On 29 June 2021, the 2021 Budget Implementation Act (“Bill C-30”) received Royal Assent, which includes certain tax measures that were proposed in the 2021 Federal Budget, the 2020 Fall Economic Statement, and the 2019 Federal Budget. Bill C-30 was enacted on 29 June 2021. The highlights of the tax measures enacted by Bill C-30 include:
- Limiting the stock option deduction for employees of non-Canadian controlled private corporations with consolidated group revenue of at least $500 million.
- Bill C-30 includes outstanding 2019 federal budget measures related to transfer pricing rules (ordering of rules and reassessment period).
- Expanding the scope of the “foreign affiliate dumping” rules to apply to Canadian resident corporations that are controlled by non-resident individuals and trusts, or groups of non-residents not dealing at arm’s length.
- Providing flow-through share issuers with an additional year to incur qualifying expenditures in respect of subscription agreements entered into in 2019 and 2020.
- Denying deductions to mutual fund trusts for income or capital gains (beyond certain limits) allocated to redeeming unitholders.
- Preventing non-residents from avoiding dividend withholding tax on compensation payments made under cross-border securities lending arrangements in respect of shares of Canadian-resident corporations.
- Narrowing the exception to the rules related to “derivative forward agreements,” which are rules designed to prevent taxpayers from using derivative transactions to convert ordinary income into capital gains.
- Introducing the Canada Recovery Hiring Program refundable tax credit.
- Revising certain rules related to the Canada Emergency Wage Subsidy (CEWS) and Canada Emergency Rent Subsidy (CERS).
- Enhancing GST/HST measures related to non-resident vendors and e-commerce.
