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

Marginal note:Definitions

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

  CTM investment tax credit

  CTM investment tax credit of a qualifying taxpayer for a taxation year means  

  • (a) the total of all amounts each of which is the specified percentage of the capital cost to the taxpayer of CTM property acquired by the taxpayer in the year for a CTM use; and

  • (b) the total of all amounts required by subsection (8) to be added in computing the taxpayer’s CTM investment tax credit at the end of the year. (crédit d’impôt à l’investissement pour la FTP)

  CTM property

  CTM property means property of a taxpayer, other than excluded property,

  • (a) situated in Canada and intended for use exclusively in Canada;

  • (b) that has not been used, or acquired for use or lease, for any purpose whatever before it was acquired by the taxpayer;

  • (c) that, if it is to be leased by the taxpayer to another person or a partnership, is

    • (i) leased to a qualifying taxpayer or a partnership all the members of which are qualifying taxpayers, and

    • (ii) leased in the ordinary course of carrying on a business in Canada by the taxpayer whose principal business is selling or servicing property of that type, or whose principal business is leasing property, lending money, purchasing conditional sales contracts, accounts receivable, bills of sale, chattel mortgages or hypothecary claims on movables, bills of exchange or other obligations representing all or part of the sale price of merchandise or services, or any combination thereof; and

  • (d) described in Schedule II to the Income Tax Regulations that

    • (i) is included in

      • (A) paragraph (a) or (c) of Class 8,

      • (B) paragraph (a) of Class 43,

      • (C) Class 43.1 that would otherwise be included in any of clauses (A), (B) and (E),

      • (D) Class 43.2 that would otherwise be included in clause (C), or

      • (E) Class 53,

    • (ii) is included in

      • (A) paragraph (b) of Class 8, or would be included in paragraph (b) of Class 8 if that paragraph were read without reference to the word “solely” and if the word “building” were read as “structure”,

      • (B) Class 43.1 that would otherwise be included in clause (A), or

      • (C) Class 43.2 that would otherwise be included in clause (B),

    • (iii) is included in

      • (A) subparagraph (k)(i) of Class 10, provided that the property would otherwise be in paragraph (a) or (c) of Class 8,

      • (B) subparagraph (k)(ii) of Class 10,

      • (C) paragraph (b) of Class 41, or in paragraph (b) of Class 41.2, that would otherwise be included in clauses (A) or (B),

      • (D) paragraph (b) of Class 43,

      • (E) Class 43.1 that would otherwise be included in any of clauses (A) to (D), or

      • (F) Class 43.2 that would otherwise be included in clause (E),

    • (iv) is included in paragraph (d) or (j) of Class 12,

    • (v) is included in

      • (A) paragraph (a) or (e) of Class 10 or Class 38, but excluding any property that is designed or adapted for use on streets and highways, or

      • (B) Class 56, or

    • (vi) would be described in any of subparagraphs (i) to (v) if the word “mine” in Schedule II of the Income Tax Regulations were read as “mine, well or tailing pond”. (bien de FTP)

  CTM use

  CTM use means the use of a property

  • (a) all or substantially all for activities described in paragraph (a) or (c) of the definition qualified zero-emission technology manufacturing activities in section 5202 of the Income Tax Regulations; or

  • (b) in a qualifying mineral activity producing all or substantially all qualifying materials. (utilisation pour la FTP)

  excluded property

  excluded property means any property used in the production of battery cells or modules if the production has benefitted from, or can reasonably be expected to benefit from, support under a contribution agreement with the Government of Canada referred to in paragraph 7300(e) of the Income Tax Regulations. (bien exclu)

  government assistance

  government assistance has the same meaning as in subsection 127(9). (aide gouvernementale)

  non-CTM use

  non-CTM use means a use of a property other than a CTM use. (utilisation autre que pour la FTP)

  non-government assistance

  non-government assistance has the same meaning as in subsection 127(9). (aide non gouvernementale)

  permitted element

  permitted element means hydrogen, carbon, nitrogen, oxygen, phosphorus, sulfur, selenium, sodium, potassium, a halogen or a noble gas. (élément autorisé)

  qualifying material

  qualifying material means

  • (a) lithium;

  • (b) cobalt;

  • (c) nickel;

  • (d) copper;

  • (e) rare earth elements; and

  • (f) graphite. (matériau admissible)

  qualifying mineral activity

  qualifying mineral activity means

  • (a) the extraction of resources from a mineral deposit or from a tailing pond;

  • (b) a mineral processing activity, including crushing, grinding, milling, separation, sieving, screening, froth floatation, leaching, recrystallization, precipitation, drying, evaporation, heating, calcinating, roasting, smelting, casting of ingots, refining, purification, distillation, electrodeposition and surface roughening of electrodeposited foil, that

    • (i) is performed at a mine site, well site, tailing pond, mill, smelter or refinery, and

    • (ii) occurs prior to or as part of a process intended

      • (A) to increase the purity of at least one qualifying material, or

      • (B) to produce a material with non-trace amounts of a single qualifying material, and without non-trace amounts of any elements other than permitted elements;

  • (c) a recycling activity that is

    • (i) sorting, disassembly or shredding of a recyclable material, or

    • (ii) a material processing activity substantially similar to an activity described in paragraph (b) if that paragraph were read without reference to its subparagraph (i);

  • (d) a synthetic graphite activity that is

    • (i) performed during or after the graphitization stage, and

    • (ii) a material processing activity substantially similar to an activity described in paragraph (b) if that paragraph were read without reference to its subparagraph (i); or

  • (e) spheronization of graphite or coating of spheronized graphite. (activité minière admissible)

  qualifying taxpayer

  qualifying taxpayer means a taxable Canadian corporation. (contribuable admissible)

  specified percentage

  specified percentage means in respect of a CTM property of the taxpayer that is acquired

  • (a) before January 1, 2024, determined without reference to subsection (4), nil;

  • (b) after December 31, 2023 and before January 1, 2032, 30%;

  • (c) after December 31, 2031 and before January 1, 2033, 20%;

  • (d) after December 31, 2032 and before January 1, 2034, 10%;

  • (e) after December 31, 2033 and before January 1, 2035, 5%; and

  • (f) after December 31, 2034, nil. (pourcentage déterminé)

• Marginal note:CTM investment tax credit

  (2) If a qualifying taxpayer files with its return of income for a taxation year a prescribed form containing prescribed information, the taxpayer is deemed to have paid on its balance-due day for the year an amount on account of the taxpayer’s tax payable under this Part for the year equal to the taxpayer’s CTM investment tax credit for the year.

• Marginal note:Time limit for application

  (3) A payment on account of tax payable shall not be deemed to be paid under subsection (2) if the taxpayer does not file with the Minister a prescribed form containing prescribed information in respect of the amount on or before the day that is one year after the taxpayer’s filing-due date for the year and, if the prescribed form is filed after the taxpayer’s filing-due date for the year, no payment is deemed to arise under that subsection until the prescribed form containing the prescribed information has been filed with the Minister.

• Marginal note:Time of acquisition

  (4) For the purpose of this section, CTM property is deemed not to have been acquired by a taxpayer before the property is considered to have become available for use by the taxpayer, determined without reference to paragraphs 13(27)(c) and (28)(d).

• Marginal note:Special rules — adjustments

  (5) For the purpose of this section, the capital cost of CTM property to a taxpayer shall

  • (a) not include any amount in respect of a capital property

    • (i) for which an amount was previously deducted under this section by any person,

    • (ii) in respect of which a clean hydrogen tax credit (as defined in subsection 127.48(1)) was deducted by any person, or

    • (iii) that has, by virtue of section 21, been added to the cost of a property;

  • (b) be determined without reference to subsections 13(7.1) and (7.4);

  • (c) be reduced by the total of all amounts, each of which can reasonably be considered to be in respect of the property and is

    • (i) an amount of any government assistance or non-government assistance received by the taxpayer in or before the taxation year in which the property was acquired, or

    • (ii) an amount not described in subparagraph (i) that, in the taxation year, the taxpayer is entitled to or can reasonably be expected to receive and that would be government assistance or non-government assistance if it were received by the taxpayer; and

  • (d) be determined with reference to subsections 127(11.6) to (11.8) in respect of an expenditure or cost to a taxpayer except that

    • (i) the reference in subsection 127(11.6) to subsection 127(11.5) is to be read as a reference to section 127.49,

    • (ii) the reference in subsection 127(11.6) to subsection 127(26) is to be read as a reference to subsection 127.49(9), and

    • (iii) the term “qualified expenditure” is to be read as an expenditure eligible to be added to the capital cost of a CTM property.

• Marginal note:Deemed deduction

  (6) For the purpose of this section, paragraph 12(1)(t), subsection 13(7.1), the description of I in the definition undepreciated capital cost in subsection 13(21), subsection 53(2) and sections 127.48 and 129, the amount deemed under subsection (2) to have been paid by a taxpayer for a taxation year is deemed to have been deducted from the taxpayer’s tax otherwise payable under this Part for the year.

• Marginal note:Repayment of assistance

  (7) Where a taxpayer has, in a particular taxation year, repaid (or has not received and can no longer reasonably be expected to receive) an amount of government assistance or non-government assistance that was applied to reduce the cost of a property under paragraph (5)(c) for a preceding taxation year, the amount repaid (or no longer expected to be received) is to be added to the cost to the taxpayer of a property acquired in the particular year for the purpose of determining the taxpayer’s CTM investment tax credit for the year.

• Marginal note:Partnerships

  (8) Subject to section 127.491, where, in a particular taxation year of a qualifying taxpayer that is a member of a partnership, an amount would be determined under subsection (2) in respect of the partnership, for its taxation year that ends in the particular year, if the partnership were a qualifying taxpayer and its fiscal period were its taxation year, the portion of that amount that can reasonably be considered to be the taxpayer’s share thereof shall be added in computing the CTM investment tax credit of the taxpayer at the end of the particular year.

• Marginal note:Unpaid amounts

  (9) For the purpose of this section, where any part of the capital cost of a taxpayer’s CTM property is unpaid on the day that is 180 days after the end of the taxation year in which a deduction in respect of a CTM investment tax credit would otherwise be available in respect of the property, such amount is to be

  • (a) excluded from the capital cost of such property in the year; and

  • (b) added to the capital cost of such property at the time it is paid.

• Marginal note:Tax shelter investment

  (10) Subsection (2) does not apply if a CTM property – or an interest in a person or partnership that has, directly or indirectly, an interest in, or for civil law, a right in, such property – is a tax shelter investment for the purpose of section 143.2.

• Marginal note:Recapture — conditions for application

  (11) Subsection (12) applies in a taxation year if

  • (a) a taxpayer acquired a CTM property in the year or any of the preceding 10 calendar years;

  • (b) the taxpayer became entitled to a CTM investment tax credit in respect of the capital cost, or a portion of the capital cost, of the property; and

  • (c) in the year, the property (or another property that incorporates the property) is converted to a non-CTM use, is exported from Canada or is disposed of without having been previously exported or converted to a non-CTM use.

• Marginal note:Recapture of credit

  (12) If this subsection applies, there shall be added to the taxpayer’s tax otherwise payable under this Part for the year the lesser of

  • (a) the amount of the taxpayer’s CTM investment tax credit in respect of the property, and

  • (b) the amount determined by the formula

    A × (B ÷ C)

    where

    A

    is the amount of the taxpayer’s CTM investment tax credit in respect of the property,

    B

    is

    • (i) in the case where the property is disposed of to a person or partnership who deals at arm’s length with the taxpayer, the proceeds of disposition of the property, or

    • (ii) in the case where the property is disposed of to a person or partnership who does not deal at arm’s length with the taxpayer, is converted to a non-CTM use or is exported from Canada, the fair market value of the property, and

    C

    is the capital cost of the property on which the CTM investment tax credit was deducted.

• Marginal note:Certain non-arm’s length transfers

  (13) Subsections (11) and (12) do not apply to a taxpayer (in this subsection referred to as the “transferor”) that disposes of a property to a qualifying taxpayer (in this subsection referred to as the “purchaser”) related to the transferor, if the purchaser acquired the property in circumstances where the property would be CTM property to the purchaser (but for paragraph (b) of the definition CTM property in subsection (1)) and is used by the purchaser for a CTM use.

• Marginal note:Certain non-arm’s length transfers — recapture deferred

  (14) If subsections (11) and (12) do not apply because of subsection (13), subsection 127(34) applies with such modifications as the circumstances require, including that the reference to subsection 127(33) be read as subsection 127.49(13).

• Marginal note:Recapture event reporting requirement

  (15) If subsection (12) or (13) applies to a taxpayer for a taxation year, the taxpayer shall notify the Minister in prescribed form and manner on or before the taxpayer’s filing-due date for the year.

• Marginal note:Recapture of credit for partnerships

  (16) Subsection (17) applies in a fiscal period of a partnership if

  • (a) the partnership acquired a CTM property in the fiscal period or in any of the 10 preceding calendar years;

  • (b) the cost, or a portion of the cost, of the property is included in an amount, a percentage of which can reasonably be considered to have been included in computing the amount determined under subsection (8) in respect of the partnership at the end of a fiscal period; and

  • (c) in the fiscal period, the property (or another property that incorporates the property) is converted to a non-CTM use, is exported from Canada or is disposed of without having been previously exported or converted to a non-CTM use.

• Marginal note:Addition to tax

  (17) If this subsection applies to a fiscal period of a partnership, where a taxpayer is a member of the partnership during the fiscal period, there shall be added to the taxpayer’s tax otherwise payable under this Part for the taxpayer’s taxation year in which the fiscal period ends the amount that can reasonably be considered to be the taxpayer’s share of the amount, if any, equal to the lesser of

  • (a) the amount that can reasonably be considered to have been included in respect of the property in computing the amount determined under subsection (8) in respect of the partnership, and

  • (b) the percentage described in paragraph (16)(b) of

    • (i) where the property (or the other property) is disposed of to a person who deals at arm’s length with the partnership, the proceeds of disposition of the property, and

    • (ii) in any other case, the fair market value of the property (or the other property) at the time of the conversion, export or disposition.

• Marginal note:Information return — partnerships

  (18) If subsections (16) and (17) apply with respect to the property of a partnership for a fiscal period, the partnership shall notify the Minister in prescribed form and manner on or before the day when a return is required by section 229 of the Income Tax Regulations to be filed in respect of the period.

• Marginal note:CTM investment tax credit — purpose

  (19) The purpose of this section is to encourage the investment of capital in Canada for a CTM use.