Fall Economic Statement Implementation Act, 2022 (S.C. 2022, c. 19)

• Published date: 17 April 2023
• Date: 15 December 2022
• Section: Part III - Acts of Parliament
• Gazette Issue: 2 - [object Object]

S.C. 2022, c. 19

Assented to 2022-12-15

An Act to implement certain provisions of the fall economic statement tabled in Parliament on November 3, 2022 and certain provisions of the budget tabled in Parliament on April 7, 2022

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 fall economic statement tabled in Parliament on November 3, 2022 and certain provisions of the budget tabled in Parliament on April 7, 2022”.

SUMMARY

Part 1 implements certain measures in respect of the Income Tax Act by

• (a) providing that any gain on the disposition of a Canadian housing unit within a one-year period of its acquisition is treated as business income;

• (b) introducing a Tax-Free First Home Savings Account;

• (c) phasing out flow-through shares for oil, gas and coal activities;

• (d) introducing a new 30% Critical Mineral Exploration Tax Credit for specified mineral exploration expenses incurred in Canada and renounced to flow-through share investors;

• (e) introducing the Canada Recovery Dividend under which banks and life insurers’ groups pay a temporary one-time 15% tax on taxable income above $1 billion over five years;

• (f) increasing the corporate income tax rate of banks and life insurers’ groups by 1.5% on taxable income above $100 million;

• (g) providing additional reporting requirements for trusts;

• (h) providing rules applicable to mutual fund trusts listed on a designated stock exchange in Canada with respect to amounts that are allocated to redeeming unitholders;

• (i) providing the Minister of National Revenue with the discretion to decline to issue a certificate under section 116 of the Income Tax Act in certain circumstances relating to the administration and enforcement of the Underused Housing Tax Act;

• (j) doubling the First-Time Homebuyers’ Tax Credit;

• (k) expanding the eligibility criteria for the Medical Expense Tax Credit in respect of medical expenses incurred in Canada related to surrogate mothers and donors and fees paid in Canada to fertility clinics and donor banks;

• (l) introducing the Multigenerational Home Renovation Tax Credit;

• (m) allowing access to the small business tax rate on a phased-out basis up to taxable capital of $50 million;

• (n) modifying the computation of income as a result of the adoption of a new international accounting standard for insurance contracts;

• (o) introducing a new graduated disbursement quota rate for charities;

• (p) providing that the general anti-avoidance rules can apply to transactions that affect tax attributes that have not yet been used to reduce taxes;

• (q) strengthening the rules on avoidance of tax debts;

• (r) modifying the calculation of the taxes applicable to registered investments that hold property that is not a qualified investment;

• (s) modifying the tax treatment of certain interest coupon stripping arrangements that might otherwise be used to avoid tax on cross-border interest payments;

• (t) clarifying the applicable rules with respect to audits by Canada Revenue Agency officials, including requiring taxpayers to give reasonable assistance and to answer all proper questions for tax purposes; and

• (u) extending the capital cost allowance for clean energy and the tax rate reduction for zero-emission technology manufacturers to include air-source heat pumps.

It also makes related and consequential amendments to the Canada Deposit Insurance Corporation Act, the Excise Tax Act, the Air Travellers Security Charge Act, the Excise Act, 2001, Part 1 of the Greenhouse Gas Pollution Pricing Act and the Income Tax Regulations.

Part 2 amends the Excise Act, 2001 and other related texts in order to implement changes to

• (a) the federal excise duty frameworks for cannabis and other products by, among other things,

  • (i) permitting excise duty remittances for certain cannabis licensees to be made on a quarterly rather than a monthly basis, starting from the quarter that began on April 1, 2022, and

  • (ii) allowing the transfer of packaged, but unstamped, cannabis products between licensed cannabis producers; and

• (b) the federal excise duty framework for vaping products in relation to the markings, customs storage and excise duty liability of these products.

Part 3 amends the Underused Housing Tax Act to make amendments of a technical or housekeeping nature. It also makes regulations under that Act in order to, among other things, implement an exemption for certain vacation properties.

Division 1 of Part 4 authorizes the Minister of Finance to acquire and hold on behalf of His Majesty in right of Canada non-voting shares of a wholly-owned subsidiary of the Canada Development Investment Corporation that is responsible for administering the Canada Growth Fund and to requisition the amounts for the acquisition of those shares out of the Consolidated Revenue Fund.

Division 2 of Part 4 amends the Bretton Woods and Related Agreements Act to increase the maximum financial assistance that may be provided in respect of foreign states.

Subdivision A of Division 3 of Part 4 enacts the Framework Agreement on First Nation Land Management Act.

Subdivision B of Division 3 of Part 4 contains transitional provisions in respect of the enactment of the Framework Agreement on First Nation Land Management Act and makes consequential amendments to other Acts. It also repeals the First Nations Land Management Act.

Division 4 of Part 4 amends the Government Employees Compensation Act in order to fulfil Canada’s obligations under the Memorandum of Understanding between the Government of Canada and the Government of the United States of America concerning Cooperation on the Civil Lunar Gateway.

Division 5 of Part 4 amends the Canada Student Loans Act to eliminate the accrual of interest on guaranteed student loans beginning on April 1, 2023.

It also amends the Canada Student Financial Assistance Act to eliminate the accrual of interest on student loans beginning on April 1, 2023.

Finally, it amends the Apprentice Loans Act to eliminate the accrual of interest on apprentice loans beginning on April 1, 2023 and to clarify when the repayment of apprentice loans begins during the interest suspension period from April 1, 2021 to March 31, 2023.

His Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:

Short Title

Marginal note:Short title

1 This Act may be cited as the Fall Economic Statement Implementation Act, 2022.

PART 1Amendments to the Income Tax Act and Other Legislation R.S., c. 1 (5th Supp.)Income Tax Act

• 2 (1) Section 12 of the Income Tax Act is amended by adding the following after subsection (11):

  • Marginal note:Flipped property — deemed business

    (12) For the purposes of this Act, if, absent this subsection and paragraph 40(2)(b), a taxpayer would have had a gain from the disposition of a flipped property, then throughout the period that the taxpayer owned the flipped property

    • (a) the taxpayer is deemed to carry on a business that is an adventure or concern in the nature of trade with respect to the flipped property;

    • (b) the flipped property is deemed to be inventory of the taxpayer’s business; and

    • (c) the flipped property is deemed not to be capital property of the taxpayer.

  • Marginal note:Definition of flipped property

    (13) For the purposes of subsections (12) and (14), a flipped property means a housing unit of a taxpayer (other than a property that would be inventory of the taxpayer if the definition inventory in subsection 248(1) were read without reference to subsection (12)) located in Canada that was owned by the taxpayer for less than 365 consecutive days prior to the disposition of the property, other than a disposition that can reasonably be considered to occur due to, or in anticipation of, one or more of the following events:

    • (a) the death of the taxpayer or a person related to the taxpayer;

    • (b) one or more persons related to the taxpayer becoming a member of the taxpayer’s household or the taxpayer becoming a member of the household of a related person;

    • (c) the breakdown of the marriage or common-law partnership of the taxpayer if the taxpayer has been living separate and apart from their spouse or common-law partner for at least 90 days prior to the disposition;

    • (d) a threat to the personal safety of the taxpayer or a related person;

    • (e) the taxpayer or a related person suffering from a serious illness or disability;

    • (f) an eligible relocation (as defined in subsection 248(1)) of the taxpayer or the taxpayer’s spouse or common-law partner, if that definition was read without reference to the requirements for the new work location and the new residence to be in Canada;

    • (g) an involuntary termination of the employment of the taxpayer or the taxpayer’s spouse or common-law partner;

    • (h) the insolvency of the taxpayer; or

    • (i) the destruction or expropriation of the property. (bien à revente précipitée)

  • Marginal note:Flipped property — loss denial

    (14) For the purposes of this Part, a taxpayer’s loss from a business in respect of a flipped property is deemed to be nil.

• (2) Subsection (1) applies throughout the period that the flipped property is owned by the taxpayer in respect of dispositions that occur after 2022.

• 3 (1) Paragraph 18(1)(u) of the Act is replaced by the following:

  • Marginal note:Fees — individual saving plans

    (u) any amount paid or payable by the taxpayer for services in respect of a FHSA, retirement savings plan, retirement income fund or TFSA under or of which the taxpayer is the annuitant or holder;

• (2) Subsection 18(9.02) of the Act is replaced by the following:

  • Marginal note:Application of subsection (9) to insurers

    (9.02) For the purpose of subsection (9), an outlay or expense made or incurred by an insurer in a taxation year on account of the acquisition of an insurance policy at any time prior to the issuance of the policy is deemed to be an expense incurred as consideration for...