modified by subsection (3.6)) in the taxation year with one or more other eligible persons or partnerships, in which case, except as otherwise provided in this section, its immediate expensing limit is nil.

  • Marginal note:Associated eligible persons or partnerships

    (3.3) Despite subsection (3.2), if all the eligible persons or partnerships that are associated with each other (within the meaning of section 256 of the Act, as modified by subsection (3.6)) in a taxation year file with the Minister in prescribed form an agreement that assigns for the purpose of this Part and Schedules II to VI a percentage to one or more of them for the year, the immediate expensing limit for the year of each of the eligible persons or partnerships is

    • (a) if the total of the percentages assigned in the agreement does not exceed 100%, $1,500,000 multiplied by the percentage assigned to that eligible person or partnership in the agreement; and

    • (b) in any other case, nil.

  • Marginal note:Failure to file agreement

    (3.4) If any of the eligible persons or partnerships that are associated with each other (within the meaning of section 256 of the Act, as modified by subsection (3.6)) in a taxation year has failed to file with the Minister an agreement described in subsection (3.3) within 30 days after notice in writing by the Minister has been forwarded to any of them that such an agreement is required for the purpose of any assessment of tax under Part I of the Act, the Minister shall, for the purpose of this Part and Schedules II to VI, allocate an amount to one or more of them for the taxation year.

  • Marginal note:Special rules for immediate expensing limit

    (3.5) Despite subsections (3.2) to (3.4),

    • (a) where an eligible person or partnership (in this paragraph referred to as the “first person”) has more than one taxation year ending in the same calendar year and it is associated (within the meaning of section 256 of the Act, as modified by subsection (3.6)) in two or more of those taxation years with another eligible person or partnership (in this paragraph referred to as the “other person”) that has a taxation year ending in that calendar year, the immediate expensing limit of the first person for each taxation year ending in the calendar year in which it is associated (within the meaning of section 256 of the Act, as modified by subsection (3.6)) with the other person that ends after the first such taxation year ending in that calendar year is, subject to the application of paragraph (b), an amount equal to the lesser of

      • (i) its immediate expensing limit determined under subsection (3.3) or (3.4) for the first such taxation year ending in the calendar year, and

      • (ii) its immediate expensing limit determined under subsection (3.3) or (3.4) for the particular taxation year ending in the calendar year; and

    • (b) where an eligible person or partnership has a taxation year that is less than 51 weeks, its immediate expensing limit for the year is that proportion of its immediate expensing limit for the year determined without reference to this paragraph that the number of days in the year is of 365.

  • Marginal note:Associated - interpretation

    (3.6) For the purposes of this Part and Schedules II to VI, in determining whether an eligible person or partnership is associated (within the meaning of section 256 of the Act, as modified by this subsection) with another eligible person or partnership in a taxation year

    • (a) if the eligible person or partnership is a partnership,

      • (i) the partnership is deemed to be a corporation (in this subsection referred to as a “deemed corporation”) for the year,

      • (ii) the deemed corporation is deemed to have a capital stock of a single class of shares, with a total of 100 issued and outstanding shares,

      • (iii) each member (in this subsection referred to as a “deemed shareholder”) of the deemed corporation is deemed to be a shareholder of the deemed corporation,

      • (iv) each deemed shareholder of the deemed corporation is deemed to hold a number of shares in the capital stock of the deemed corporation determined by the formula

        A × 100

        where

        A

        is equal to

        • (A) the deemed shareholder’s specified proportion for the last fiscal period of the deemed corporation, or

        • (B) if the deemed shareholder does not have a specified proportion described in clause (A), the proportion that the fair market value of the deemed shareholder’s interest in the deemed corporation at that time is of the fair market value of all interests in the deemed corporation at that time, and

      • (v) the deemed corporation’s fiscal period is deemed to be its taxation year; and

    • (b) if the eligible person or partnership is an individual (other than a trust) who carries on a business or has acquired immediate expensing property

      • (i) the individual, in respect of that business or property, is deemed to be a corporation that is controlled by the individual, and

      • (ii) the corporation’s taxation year is deemed to be the same as the individual’s taxation year.

• (2) Subsection (1) is deemed to have come into force on April 19, 2021.

• 37 (1) The definitions biogas and producer gas in subsection 1104(13) of the Regulations are replaced by the following:

  biogas

  biogas means the gas produced by the anaerobic digestion of specified waste material. (biogaz)

  producer gas

  producer gas means

  • (a) in respect of a property of a taxpayer that becomes available for use by the taxpayer before 2025, fuel the composition of which, excluding its water content, is all or substantially all non-condensable gases that is generated primarily from eligible waste fuel or specified waste material using a thermo-chemical conversion process and that is not generated from any feedstock other than eligible waste fuel, specified waste material or fossil fuel; and

  • (b) in respect of a property of a taxpayer that becomes available for use by the taxpayer after 2024, fuel

    • (i) the composition of which, excluding its water content, is all or substantially all non-condensable gases,

    • (ii) that is generated using a thermo-chemical conversion process,

    • (iii) that is generated from feedstock of which no more than 25% is fossil fuel when measured in terms of energy content (expressed as a higher heating value of the feedstock), and

    • (iv) that is not generated from any feedstock other than eligible waste fuel, specified waste material or fossil fuel. (gaz de gazéification)

• (2) The definitions plant residue and separated organics in subsection 1104(13) of the Regulations are replaced by the following:

  plant residue

  plant residue means residue of plants (not including wood waste and waste that no longer has the chemical properties of the plants of which it is a residue) that would otherwise be waste material. (résidus végétaux)

  separated organics

  separated organics means organic waste (other than waste that is considered to be toxic or hazardous waste under any law of Canada or a province) that could be disposed of in an eligible waste management facility or eligible landfill site. (matières organiques séparées)

• (3) Subsection 1104(13) of the Regulations is amended by adding the following in alphabetical order:

  gaseous biofuel

  gaseous biofuel means a fuel produced all or substantially all from specified waste material that is a gas at a temperature of 15.6°C (60°F) and a pressure of 101 kPa (14.7 psia). (biocarburants gazeux)

  liquid biofuel

  liquid biofuel means a fuel produced all or substantially all from specified waste material or carbon dioxide that is a liquid at a temperature of 15.6°C (60°F) and a pressure of 101 kPa (14.7 psia). (biocarburants liquides)

  solid biofuel

  solid biofuel means a fuel produced all or substantially all from specified waste material that is a solid at a temperature of 15.6°C (60°F) and a pressure of 101 kPa (14.7 psia) (other than charcoal that is used for cooking or fuels with fossil fuel-derived ignition accelerants) and that has undergone

  • (a) a thermo-chemical conversion process to increase its carbon fraction and densification; or

  • (b) densification into pellets or briquettes. (biocarburants solides)

  specified waste material

  specified waste material means wood waste, plant residue, municipal waste, sludge from an eligible sewage treatment facility, spent pulping liquor, food and animal waste, manure, pulp and paper by-product and separated organics. (déchets déterminés)

• (4) Subsection (1) applies in respect of property acquired after April 18, 2021 that has not been used or acquired for use before April 19, 2021.

• (5) Subsections (2) and (3) are deemed to have come into force on April 19, 2021.

• 38 (1) Clause 1104(17)(a)(ii)(A) of the Regulations is replaced by the following:

  • (A) any of subparagraphs (d)(vii) to (ix), (xi), (xiii), (xiv), (xvi), (xvii) and (xix) to (xxii) of Class 43.1, or

• (2) Subsection (1) applies to property acquired after April 18, 2021 that has not been used or acquired for use before April 19, 2021.

39 Section 1106 of the Regulations is amended by adding the following after subsection (1):