Budget Implementation Act, 2024, No. 1 (S.C. 2024, c. 17)

12 Subparagraph 56(1)(a)(iv) of the Act is replaced by the following:

• 13 (1) Subparagraph 60(j)(iv) of the Act is amended by striking out “or” at the end of clause (A), by adding “or” at the end of clause (B) and by adding the following after clause (B):

  • (C) to or under a registered retirement income fund under which the taxpayer is the annuitant, as defined in subsection 146.3(1), other than the portion thereof designated for a taxation year for the purposes of paragraph (l),

• (2) The portion of paragraph 60(n) of the Act before subparagraph (i) is replaced by the following:

  • Marginal note:Repayment of pension or benefits

    (n) any amount paid by the taxpayer in the year as a repayment (otherwise than because of Part VII of the Employment Insurance Act or section 8 of the Canada Recovery Benefits Act) of any of the following amounts to the extent that the amount was included in computing the taxpayer’s income, and not deducted in computing the taxpayer’s taxable income, for the year or for a preceding taxation year, namely,

• (3) Section 60 of the Act is amended by adding the following after paragraph (n.1):

  • Marginal note:Amounts repaid in subsequent years

    (n.2) any amount paid by the taxpayer in a year (in this paragraph referred to as the “subsequent year”) that is after the year as a repayment of an amount that was included in computing the taxpayer’s income for the year under any of subparagraphs 56(1)(a)(i), (ii), (iv), (vi) or (vii) or paragraph 56(1)(r), to the extent that the amount paid

    • (i) exceeds the taxpayer’s taxable income for the subsequent year (determined without reference to paragraphs (n), (n.1) and (v.1)), and

    • (ii) is not deducted in computing the taxpayer’s taxable income for any other taxation year;

• (4) Paragraph 60(r) of the Act is repealed.

• (5) Paragraph 60(v.1) of the Act is replaced by the following:

  • Marginal note:EI benefit repayment

    (v.1) any benefit repayment payable by the taxpayer under Part VII of the Employment Insurance Act on or before April 30 of the following year, to the extent that the amount was not deductible in computing the taxpayer’s income for any preceding taxation year;

• (6) Subsection (1) is deemed to have come into force on August 4, 2023.

• (7) Subsection (3) applies to the 2019 and subsequent taxation years.

• 14 (1) Paragraph 66(12.73)(e) of the Act is replaced by the following:

  • (e) if a corporation fails to file the statement within the time required or fails in the statement filed to apply the excess fully to reduce one or more purported renunciations, the Minister may at any time reduce the total amount purported to be renounced by the corporation to one or more persons by the amount of the unapplied excess in which case, except for the purpose of Part XII.6, the amount purported to have been so renounced to a person is deemed, after that time, always to have been reduced by the portion of the unapplied excess allocated by the Minister in respect of that person.

• (2) Subsection (1) is deemed to have come into force on August 4, 2023.

• 15 (1) Subclause 66.8(1)(a)(ii)(B)(I) of the Act is replaced by the following:

  • (I) the total of all amounts required by subsections 127(8) and 127.48(12) in respect of the partnership to be added in computing the investment tax credit or the clean hydrogen tax credit (as defined in subsection 127.48(1)) of the taxpayer in respect of the fiscal period, and

• (2) Subclause 66.8(1)(a)(ii)(B)(I) of the Act, as enacted by subsection (1), is replaced by the following:

  • (I) the total of all amounts required by subsections 127(8), 127.48(12) and 127.49(8) in respect of the partnership to be added in computing the investment tax credit, the clean hydrogen tax credit (as defined in subsection 127.48(1)) or the CTM investment tax credit (as defined in subsection 127.49(1)) of the taxpayer in respect of the fiscal period, and

• (3) Subsection (1) is deemed to have come into force immediately after the expiration of March 27, 2023.

• (4) Subsection (2) is deemed to have come into force on January 1, 2024.

• 16 (1) The Act is amended by adding the following after section 67.6:

  Marginal note:Definitions

  • 67.7 (1) The following definitions apply in this section.

    non-compliant amount

    non-compliant amount, for a taxation year, means the amount determined by the formula

    A × B ÷ C

    where

    A

    is the total of all amounts that would, if subsection (2) did not apply, be deductible in computing income in the taxation year in respect of the use of a residential property as a short-term rental in the taxation year;

    B

    is the number of days in the taxation year that the residential property was a non-compliant short-term rental; and

    C

    is the number of days in the taxation year that the residential property was a short-term rental. (montant non conforme)

    non-compliant short-term rental

    non-compliant short-term rental means, at any time, a short-term rental that is located in a province or municipality that, at that time,

    • (a) does not permit the operation of the short-term rental at the location of the short-term rental; or

    • (b) requires registration, a licence or a permit to operate the short-term rental, and the short-term rental does not comply with all applicable registration, licensing and permit requirements. (location à court terme non conforme)

    residential property

    residential property means all or any part of a house, apartment, condominium unit, cottage, mobile home, trailer, houseboat or other property, located in Canada, the use of which is permitted for residential purposes under applicable law. (bien résidentiel)

    short-term rental

    short-term rental means a residential property that is rented or offered for rent for a period of less than 90 consecutive days. (location à court terme)

  • Marginal note:Non-deductibility of expenses — short-term rental

    (2) Notwithstanding any other provision of this Act, no amount is deductible in computing income in respect of a short-term rental for a taxation year, to the extent the amount is a non-compliant amount for the taxation year.

  • Marginal note:Deemed compliance

    (3) For the purposes of subsection (1), a short-term rental of a person or partnership is deemed not to be a non-compliant short-term rental for the 2024 taxation year of the person or partnership if

    • (a) the short-term rental is located in a province or municipality that requires registration, a licence or a permit to operate as a short-term rental; and

    • (b) the short-term rental complies with all applicable registration, licensing and permit requirements by December 31, 2024.

  • Marginal note:Reassessments

    (4) Notwithstanding subsections 152(4) to (5), the Minister may make any assessments, reassessments and additional assessments of tax, interest and penalties and any determinations and redeterminations that are necessary to give effect to subsection (2) for any taxation year.

• (2) Subsection (1) applies to outlays made and expenses incurred after 2023.

• 17 (1) Subsection 81(1) of the Act is amended by adding the following after paragraph (c):

  • Marginal note:Ship of resident corporations

    (c.1) the income for the year of a corporation resident in Canada (if this Act were read without reference to subsection 250(4)) earned from international shipping, if that corporation satisfies the conditions set out in paragraphs 250(6)(a) and (b);

• (2) The portion of subparagraph 81(1)(g.3)(i) of the Act before clause (A) is replaced by the following:

  • (i) the taxpayer is a trust established under

• (3) Subparagraph 81(1)(g.3)(i) of the Act is amended by striking out “or” at the end of clause (D), by replacing “and” at the end of clause (E) with “or” and by adding the following after clause (E):

  • (F) the Settlement Agreement entered into by His Majesty in right of Canada, dated effective as of April 19, 2023, in respect of the class actions relating to the First Nations Child and Family Services, Jordan’s Principle and Trout Class, and

• (4) Subsection (1) applies to taxation years that begin on or after December 31, 2023.

• (5) Subsections (2) and (3) are deemed to have come into force on January 1, 2024.

• 18 (1) Subsection 87(2) of the Act is amended by adding the following after paragraph (qq):

  • Marginal note:Continuation of corporation

    (qq.1) for the purposes of section 127.48, the new corporation is deemed to be the same corporation as, and a continuation of, each predecessor corporation;

• (2) Paragraph 87(2)(qq.1) of the Act, as enacted by subsection (1), is replaced by the following:

  • Marginal note:Continuation of corporation

    (qq.1) for the purposes of sections 127.48 and 127.49, the new corporation is deemed to be the same corporation as, and a continuation of, each predecessor corporation;

• (3) Subsection (1) is deemed to have come into force immediately after the expiration of March 27, 2023.

• (4) Subsection (2) is deemed to have come into force on January 1, 2024.

• 19 (1) Subsection 88(1) of the Act is amended by adding the following after paragraph (e.3):

  • (e.31) for the purposes of section 127.48, at the end of any particular taxation year ending after the subsidiary was wound up, the parent is deemed to be the same corporation as, and a continuation of, the subsidiary;

• (2) Paragraph 88(1)(e.31) of the Act, as enacted by subsection (1), is replaced by the following:

  • (e.31) for the purposes of sections 127.48 and 127.49, at the end of any particular taxation year ending after the subsidiary was wound up, the parent is deemed to be the same corporation as, and a continuation of, the subsidiary;

• (3) Paragraph 88(2)(c) of the Act is replaced by the following:

  • (c) for the purpose of computing the income of the corporation for its taxation year that includes the particular time, paragraph 12(1)(t) shall be read as follows:

    • “(t) the amount deducted under subsection 127(5) or (6) or 127.48(3) in computing the taxpayer’s tax payable for the year or a preceding taxation year to the extent that it was not included under this paragraph in computing the taxpayer’s income for a preceding taxation year or is not included in an amount determined under paragraph 13(7.1)(e) or 37(1)(e) or subparagraph 53(2)(c)(vi) or (viii.1) or (h)(ii) or the amount determined for I in the definition undepreciated capital cost in subsection 13(21) or L in the definition cumulative Canadian exploration expense in subsection 66.1(6);”.

• (4) Paragraph 88(2)(c) of the Act, as enacted by subsection (3), is replaced by the following:

  • (c) for the purpose of computing the income of the corporation for its taxation year that includes the particular time, paragraph 12(1)(t) shall be read as follows:

    • “(t) the amount deducted under subsection 127(5) or (6), 127.48(3) or 127.49(6) in computing the taxpayer’s tax payable for the year or a preceding taxation year to the extent that it was not included under this paragraph in computing the taxpayer’s income for a preceding taxation year or is not included in an amount determined under paragraph 13(7.1)(e) or 37(1)(e) or subparagraph 53(2)(c)(vi), (viii.1) or (viii.2) or (h)(ii) or the amount determined for I in the definition undepreciated capital cost in subsection 13(21) or L in the definition cumulative Canadian exploration expense in subsection 66.1(6);”.

• (5) Subsections (1) and (3) are deemed to have come into force immediately after the expiration of March 27, 2023.

• (6) Subsections (2) and (4) are deemed to have come into force on January 1, 2024.

20 Section 89 of the Act is amended by adding the following after subsection (14.1):

• 21 (1) The portion of clause 95(2)(a)(ii)(D) of the Act before subclause (III) is replaced by the following:

  • (D) by another foreign affiliate (referred to in this clause as the “second affiliate”) of the taxpayer — in respect of which the taxpayer has a qualifying interest throughout the year — to the extent that the amounts are paid or payable by the second affiliate, in respect of any particular period in the year, under a legal obligation to pay interest in respect of

    • (I) borrowed money used for the purpose of earning income from property, or

    • (II) an amount payable for property acquired for the purpose of gaining or producing income from property

    where

• (2) Subsection (1) is deemed to have come into force on August 4, 2023.

• 22 (1) Subparagraph 96(2.1)(b)(ii) of the Act is replaced by the following:

  • (ii) the amount required by subsection 127(8) or 127.48(12) in respect of the partnership to be added in computing the investment tax credit or the clean hydrogen tax credit (as defined in subsection 127.48(1)) of the taxpayer for the taxation year,

• (2) Subparagraph 96(2.1)(b)(ii) of the Act, as enacted by subsection (1), is replaced by the following:

  • (ii) the amount required by subsection 127(8), 127.48(12) or 127.49(8) in respect of the partnership to be added in computing the investment tax credit, the clean hydrogen tax credit (as defined in subsection 127.48(1)) or the CTM investment tax credit (as defined in subsection 127.49(1)) of the taxpayer for the taxation year,

• (3) The portion of subsection 96(2.2) of the Act before paragraph (a) is replaced by the following:

  • Marginal note:At-risk amount

    (2.2) For the purposes of this section and sections 111, 127, 127.48 and 127.491, the at-risk amount of a taxpayer, in respect of a partnership of which the taxpayer is a limited partner, at any particular time is the amount, if any, by which the total of

• (4) The portion of subsection 96(2.2) of the Act before paragraph (a), as enacted by subsection (3), is replaced by the following:

  • Marginal note:At-risk amount

    (2.2) For the purposes of this section and sections 111, 127, 127.48, 127.49 and 127.491, the at-risk amount of a taxpayer, in respect of a partnership of which the taxpayer is a limited partner, at any particular time is the amount, if any, by which the total of

• (5) The portion of subsection 96(2.4) of the Act before paragraph (a) is replaced by the following:

  • Marginal note:Limited partner

    (2.4) For the purposes of this section and sections 111, 127, 127.48 and 127.491, a taxpayer who is a member of a partnership at a particular time is a limited partner of the partnership at that time if the member’s partnership interest is not an exempt interest (within the meaning assigned by subsection (2.5)) at that time and if, at that time or within three years after that time,

• (6) The portion of subsection 96(2.4) of the Act before paragraph (a), as enacted by subsection (5), is replaced by the following:

  • Marginal note:Limited partner

    (2.4) For the purposes of this section and sections 111, 127, 127.48, 127.49 and 127.491, a taxpayer who is a member of a partnership at a particular time is a limited partner of the partnership at that time if the member’s partnership interest is not an exempt interest (within the meaning assigned by subsection (2.5)) at that time and if, at that time or within three years after that time,

• (7) Subsections (1), (3) and (5) are deemed to have come into force immediately after the expiration of March 27, 2023.

• (8) Subsections (2), (4) and (6) are deemed to have come into force on January 1, 2024.