What are the key measures in Bill C-19?
Relief for certain late-filed wage and rent subsidy claims
Bill C-19 includes legislation that provides the CRA with the discretion to accept late-filed wage and rent subsidy claims on a case-by-case basis in exceptional circumstances. This legislation applies retroactively to April 11, 2020, which was the end date of the first claim period for the Canada Emergency Wage Subsidy (CEWS).
The process for making a request—and the types of circumstances the CRA will consider as being exceptional—hasn’t been announced, however this is welcome news for taxpayers that may qualify.
Immediate expensing rules
Bill C-19 includes legislation to implement the immediate expensing rules proposed in Budget 2021. This allows Canadian-Controlled Private Corporations (CCPCs) to immediately write-off up to $1.5 million of certain eligible capital property purchased on or after April 19, 2021 and becomes available for use before January 1, 2024. This tax incentive is also available to Canadian resident sole proprietors and certain eligible partnerships, but only for purchases on or after January 1, 2022.
Eligible capital property includes most property subject to the capital cost allowance rules, but excludes classes 1 to 6 (i.e., buildings), 14.1, 17, 47, 49 and 51, which are generally long-lived assets.
The $1.5 million limit must be shared by associated parties and is prorated for short taxation years. Any unused portion of the limit cannot be carried forward. See our Budget 2021 summary for more details.
Tax reduction for zero-emission technology manufacturers
As proposed in Budget 2021, Bill C-19 includes a temporary reduction in the federal corporate tax rate for eligible zero-emission technology manufacturers as follows:
- a reduction in the general corporate tax rate from 15 per cent to 7.5 per cent
- a reduction in the small business corporate tax rate from 9 per cent to 4.5 per cent
To be eligible, at least 10 per cent of the corporation’s gross revenue from all active businesses carried on in Canada must be derived from qualifying zero-emission technology manufacturing or processing activities. Also, the reduce rates only apply to the corporation’s zero-emission technology profits.
The reduced tax rates apply to taxation years that begin after 2021 and will be gradually phased out starting with taxation years that begin in 2029 and fully phased out for taxation years that begin after 2031.
Luxury tax
Another important tax measure in Bill C-19 is the new luxury tax. Originally proposed in Budget 2021, new cars and personal aircraft worth over $100,000 and new boats or yachts priced over $250,000 will be subject to an additional luxury sales tax. The tax is calculated as the lesser of:
- 10 per cent of the value of these luxury items or
- 20 per cent of the value above these threshold amounts.
The luxury tax will come into force on September 1, 2022. See our tax alert article on luxury tax for more details.
Charitable partnership
As introduced in Budget 2022, restrictions are now eased on certain grants made by charities to third-party organizations. Previously, registered charities were only permitted to use their resources for their own charitable activities or for gifts to other qualified donees. Legislative amendments in Bill C-19 extend the scope of permissible disbursements to include certain non-qualified donees if they further the charity’s purposes. The grantor charity is required to meet several accountability requirements such as pre-grant screening, written agreements, ongoing monitoring, and reviewing and approving the final report of the grantee. This measure applies to disbursements made on or after June 23, 2022.
Other tax measures
- Labour Mobility Deduction: This new measure for 2022 and onwards allows tradespeople and apprentices in the construction industry to deduct certain travel and relocation expenses incurred in the course of employment for eligible temporary relocations. See our Budget 2022 summary [ 1400 kb ] for details.
- Expansion of clean energy equipment tax incentive: Class 43.1 and Class 43.2—which provide accelerated capital cost allowance for certain investments in clean energy generation and energy conservation—have been expanded to include additional types of clean energy properties, such as air-source heat pumps that are acquired and available or used on or after April 19, 2021.
- Doubling Home Accessibility Tax Credit: The annual expense limit on the Home Accessibility Tax Credit is doubled from $10,000 to $20,000 for expenses incurred in 2022 and subsequent years. This non-refundable credit is applied at a rate of 15 per cent which means this change provides up to $1,500 additional tax relief for individuals over the age of 65 or who are eligible for the Disability Tax Credit.
- Expansion of Disability Tax Credit: The list of mental functions necessary for everyday life has been expanded. The eligibility criteria for the life-sustaining therapy category were also expanded. These changes apply to 2021 and onwards.
- GST/HST on new housing assignment sales: All assignment sales in respect of newly constructed or substantially renovated single unit residential complexes and condos made after May 6, 2022 are now taxable for GST/HST purposes regardless of the original intention of the purchaser and regardless if the purchaser had any intention to make their unit their residence or use it for any other non-business purpose.
- Delivery of Climate Action Incentive: The Climate Action Incentive payments is now delivered to eligible individuals as quarterly payments starting in July 2022 instead of an annual refundable tax credit.
- Deadline extension for Film or Video Production Tax Credit: certain timelines relevant for the Canadian Film or Video Production Tax Credit are temporarily extended in response to COVID-19.
If you need help navigating these tax measures or have any questions, our advisors are here to help you—reach out to us here.
Disclaimer
The information contained herein is general in nature and is based on proposals that are subject to change. It is not, and should not be construed as, accounting, legal, or tax advice or an opinion provided by Doane Grant Thornton LLP to the reader. This material may not be applicable to, or suitable for, specific circumstances or needs and may require consideration of other factors not described herein.
