Budget 2025 Implementation Act, No. 1 (S.C. 2026, c. 3)
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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)
80 (1) Subsection 183.1(7) of the Act is replaced by the following:
Marginal note:Non-application — subsections 110.6(8), 110.61(8) and 110.62(8)
(7) If this section has been applied in respect of an amount, subsections 110.6(8), 110.61(8) and 110.62(8) do not apply to the capital gain in respect of which the amount formed all or a part of the proceeds of disposition.
(2) Subsection (1) is deemed to have come into force on January 1, 2024.
81 (1) Subparagraph (a)(ii) of the definition qualifying issuance in subsection 183.3(1) of the Act is replaced by the following:
(ii) a bond, debenture, note or other security (other than equity) of the covered entity that was issued solely for cash consideration, or that was issued in an exchange described in paragraph (c), the terms of which confer on the holder the right to make the exchange, or
(2) Paragraph (c) of the definition qualifying issuance in subsection 183.3(1) of the Act is replaced by the following:
(c) to a person or partnership, with which the covered entity deals at arm’s length and is not affiliated, in exchange for property used in an active business carried on by the covered entity or by a specified affiliate of the covered entity. (émission admissible)
(3) Subparagraph (a)(ii) of the definition reorganization transaction in subsection 183.3(1) of the Act is replaced by the following:
(ii) another entity that is related to the covered entity immediately before the exchange and is a covered entity for its taxation year that includes the exchange, or
(4) Paragraph (c) of the definition reorganization transaction in subsection 183.3(1) of the Act is replaced by the following:
(c) on a winding-up
(i) of the covered entity during which all or substantially all of the property owned by the covered entity is distributed to the equity holders of the covered entity, or
(ii) to which subsection 88(1) applies;
(5) The definition reorganization transaction in subsection 183.3(1) of the Act is amended by striking out “or” at the end of paragraph (g) and by adding the following after that paragraph:
(g.1) at the demand of a holder of the equity, in accordance with the conditions of the issued units of the trust, for an amount that does not exceed the portion of the net asset value (as defined in subsection 132(4)) of the trust attributable to that equity at the time of the redemption, acquisition or cancellation, if the covered entity is a trust that has one or more classes of units in continuous distribution; or
(6) The portion of paragraph (a) of the description of B in subsection 183.3(2) of the Act before the formula is replaced by the following:
(a) if equity of the covered entity (other than substantive debt) is redeemed, acquired or cancelled in the taxation year by the covered entity, pursuant to a reorganization transaction described in paragraph (a) or (b) of that definition and any portion of the consideration received by a holder for the equity is not equity consideration described in paragraph (a) or (b) of the definition reorganization transaction, the amount determined by the formula
(7) The portion of subsection 183.3(5) of the Act before paragraph (a) is replaced by the following:
Marginal note:Similar transactions
(5) For the purposes of subsections (1) and (2), if a specified affiliate of a covered entity acquires equity of the covered entity, the equity is deemed to be acquired by the covered entity unless the specified affiliate is
(8) Subsections (1) to (7) are deemed to have come into force on January 1, 2024.
82 (1) Paragraph 183.4(1)(c) of the Act is replaced by the following:
(c) if the entity is a partnership, every member of the partnership must — on or before the day on which a return is, or would be if the entity were a SIFT partnership, required to be filed for the year under section 229 of the Income Tax Regulations — file with the Minister a return for the year under this Part in prescribed form.
(2) Section 183.4 of the Act is amended by adding the following after subsection (1):
Marginal note:Authority to file return for partnership
(1.1) For the purposes of paragraph (1)(c), if, in respect of a taxation year of a partnership, a particular member of the partnership has authority to act for the partnership,
(a) if the particular member has filed a return as required by this Part for the year, each other person who was a member of the partnership during the year is deemed to have filed the return; and
(b) a return that has been filed by any other member of the partnership for the year is not valid and is deemed not to have been filed by any member of the partnership.
(3) Subsections (1) and (2) are deemed to have come into force on January 1, 2024.
83 (1) Subparagraphs (d)(i) to (iii) of the definition exempt contribution in subsection 207.01(1) of the Act are replaced by the following:
(i) the amount by which the amount of the survivor payment exceeds the total of all other contributions designated by the survivor in relation to the survivor payment, and
(ii) if the individual had, immediately before the individual’s death, an excess TFSA amount or if payments described in paragraph (b) are made to more than one survivor of the individual, nil or the greater amount, if any, allowed by the Minister in respect of the contribution. (cotisation exclue)
(2) Subsection (1) comes into force or is deemed to have come into force on January 1, 2026.
84 (1) Subsection 207.04(3) of the Act is replaced by the following:
Marginal note:Both prohibited and non-qualified investment
(3) For the purposes of this section and subsections 146(10.1), 146.1(5), 146.2(6), 146.3(9), 146.4(5), 146.6(3) and 207.01(6), if a trust governed by a registered plan holds property at any time that is, for the trust, both a prohibited investment and a non-qualified investment, the property is deemed at that time not to be a non-qualified investment, but remains a prohibited investment, for the trust.
(2) Section 207.04 of the Act is amended by adding the following after subsection (6):
Marginal note:Securities lending arrangements
(7) For the purposes of this section and subsections 146(10.1), 146.1(5), 146.2(6), 146.3(9), 146.4(5) and 146.6(3), a right received by a lender under a securities lending arrangement is deemed not to be a non-qualified investment for a trust if
(a) the security lent or transferred under the arrangement is described in paragraph (d) of the definition qualified investment in section 204;
(b) the lender under the arrangement is the trust;
(c) the borrower under the arrangement is a registered securities dealer resident in Canada;
(d) it is reasonable to conclude that the controlling individual of the registered plan that governs the trust neither knew nor ought to have known that the security lent or transferred under the arrangement (or property substituted for it) would be, while lent or transferred under the arrangement, received by a person who does not deal at arm’s length with the controlling individual of the registered plan that governs the trust;
(e) the trust has a right under the arrangement to require the borrower to transfer or return an identical security (within the meaning assigned by paragraph (b) of the definition securities lending arrangement in subsection 260(1)) at any time throughout the period described in paragraph (c) of that definition;
(f) property that is described in paragraph (a) or (b) of the definition qualified investment in section 204 that is of equivalent value to the security lent under the arrangement is held in trust for the benefit of the lender and is to be distributed to the lender in the event that an identical security (within the meaning assigned by paragraph (b) of the definition securities lending arrangement in subsection 260(1)) is not transferred or returned to the lender under the arrangement; and
(g) the controlling individual of the registered plan that governs the trust is provided written disclosure of the arrangement and consents to the arrangement prior to the time it is entered into.
(3) Subsection (1) is deemed to have come into force on April 1, 2023.
(4) Subsection (2) is deemed to have come into force on January 1, 2023.
85 (1) The portion of subsection 211.92(10) of the English version of the Act before the formula is replaced by the following:
Marginal note:Refurbishment property disposition
(10) Except where subsection (11) applies, if at any time in a particular taxation year during the total CCUS project review period of a CCUS project a taxpayer disposes of or removes from Canada a property for which the taxpayer’s qualified CCUS expenditure resulted in the determination of a CCUS refurbishment tax credit for the year or a previous taxation year, then there shall be added to the tax otherwise payable by the taxpayer under this Part for the year the amount determined by the formula
(2) Subsection 211.92(12) of the Act is replaced by following:
Marginal note:Partnerships
(12) Subject to section 127.47, if subsection 127.44(11) has at any time applied to add an amount in computing the CCUS tax credit of a current or former member of a partnership, then for the purposes of this Part, subsections (2) to (11) shall apply to determine amounts in respect of the partnership as if the partnership were a taxable Canadian corporation, its fiscal period were its taxation year and it had deducted all of the CCUS tax credits that were previously added in computing the CCUS tax credit of any member of the partnership under subsection 127.44(2) because of the application of subsection 127.44(11) in respect of its partnership interest.
(3) Subsection 211.92(15) of the Act is replaced by the following:
Marginal note:Joint and several, or solidary, liability
(15) Each current or former member of a partnership is jointly and severally, or solidarily, liable for any portion of the amount of tax — determined because of subsection (12) in respect of the partnership for a fiscal period — that is not added to the tax payable
(a) of a qualifying taxpayer under subsection (13); or
(b) of a taxable Canadian corporation because of subsection (14) and paid by the corporation by its filing-due date for its taxation year that includes the end of the fiscal period.
Marginal note:Former member liability
(16) If a particular taxpayer was, at the time that an amount is determined because of subsection (12) in respect of the partnership for a taxation year, no longer a member of the partnership, the particular taxpayer’s liability for tax because of subsection (15) is limited to the total of all amounts each of which is an amount determined for the particular taxpayer under subsection 127.44(2) because of its membership in the partnership.
(4) Subsections (1) to (3) are deemed to have come into force on January 1, 2022.
86 (1) Subsection 211.93(3) of the Act is replaced by the following:
Marginal note:Shared filing
(3) If more than one person is required by subsection (1) to submit a knowledge sharing report in respect of a knowledge sharing CCUS project, the submission with full and accurate disclosure by any one of such persons of the report is deemed to have been made by each person to whom subsection (1) applies in respect of the report.
(2) Subsection (1) is deemed to have come into force on January 1, 2022.
87 (1) Paragraph 212(1)(i) of the Act is replaced by the following:
Marginal note:Restrictive covenant amount
(i) an amount that would, if the non-resident person had been resident in Canada throughout the taxation year in which the amount was received or receivable, be required by paragraph 56(1)(m) or subsection 56.4(2) to be included in computing the non-resident person’s income for the taxation year, except an amount deemed to be a payment of interest and referred to in subsection 214(15);
(2) Subsection (1) is deemed to have come into force on August 12, 2024.
88 (1) The portion of paragraph 212.1(6)(b) of the Act before subparagraph (i) is replaced by the following:
(b) for the purposes of subsections (1) and (1.1) and paragraph (c), if at any time a conduit disposes of shares — other than a disposal of shares by a non-resident trust or by a trust resident in Canada that is, at that time, a graduated rate estate of an individual (if the trust acquired the shares on and as a consequence of the individual’s death and the individual was, immediately before their death, resident in Canada) — of the capital stock of a corporation resident in Canada to a purchaser, then
(2) Subsection (1) applies to dispositions that occur after February 26, 2018.
(3) A written application made by a person under subsection 227(6) of the Act in respect of an amount that has been paid to the Receiver General is deemed to be filed on time if
(a) the application is filed with the Minister of National Revenue within 180 days after the day on which this Act receives royal assent; and
(b) the person is no longer liable to pay the amount as a result of the enactment by subsection (1) of the portion of paragraph 212.1(6)(b) of the Act before subparagraph (i).
89 (1) Subsection 214(15) of the Act is amended by striking out “and” at the end of paragraph (a) and by replacing paragraph (b) with the following:
(b) where a non-resident person has entered into an agreement under the terms of which the non-resident person agrees to lend money, or to make money available, to a person resident in Canada, any amount paid or credited as consideration for so agreeing to lend money or to make money available is deemed to be a payment of interest; and
(c) where a non-resident person has entered into an agreement under the terms of which the non-resident person agrees to the rescheduling or restructuring of a debt obligation of a person resident in Canada, and the rescheduling or restructuring, as the case may be, provides for the modification of the terms or conditions of the debt obligation or the conversion or substitution of the debt obligation to or with a share or another debt obligation, any amount paid or credited as consideration for so agreeing is deemed to be a payment of interest.
(2) Subsection (1) is deemed to have come into force on August 12, 2024.
90 (1) Section 215 of the Act is amended by adding the following after subsection (1.1):
Marginal note:Exception — residential tenants
(1.2) Subsection (1) does not apply in respect of an amount paid or credited by an individual (other than a trust that is not a graduated rate estate) to a non-resident person as rent for the use of a residential property (as defined in subsection 67.7(1)) in which an individual resides (or resided before their death, provided that the amount is paid no more than 36 months after their death).
Marginal note:Payment — residential tenants
(1.3) If subsection (1.2) applies and subsection (3) does not apply, the non-resident person must immediately remit to the Receiver General the income tax payable under this Part in respect of the amount and submit with the remittance a statement in prescribed form.
(2) Subsection (1) is deemed to have come into force on August 12, 2024.
91 (1) Subsection 220(2.2) of the Act is replaced by the following:
Marginal note:Exception
(2.2) Subsection (2.1) does not apply in respect of a prescribed form, receipt or document, or prescribed information, that is filed with the Minister on or after the day specified, in respect of the form, receipt, document or information, in subsection 37(11) or paragraph (m) of the definition investment tax credit in subsection 127(9), or subsection 127.44(17), 127.45(3), 127.48(4), 127.49(3) or 127.491(6).
(2) Subsection (1) is deemed to have come into force on April 16, 2024.
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