Budget Implementation Act, 2023, No. 1 (S.C. 2023, c. 26)
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Assented to 2023-06-22
PART 1Amendments to the Income Tax Act and Other Legislation (continued)
R.S., c. 1 (5th Supp.)Income Tax Act (continued)
10 (1) Subparagraph (c.1)(iii.1) of the definition principal residence in section 54 of the Act is amended by striking out “or” at the end of clause (B), by replacing “and” with “or” at the end of clause (C) and by adding the following after clause (C):
(D) a trust
(I) a specified beneficiary of which for the year is a qualifying individual for the year in respect of the trust, and
(II) under which no person other than a beneficiary described in subclause (I) may receive or otherwise obtain the use of, during the beneficiary’s lifetime, any of the income or capital of the trust and the trustees are required to consider the needs of the beneficiary including, without limiting the generality of the foregoing, the comfort, care and maintenance of the beneficiary, and
(2) The definition principal residence in section 54 of the Act is amended by striking out “and” at the end of paragraph (e), by adding “and” at the end of paragraph (f) and by adding the following after paragraph (f):
(g) a qualifying individual, for a taxation year in respect of a trust, means an individual who meets the following conditions:
(i) the individual is, in the year, any of
(A) the settlor of the trust,
(B) the child, grandchild, great grandchild, parent, grandparent, great grandparent, brother, sister, uncle, aunt, niece or nephew of the settlor or of the spouse or common-law partner or former spouse or common-law partner of the settlor, and
(C) the spouse or common-law partner or former spouse or common-law partner of any person described in clause (A) or (B),
(ii) the individual is resident in Canada during the year, and
(iii) an amount is deductible, or would be deductible if this Act were read without reference to paragraph 118.3(1)(c), under subsection 118.3(1) in computing the individual’s tax payable under this Part for the year; (résidence principale)
(3) Subsections (1) and (2) apply to taxation years that begin after 2016.
11 (1) Paragraph 60(i) of the Act is replaced by the following:
Marginal note:Premium or payment under PRPP, RRSP or RRIF
(i) any amount that is deductible under section 146 or 146.3 or subsection 147.3(13.1) or 147.5(19) in computing the income of the taxpayer for the year;
(2) Paragraph 60(i) of the Act is replaced by the following:
Marginal note:Premium or payment – FHSA, PRPP, RRSP or RRIF
(i) any amount that is deductible under section 146, 146.3 or 146.6 or subsection 147.3(13.1) or 147.5(19) in computing the income of the taxpayer for the year;
(3) Subsection (1) is deemed to have come into force on December 14, 2012.
(4) Subsection (2) is deemed to have come into force on April 1, 2023.
12 (1) Paragraph 60.03(2)(a) of the Act is replaced by the following:
(a) the pensioner is deemed not to have received the portion of the pensioner’s pension income, qualified pension income or an amount described in subparagraph (c)(i) of the definition eligible pension income in subsection (1), as the case may be, for the taxation year that is equal to the amount of the pensioner’s split-pension amount for that taxation year; and
(2) Paragraph 60.03(2)(b) of the Act is amended by striking out “and” at the end of subparagraph (i), by adding “and” at the end of subparagraph (ii) and by adding the following after subparagraph (ii):
(iii) as an amount described in subparagraph (c)(i) of the definition eligible pension income in subsection (1) to the extent that the split-pension amount was received by the pensioner as an amount described in subparagraph (c)(i) of that definition, if the pension transferee has attained the age of 65 years before the end of the taxation year.
(3) Subsections (1) and (2) apply to the 2015 and subsequent taxation years.
13 (1) The portion of subparagraph (i) of the description of C in paragraph 63(2.3)(c) of the French version of the Act before clause (A) is replaced by the following:
(i) s’il existe une personne assumant les frais d’entretien d’un enfant admissible du contribuable pour l’année, la somme des nombres suivants :
(2) The portion of subparagraph (ii) of the description of C in paragraph 63(2.3)(c) of the French version of the Act before clause (A) is replaced by the following:
(ii) dans les autres cas, la somme des nombres suivants :
14 Paragraph 66.1(9)(f) of the Act is replaced by the following:
(f) all Canadian development expenses described in subparagraph (a)(ii) of the definition Canadian development expense in subsection 66.2(5) incurred by the taxpayer in respect of the well in a taxation year preceding the year, other than
(i) expenses referred to in paragraph (d) or (e),
(ii) restricted expenses, and
(iii) expenses for a well referred to in paragraph (a) that are incurred
(A) after 2020 (including expenses that are deemed by subsection 66(12.66) to have been incurred on December 31, 2020), if the expenses are incurred in connection with an obligation that was committed to in writing (including a commitment to a government under the terms of a licence or permit) by the taxpayer before March 22, 2017, and
(B) after 2018 (including expenses that are deemed by subsection 66(12.66) to have been incurred on December 31, 2018), in any other case,
15 The portion of the definition commercial debt obligation after paragraph (b) in subsection 80(1) of the Act is replaced by the following:
an amount in respect of the interest was or would have been deductible in computing the debtor’s income, taxable income or taxable income earned in Canada, as the case may be, if this Act were read without reference to paragraph 18(1)(g), subsections 18(2), (3.1) and (4) and section 21; (créance commerciale)
16 (1) The portion of paragraph 81(1)(d.1) of the Act before subparagraph (i) is replaced by the following:
Marginal note:Canadian Forces members and veterans amounts
(d.1) the total of all amounts received or enjoyed by the taxpayer or the taxpayer’s spouse or common-law partner or survivor (as defined in subsection 146.2(1)) in the year on account of
(2) Paragraph 81(1)(d.1) of the Act is amended by striking out “or” at the end of subparagraph (iii) and by adding the following after subparagraph (iv):
(v) a benefit provided under the Veterans Health Care Regulations,
(vi) a benefit provided in respect of Rehabilitation Services and Vocational Assistance under Part 2 of the Veterans Well-being Act, or
(vii) a benefit provided to a member of the Canadian Forces under the Compensation and Benefit Instructions for the Canadian Forces that is
(A) a home modifications benefit,
(B) a home modifications move benefit,
(C) a vehicle modifications benefit,
(D) a home assistance benefit,
(E) an attendant care benefit,
(F) a caregiver benefit,
(G) a spousal education upgrade benefit,
(H) a funeral and burial expenses benefit, or
(I) a next of kin travel benefit;
(3) Paragraph 81(1)(d.1) of the Act is amended by striking out “or” at the end of subparagraph (vi), by adding “or” at the end of subparagraph (vii) and by adding the following after subparagraph (vii):
(viii) a benefit provided by the Department of National Defence as an education expense reimbursement for ill and injured members;
(4) Subparagraph 81(1)(g.3)(i) of the Act is amended by striking out “or” at the end of clause (C), by replacing “and” with “or” at the end of clause (D) and by adding the following after clause (D):
(E) the Settlement Agreement entered into by His Majesty in right of Canada on January 18, 2023 in respect of the class action relating to the attendance of day scholars at residential schools, and
(5) Subsections (1) and (2) are deemed to have come into force on January 1, 2018.
(6) Subsection (3) is deemed to have come into force on January 1, 2021.
(7) Subsection (4) applies to the 2023 and subsequent taxation years.
17 (1) Paragraph 87(2)(j.6) of the 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 127(10.2), section 139.1, subsection 152(4.3), the determination of D in the definition undepreciated capital cost in subsection 13(21) and the determination of L in the definition cumulative Canadian exploration expense in subsection 66.1(6), the new corporation is deemed to be the same corporation as, and a continuation of, each predecessor corporation;
(2) Subsection (1) applies to taxation years that end after 2007 except that, for taxation years that end before March 19, 2019, paragraph 87(2)(j.6) of the Act, as enacted by subsection (1), does not apply to subsection 127(10.2) of the Act.
18 (1) Paragraph 90(8)(b) of the Act is replaced by the following:
(b) indebtedness that arose in the ordinary course of the business of the creditor or a loan made in the ordinary course of the creditor’s ordinary business of lending money (other than a business of lending money if, at any time during which the loan is outstanding, less than 90% of the aggregate outstanding amount of the loans of the business is owing by borrowers that deal at arm’s length with the creditor) if, at the time the indebtedness arose or the loan was made, bona fide arrangements were made for repayment of the indebtedness or loan within a reasonable time;
(2) Section 90 of the Act is amended by adding the following after subsection (8):
Marginal note:Interpretation — partnerships
(8.01) For the purposes of paragraph (8)(b), a borrower shall be considered to deal at arm’s length with a creditor only if
(a) for greater certainty, the borrower and the creditor deal with each other at arm’s length;
(b) where either the borrower or the creditor is a partnership and the other party is not, each member of the partnership deals at arm’s length with the other party; and
(c) where both the borrower and the creditor are partnerships, the borrower and each member of the borrower deal at arm’s length with the creditor and each member of the creditor.
(3) Subsections (1) and (2) apply to loans made after 2022. Subsection (1), subsection 90(6) of the Act and all provisions of the Act relevant to the interpretation and application of subsection 90(6) of the Act also apply in respect of any portion of a particular loan made before 2023 that remains outstanding on January 1, 2023 – as if that portion were a separate loan that was made on January 1, 2023 in the same manner and on the same terms as the particular loan – if, at the time when the particular loan was made, it met the requirements of subsection 90(6) of the Act as in force at the time when the particular loan was made.
19 (1) The portion of subsection 93.3(1) of the Act before paragraph (a) is replaced by the following:
Marginal note:Definition of specified trust
93.3 (1) In this section, specified trust, at any time, means a trust in respect of which the following apply at that time:
(2) Paragraph 93.3(1)(b) of the Act is replaced by the following:
(b) the trust is resident in Australia or India (in this section referred to as the “specified jurisdiction”);
(3) Paragraph 93.3(2)(c) of the Act is replaced by the following:
(c) the trust is at that time a specified trust;
(4) The portion of paragraph 93.3(2)(e) of the Act before subparagraph (i) is replaced by the following:
(e) unless the non-resident corporation first acquires a beneficial interest in the trust at that time or the non-resident corporation first becomes a foreign affiliate of the taxpayer at that time, immediately before that time (referred to in this paragraph as the “preceding time”) subsection (3) applied
(5) The portion of subsection 93.3(3) of the Act before paragraph (b) is replaced by the following:
Marginal note:Specified trusts
(3) If this subsection applies at any time to a taxpayer resident in Canada in respect of a trust, the following rules apply at that time for the specified purposes:
(a) the trust is deemed to be a non-resident corporation that is resident in the specified jurisdiction and not to be a trust;
(6) Paragraph 93.3(4)(a) of the Act is replaced by the following:
(a) the determination, in respect of an interest in a specified trust, of the Canadian tax results (as defined in subsection 261(1)) of the taxpayer resident in Canada referred to in subsection (3) for a taxation year in respect of shares of the capital stock of a foreign affiliate of the taxpayer;
(7) Subsections (1) to (3), (5) and (6) are deemed to have come into force on January 1, 2022.
(8) Subsection (4) is deemed to have come into force on July 12, 2013. However, if section 93.3 of the Act is deemed to have come into force on January 1, 2006 in respect of a corporation resident in Canada because of an election filed under subsection 22(3) of the Economic Action Plan 2014 Act, No. 2, then subsection (4) is deemed to have come into force on January 1, 2006 in respect of that corporation.
(9) For the purpose of determining if the condition in paragraph 93.3(2)(e) of the Act, as amended by subsection (4), is met at any particular time on or after January 1, 2022, if a non-resident corporation has a beneficial interest in a trust resident in India at the beginning of the day on January 1, 2022, the non-resident corporation is deemed to have first acquired a beneficial interest in the trust at that time.
20 (1) The portion of paragraph 95(2)(b) of the French version of the Act before subparagraph (i) is replaced by the following:
b) la fourniture, par une société étrangère affiliée d’un contribuable, de services ou d’un engagement de fournir des services est réputée constituer une entreprise distincte, autre qu’une entreprise exploitée activement, que la société affiliée exploite, et le revenu qui est tiré de cette entreprise, qui s’y rapporte ou qui y est accessoire est réputé être un revenu tiré d’une entreprise autre qu’une entreprise exploitée activement, dans la mesure où, selon le cas :
(2) The definition eligible controlled foreign affiliate in subsection 95(4) of the Act is replaced by the following:
- eligible controlled foreign affiliate
eligible controlled foreign affiliate, of a taxpayer, at any time, means a foreign affiliate of the taxpayer at that time, if
(a) the affiliate is a controlled foreign affiliate of the taxpayer at that time and at the end of the affiliate’s taxation year that includes that time, and
(b) the following condition is met:
A ≥ 90%
where
- A
- is the total of all amounts each of which would be the participating percentage (determined at the end of the taxation year) of a share owned by the taxpayer of the capital stock of a corporation, in respect of the affiliate, if
(i) the definition relevant cost base were read without reference to the words “if the affiliate is an eligible controlled foreign affiliate of the taxpayer at that time,” in its subparagraph (b)(i), and
(ii) the definition participating percentage in subsection (1) were read without reference to its paragraph (a) and the portion of its paragraph (b) before subparagraph (i); (société étrangère affiliée contrôlée admissible)
(3) Subsection (1) applies to taxation years of a foreign affiliate of a taxpayer that begin on or after February 27, 2004.
(4) Subsection (2) applies in respect of determinations made after August 19, 2011 in respect of property of a foreign affiliate of a taxpayer. However, if the taxpayer elects in writing under this subsection, in respect of all of its foreign affiliates, and files the election with the Minister of National Revenue, paragraph (b) of the definition eligible controlled foreign affiliate in subsection 95(4) of the Act, as enacted by subsection (2), is, in respect of any such determination made before August 9, 2022, to be read without reference to subparagraph (ii) of the description of A and subparagraph (i) of the description of A is to be read as follows:
(i) the amount determined for paragraph (b) in the definition relevant cost base were nil;
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