2024 Federal Budget analysis
– The 2023 budget proposed a refundable ITC for clean electricity, equal to 15% of the capital cost of eligible property.
– The 2024 budget provides the design and implementation details of the ITC, including the eligibility criteria.
– The ITC will be available only to eligible Canadian corporations, including taxable Canadian corporations, provincial and territorial Crown corporations, and corporations owned by municipalities or Indigenous communities.
– Property eligible for the ITC includes equipment used to generate electricity from various sources, including solar, wind, water, nuclear fission, geothermal energy, and specified waste materials.
– The ITC will be subject to potential repayment obligations if the property is converted to an ineligible use, exported from Canada, or disposed of.
– The EV Supply Chain Investment Tax Credit is equal to 10% of the cost of buildings used in electric vehicle supply chain segments.
– The Clean Technology Manufacturing Investment Tax Credit has been updated to include production of qualifying minerals at polymetallic projects.
– An accelerated CCA of 10% is provided for new eligible purpose-built rental projects that begin construction after April 15, 2024.
– Immediate expensing is provided for certain productivity-enhancing assets acquired after April 15, 2024.
– The budget proposes to extend an exemption for certain interest and financing expenses relating to arm’s length financing used to build or acquire purpose-built rental housing.
– The government is considering introducing a new tax on residentially zoned vacant land to spur development.
– The government intends to restrict the acquisition of existing single-family homes by very large corporate investors.
– The government is exploring measures to expand access to alternative financing products for home purchasers, such as halal mortgages.
– Amendments are proposed to the CRA’s information gathering provisions to enhance tax audits and facilitate the collection of tax revenues.
– The budget proposes to remove the tax-indifferent investor exception to the anti-avoidance rule for synthetic equity arrangements.
– Specific amendments are proposed to preclude a corporation from qualifying as a mutual fund corporation if it is controlled by or for the benefit of a corporate group.
– The budget introduces the Canada Carbon Rebate for Small Business, to return a portion of the federal backstop pollution pricing fuel charge proceeds collected from a province to CCPCs with less than 500 employees.
– The budget proposes measures to address tax debt avoidance planning, including joint and several liability for taxpayers who participate in such planning.
– The budget proposes to remove the failure to file an information return in respect of a reportable or notifiable transaction under the mandatory disclosure rules from the general penalty provision.
– The budget proposes to repeal the exception to the debt forgiveness rules for bankrupt corporations and the loss restriction rule applicable to bankrupt corporations.
– The government launched consultations on the existing SR&ED tax incentives and announces a second phase of consultations to focus on specific policy parameters.
