Budget 2025 Implementation Act, No. 1 (S.C. 2026, c. 3)
Full Document:
- HTMLFull Document: Budget 2025 Implementation Act, No. 1 (Accessibility Buttons available) |
- PDFFull Document: Budget 2025 Implementation Act, No. 1 [4971 KB]
Assented to 2026-03-26
PART 1Amendments to the Income Tax Act and Other Legislation (continued)
R.S., c. 1 (5th Supp.)Income Tax Act (continued)
72 (1) Paragraph 152(1)(b) of the Act is replaced by the following:
(b) the amount of tax, if any, deemed by any of subsections 120(2) or (2.2), 122.5(3) to (3.003), 122.51(2), 122.7(2) or (3), 122.72(1), 122.8(4), 122.9(2), 122.91(1), 125.4(3), 125.5(3), 125.6(2) or (2.1), 127.1(1), 127.41(3), 127.42(2) or (3), 127.44(2), 127.45(2), 127.48(2), 127.49(2) or 210.2(3) or (4) to be paid on account of the taxpayer’s tax payable under this Part for the year.
(2) Paragraph 152(1)(b) of the Act, as enacted by subsection (1), is replaced by the following:
(b) the amount of tax, if any, deemed by any of subsections 120(2) or (2.2), 122.5(3) to (3.003), 122.51(2), 122.7(2) or (3), 122.72(1), 122.8(4), 122.9(2), 122.91(1), 122.92(3), 125.4(3), 125.5(3), 125.6(2) or (2.1), 127.1(1), 127.41(3), 127.42(2) or (3), 127.44(2), 127.45(2), 127.48(2), 127.49(2) or 210.2(3) or (4) to be paid on account of the taxpayer’s tax payable under this Part for the year.
(3) Paragraph 152(1)(b) of the Act, as enacted by subsection (2), is replaced by the following:
(b) the amount of tax, if any, deemed by any of subsections 120(2) or (2.2), 122.5(3) to (3.003), 122.51(2), 122.7(2) or (3), 122.72(1), 122.8(4), 122.9(2), 122.91(1), 122.92(3), 125.4(3), 125.5(3), 125.6(2) or (2.1), 127.1(1), 127.41(3), 127.42(2) or (3), 127.44(2), 127.45(2), 127.48(2), 127.49(2), 127.491(2) or 210.2(3) or (4) to be paid on account of the taxpayer’s tax payable under this Part for the year.
(4) Paragraph 152(1)(b) of the Act, as enacted by subsection (3), is replaced by the following:
(b) the amount of tax, if any, deemed by any of subsections 120(2) or (2.2), 122.5(3) to (3.003), 122.51(2), 122.7(2) or (3), 122.72(1), 122.8(4), 122.9(2), 122.91(1), 122.92(3), 125.4(3), 125.5(3), 125.6(2) or (2.1), 127.1(1), 127.41(3), 127.42(2) or (3), 127.421(2) or (3), 127.44(2), 127.45(2), 127.48(2), 127.49(2), 127.491(2) or 210.2(3) or (4) to be paid on account of the taxpayer’s tax payable under this Part for the year.
(5) Paragraph 152(1)(b) of the Act, as enacted by subsection (4), is replaced by the following:
(b) the amount of tax, if any, deemed by any of subsections 120(2) or (2.2), 122.5(3) to (3.003), 122.51(2), 122.7(2) or (3), 122.72(1), 122.8(4), 122.9(2), 122.91(1), 122.92(3), 122.93(2), 125.4(3), 125.5(3), 125.6(2) or (2.1), 127.1(1), 127.41(3), 127.42(2) or (3), 127.421(2) or (3), 127.44(2), 127.45(2), 127.48(2), 127.49(2), 127.491(2) or 210.2(3) or (4) to be paid on account of the taxpayer’s tax payable under this Part for the year.
(6) Paragraph 152(1.2)(d) of the Act is replaced by the following:
(d) the Minister determines the amount deemed by any of subsections 122.5(3) to (3.003), 122.72(1), 122.8(4) or 127.421(2) or (3) to have been paid by a person for a taxation year to be nil, subsection (2) does not apply to the determination unless the person requests a notice of determination from the Minister.
(7) Section 152 of the Act is amended by adding the following after subsection (3.4):
Marginal note:Clean electricity — notice of determination
(3.5) On receipt of a prescribed form referred to in subsection 127.491(2) from an entity that is described in any of paragraphs (b) to (f) of the definition qualifying corporation in subsection 127.491(1), the Minister shall, with all due dispatch, determine the amount of the entity’s clean electricity investment tax credit under paragraph 127.491(2)(b), or determine that there is no such amount, and shall send a notice of the determination to the entity.
(8) Subsection 152(3.5) of the Act, as enacted by subsection (7), is replaced by the following:
Marginal note:Clean electricity — notice of determination
(3.5) On receipt of a prescribed form referred to in subsection 127.491(2) from an entity that is described in any of paragraphs (b) to (h) of the definition qualifying corporation in subsection 127.491(1), the Minister shall, with all due dispatch, determine the amount of the entity’s clean electricity investment tax credit under paragraph 127.491(2)(b), or determine that there is no such amount, and shall send a notice of the determination to the entity.
(9) Subsection 152(3.5) of the Act, as enacted by subsection (8), is replaced by the following:
Marginal note:Clean electricity — notice of determination
(3.5) On receipt of a prescribed form referred to in subsection 127.491(2) from an entity that is described in any of paragraphs (b) to (i) of the definition qualifying corporation in subsection 127.491(1), the Minister shall, with all due dispatch, determine the amount of the entity’s clean electricity investment tax credit under paragraph 127.491(2)(b), or determine that there is no such amount, and shall send a notice of the determination to the entity.
(10) Subsection 152(4) of the Act is amended by adding the following after paragraph (b.94):
(b.941) the assessment, reassessment or additional assessment is made before the day that is 36 months after the end of the normal reassessment period for the taxpayer in respect of the year and is made in respect of a disposition, in the year, of shares of the capital stock of a corporation in respect of which the taxpayer claimed a deduction under subsection 110.62(2);
(11) Subsection 152(4) of the Act, as amended by subsection (10), is amended by adding the following after paragraph (b.941):
(b.95) a prescribed form that is required to be filed by the taxpayer, or a partnership of which the taxpayer is a member, under subsection 127.491(24) or (25) is not filed as and when required, and the assessment, re-assessment or additional assessment is made in relation to transactions or events described in any of subsections 127.491(16), (17), (22), (23) or (26) to (30) before the day that is
(i) in the case of a taxpayer described in paragraph (3.1)(a), four years after the day on which the form is filed, and
(ii) in any other case, three years after the day on which the form is filed;
(12) Paragraph 152(4.01)(b) of the Act is amended by striking out “or” at the end of subparagraph (xiii), by adding “or” at the end of subparagraph (xiv) and by adding the following after subparagraph (xiv):
(xv) the transactions or events referred to in paragraph (4)(b.95);
(13) Paragraph 152(4.2)(b) of the Act is replaced by the following:
(b) redetermine the amount, if any, deemed by any of subsections 120(2) or (2.2), 122.5(3) to (3.003), 122.51(2), 122.7(2) or (3), 122.8(4), 122.9(2), 122.91(1), 122.92(3), 127.1(1), 127.41(3) or 210.2(3) or (4) to be paid on account of the taxpayer’s tax payable under this Part for the year or deemed by subsection 122.61(1) to be an overpayment on account of the taxpayer’s liability under this Part for the year.
(14) Paragraph 152(4.2)(b) of the Act, as enacted by subsection (13), is replaced by the following:
(b) redetermine the amount, if any, deemed by any of subsections 120(2) or (2.2), 122.5(3) to (3.003), 122.51(2), 122.7(2) or (3), 122.8(4), 122.9(2), 122.91(1), 122.92(3), 122.93(2), 127.1(1), 127.41(3) or 210.2(3) or (4) to be paid on account of the taxpayer’s tax payable under this Part for the year or deemed by subsection 122.61(1) to be an overpayment on account of the taxpayer’s liability under this Part for the year.
(15) Subsection (1) applies to the 2021 and subsequent taxation years.
(16) Subsections (2) and (13) are deemed to have come into force on January 1, 2023.
(17) Subsections (3), (7), (11) and (12) are deemed to have come into force on April 16, 2024.
(18) Subsections (4) and (6) are deemed to have come into force on June 20, 2024.
(19) Subsections (5) and (14) apply to the 2026 and subsequent taxation years.
(20) Subsection (8) is deemed to have come into force on December 16, 2024.
(21) Subsection (9) is deemed to have come into force on November 4, 2025.
(22) Subsection (10) is deemed to have come into force on January 1, 2024.
73 (1) Paragraph 153(1)(b) of the Act is replaced by the following:
(b) a superannuation or pension benefit, other than an amount described in clause 56(1)(a)(i)(H),
(2) Paragraph 153(1)(j) of the Act is replaced by the following:
(j) a payment out of or under an RRSP or a plan referred to in subsection 146(12) as an “amended plan”, other than an amount described in paragraph (c.2) of the definition benefit in subsection 146(1),
(3) Paragraph 153(1)(l) of the Act is replaced by the following:
(l) a payment out of or under a RRIF or a fund referred to in subsection 146.3(11) as an “amended fund”, other than an amount described in paragraph 146.3(5)(e),
(4) Section 153 of the Act is amended by adding the following after subsection (7):
Marginal note:Non-resident service providers
(8) The Minister may
(a) waive the requirement under subsection (1) to deduct or withhold amounts from payments described in paragraph (1)(g) to a non-resident person during a period of time specified by the Minister if it is established in a manner acceptable to the Minister that
(i) the payments
(A) are income of the non-resident person from a business that is
(I) a treaty-protected business, or
(II) not carried on in Canada, or
(B) would not be included in computing the income of the non-resident person because of paragraph 81(1)(c), and
(ii) the conditions established by the Minister are met; and
(b) revoke a waiver made under paragraph (a).
Marginal note:Class of non-residents
(9) A waiver made by the Minister under paragraph (8)(a) may apply in respect of a class of non-resident persons specified by the Minister.
(5) Subsections (1) to (3) apply in respect of amounts paid to an unclaimed property authority after December 31, 2026.
74 (1) Paragraph 157(3)(e) of the Act is replaced by the following:
(e) 1/12 of the total of the amounts each of which is deemed by subsection 125.4(3), 125.5(3), 125.6(2) or (2.1), 127.1(1), 127.41(3), 127.44(2), 127.45(2), 127.48(2), 127.49(2) or 127.491(2) to have been paid on account of the corporation’s tax payable under this Part for the year.
(2) Paragraph 157(3.1)(c) of the Act is replaced by the following:
(c) 1/4 of the total of the amounts each of which is deemed by subsection 125.4(3), 125.5(3), 125.6(2) or (2.1), 127.1(1), 127.41(3), 127.44(2), 127.45(2), 127.48(2), 127.49(2) or 127.491(2) to have been paid on account of the corporation’s tax payable under this Part for the taxation year.
(3) Subsections (1) and (2) are deemed to have come into force on April 16, 2024.
75 (1) Section 160 of the Act is amended by adding the following after subsection (1.6):
Marginal note:Joint and several, or solidary, liability — qualifying cooperative conversions
(1.7) If a purchaser corporation and a taxpayer have jointly elected under paragraph 110.62(1)(e) in respect of a disposition of shares of the capital stock of a corporation and paragraph 110.62(4)(a) applies, the subject corporation, the purchaser corporation and the taxpayer are jointly and severally, or solidarily, liable for the tax payable by the taxpayer under this Part to the extent that the tax payable by the taxpayer is greater than it would have been if the disposition had satisfied the conditions set out in section 110.62.
(2) Subsection (1) is deemed to have come into force on January 1, 2024.
76 (1) Paragraph 160.1(1)(b) of the Act is replaced by the following:
(b) the taxpayer shall pay to the Receiver General interest at the prescribed rate on the excess (other than any portion of the excess that can reasonably be considered to arise as a consequence of the operation of section 122.5, 122.61, 122.72, 122.8 or 127.421) from the day it became payable to the date of payment.
(2) Subsection 160.1(3) of the Act is replaced by the following:
Marginal note:Assessment
(3) The Minister may at any time assess a taxpayer in respect of any amount payable by the taxpayer because of any of subsections (1) to (1.2) or for which the taxpayer is liable because of subsection (2.1) or (2.2), and the provisions of this Division (including, for greater certainty, the provisions in respect of interest payable) apply, with any modifications that the circumstances require, in respect of an assessment made under this section, as though it were made under section 152 in respect of taxes payable under this Part, except that no interest is payable on an amount assessed in respect of an excess referred to in subsection (1) that can reasonably be considered to arise as a consequence of the operation of section 122.5, 122.61, 122.72, 122.8 or 127.421.
(3) Subsections (1) and (2) are deemed to have come into force on June 20, 2024.
77 (1) The portion of subsection 160.2(4) of the Act before paragraph (a) is replaced by the following:
Marginal note:Rules applicable
(4) If a taxpayer and an annuitant have, by virtue of subsection (1) or (2) become jointly and severally, or solidarily, liable in respect of part or all of a liability of the annuitant under this Act, the following rules apply:
(2) Paragraph 160.2(4)(b) of the Act is replaced by the following:
(b) a payment by the annuitant on account of the annuitant’s liability discharges the taxpayer’s liability only to the extent that the payment operates to reduce the annuitant’s liability to an amount less than the amount in respect of which the taxpayer was, by subsection (1) or (2), as the case may be, made jointly and severally, or solidarily, liable.
(3) Subsections (1) and (2) are deemed to have come into force on April 1, 2023.
78 (1) Subsection 163(2) of the Act is amended by adding the following after paragraph (c.6):
(c.7) the amount, if any, by which
(i) the amount that would be deemed by subsection 122.93(2) to have been paid for the year by the person if that amount were calculated by reference to the person’s claim for the year under that subsection
exceeds
(ii) the amount that is deemed by that subsection to be paid for the year by the person.
(2) Paragraph 163(2)(d.1) of the Act is replaced by the following:
(d.1) the amount, if any, by which
(i) the amount that would be deemed by subsection 127.44(2), 127.45(2), 127.48(2), 127.49(2) or 127.491(2), as the case may be, to be paid for the year by the person if that amount were calculated by reference to the information provided in the return or form filed for the year pursuant to that subsection
exceeds
(ii) the amount that is deemed by subsection 127.44(2), 127.45(2), 127.48(2), 127.49(2) or 127.491(2), as the case may be, to be paid for the year by the person,
(3) Subparagraph 163(5)(a)(i) of the Act is replaced by the following:
(i) makes — or participates in, assents to or acquiesces in, the making of — a false statement or omission in a return of income of a trust that is not subject to one of the exceptions listed in paragraphs 150(1.2)(a) to (r) for a taxation year, or
(4) Subsection (1) applies to the 2026 and subsequent taxation years.
(5) Subsection (2) is deemed to have come into force on April 16, 2024.
(6) Subsection (3) applies to taxation years that end after December 30, 2025.
79 (1) Subsections 164(6) and (6.1) of the Act are replaced by the following:
Marginal note:Disposition by legal representative of deceased
(6) If in the course of administering the graduated rate estate of a taxpayer, the taxpayer’s legal representative has, in a taxation year (in this subsection referred to as the “particular year”) that is within the first three taxation years of the estate,
(a) disposed of capital property of the estate so that the total of all amounts each of which is a capital loss from the disposition of a property in the particular year exceeds the total of all amounts each of which is a capital gain from the disposition of a property in the particular year, or
(b) disposed of all of the depreciable property of a prescribed class of the estate so that the undepreciated capital cost to the estate of property of that class at the end of the particular year is, by virtue of subsection 20(16) or any regulation made under paragraph 20(1)(a), deductible in computing the income of the estate for the particular year,
despite any other provision of this Act, the following rules apply:
(c) such parts of one or more capital losses of the estate from the disposition of properties in the particular year (the total of which is not to exceed the excess referred to in paragraph (a)) as the legal representative so elects, in prescribed form and manner on or before the filing-due date for the particular taxation year of the estate, are deemed (except for the purpose of subsection 112(3) and this paragraph) to be capital losses of the deceased taxpayer from the disposition of the properties by the taxpayer in the taxpayer’s last taxation year and not to be capital losses of the estate from the disposition of those properties,
(d) such part of the amount of any deduction described in paragraph (b) (not exceeding the amount that, but for this subsection, would be the total of the non-capital loss and the farm loss of the estate for the particular year) as the legal representative so elects, in prescribed form and manner on or before the filing-due date for the particular year of the estate, is deductible in computing the income of the taxpayer for the taxpayer’s last taxation year and is not deductible in computing any loss of the estate,
(e) the legal representative shall, at or before the time prescribed for filing the election referred to in paragraphs (c) and (d), file a prescribed form amending the return of income of the deceased taxpayer for the taxpayer’s last taxation year to give effect to the rules in those paragraphs, and
(f) in computing the taxable income of the deceased taxpayer for a taxation year preceding the taxpayer’s last taxation year, no amount may be deducted in respect of an amount referred to in paragraph (c) or (d).
Marginal note:Realization of deceased employees’ options
(6.1) Despite any other provision of this Act, if a right to acquire securities (as defined in subsection 7(7)) under an agreement in respect of which a benefit was deemed by paragraph 7(1)(e) to have been received by a taxpayer (in this subsection referred to as the “right”) is exercised or disposed of by the taxpayer’s legal representative in a taxation year that is within the first three taxation years of the graduated rate estate of the taxpayer and the representative so elects in prescribed form and manner on or before the filing-due date for the taxation year of the estate,
(a) the amount, if any, by which
(i) the amount of the benefit deemed by paragraph 7(1)(e) to have been received by the taxpayer in respect of the right
exceeds the total of
(ii) the amount, if any, by which the value of the right immediately before the time it was exercised or disposed of exceeds the amount, if any, paid by the taxpayer to acquire the right, and
(iii) where in computing the taxpayer’s taxable income for the taxation year in which the taxpayer died an amount was deducted under paragraph 110(1)(d) in respect of the benefit deemed by paragraph 7(1)(e) to have been received by the taxpayer in that year by reason of paragraph 7(1)(e) in respect of that right, 1/2 of the amount, if any, by which the amount determined under subparagraph (i) exceeds the amount determined under subparagraph (ii),
shall be deemed to be a loss of the taxpayer from employment for the taxpayer’s last taxation year;
(b) there shall be deducted in computing the adjusted cost base to the estate of the right at any time the amount of the loss that would be determined under paragraph (a) if that paragraph were read without reference to subparagraph (a)(iii); and
(c) the legal representative shall, at or before the time prescribed for filing the election under this subsection, file a prescribed form amending the return of income of the taxpayer for the taxpayer’s last taxation year to give effect to paragraph (a).
(2) Subsection (1) applies to taxation years of
(a) individuals who died on or after August 12, 2024; and
(b) graduated rate estates of individuals who died on or after August 12, 2024.
Page Details
- Date modified: