The Canadian federal government released first reading of Budget Implement Act (Bill C-74) on March 27, 2018. This bill includes measures from the 2018 federal budget and other measures including income tax amendments, such as, small business tax changes, amendments to tobacco and marijuana taxation, and implements new veterans and environmental policy, among other things.

The Government supports Canada’s small businesses and continues to support low business tax rates to better enable businesses to grow and create good jobs. The federal small business rate was reduced from January 1, 2018 and will be 9% from January 1, 2019. This Bill also introduces passive investment income rules applicable to taxation years after 2018. This Bill C-74 also includes measures regarding passive income limit. Under this provision, the new threshold is $50,000 on passive income per year. That means, there would be no tax increase on passive investment income less than the threshold limit.

Part 2 of this Bill implements certain excise measures proposed in the February 27, 2018 budget by advancing the existing adjustments for excise duty rates on tobacco products to occur on an annual basis rather than every five years; and increasing excise duty rates on tobacco products to account for inflation. This bill have also replaced subsection 58.‍2(2) of the Excise Tax Act, 2001 to section 58.3. New subsection states that, every person shall pay to Her Majesty a tax on all taxed cigarettes of the person held at the beginning of February 28,2018 at the rate of $0.‍011468 per cigarette.

Under Part 3 of the Bill, a new federal excise duty framework implements for cannabis products proposed in the budget by imposing excise duties on cannabis products to be paid by cannabis licensees.