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)
58 (1) Paragraph 127.52(1)(d.1) of the Act is replaced by the following:
(d.1) in respect of a disposition to which paragraph 38(a.1) applies (other than a disposition of a property that is included in a flow-through share class of property, as defined in section 54), the portion of that paragraph before subparagraph (i) were read as “a taxpayer’s taxable capital gain for a taxation year from the disposition of a property is equal to 3/10 of the taxpayer’s capital gain for the year from the disposition of the property if”;
(d.2) in respect of a disposition of a property that is included in a flow-through share class of property (as defined in section 54) to which paragraph 38(a.1) applies, the portion of that paragraph before subparagraph (i) were read as “a taxpayer’s taxable capital gain for a taxation year from the disposition of a flow-through share class of property is equal to 3/10 of the amount, if any, by which the taxpayer’s capital gain for the year from the disposition of the flow-through share class of property, exceeds the amount deemed to be a capital gain of the taxpayer from the disposition of another capital property because of the application of subsection 40(12) in respect of the disposition of the flow-through share class of property”;
(2) Subparagraph 127.52(1)(h)(vi) of the Act is replaced by the following:
(vi) twice the amount deducted under subsection 110.61(2) or 110.62(2);
(3) Subparagraph 127.52(1)(j)(ii) of the Act is replaced by the following:
(ii) paragraphs 20(1)(c) to (f) and (bb) in respect of an amount borrowed or paid to earn income from property for the year, other than an amount described under any of paragraphs (b), (c), (c.2), (c.3) and (e.1),
(4) Subsections (1) to (3) apply to taxation years that begin after 2023.
59 (1) Paragraph 127.55(f) of the Act is amended by striking out “or” at the end of subparagraph (vi) and by adding the following after subparagraph (vii):
(viii) a trust if
(A) it is established
(I) under a law of Canada or a province and is for the benefit of an Indigenous group, community or people that holds rights recognized and affirmed by section 35 of the Constitution Act, 1982, or
(II) under a treaty, or a settlement agreement, between His Majesty in right of Canada, or His Majesty in right of a province, and an Indigenous group, community or people described in subclause (I), and
(B) all or substantially all of the contributions to the trust before the end of the taxation year are amounts paid under the law, treaty or settlement agreement described in subclause (A)(I) or (II) or are reasonably traceable to those amounts, or
(ix) a trust, all of the beneficiaries of which are any combination of
(A) all of the members of an Indigenous group, community or people that holds rights recognized and affirmed by section 35 of the Constitution Act, 1982,
(B) a public body performing a function of government in Canada within the meaning of paragraph 149(1)(c) in relation to an Indigenous group, community or people that holds rights recognized and affirmed by section 35 of the Constitution Act, 1982,
(C) a person described under paragraph 149(1)(f) or (l) that is organized and operated primarily for health, education, social welfare or community improvement for the benefit of the members of an Indigenous group, community or people that holds rights recognized and affirmed by section 35 of the Constitution Act, 1982,
(D) a corporation all of the shares (except directors’ qualifying shares) or of the capital of which are owned by a person described in clause (B) or clause (C), a trust described in subparagraph (viii), another corporation that is described in this clause or a combination of those persons, and
(E) a trust described in subparagraph (viii).
(2) Subsection (1) applies to taxation years that begin after December 31, 2023.
60 (1) Clause 128(2)(e)(ii)(A) of the Act is replaced by the following:
(A) an amount under any of paragraphs 110(1)(d) to (d.3) and sections 110.6, 110.61 and 110.62 to the extent that the amount is in respect of an amount included in income under subparagraph (i) for that taxation year, and
(2) Subparagraph 128(2)(f)(iii) of the Act is replaced by the following:
(iii) in computing the individual’s taxable income for the year, no amount were deductible under any of paragraphs 110(1)(d) to (d.3) and sections 110.6, 110.61 and 110.62 in respect of an amount included in income under subparagraph (e)(i), and no amount were deductible under section 111, and
(3) Subsections (1) and (2) are deemed to have come into force on January 1, 2024.
61 (1) The definitions perte and revenu in subsection 129(4) of the French version of the Act are repealed.
(2) Paragraph (b) of the definition income or loss in subsection 129(4) of the English version of the Act is replaced by the following:
(b) does not include
(i) the income or loss from any property that is incident to or pertains to an active business carried on by it,
(ii) the income or loss from any property that is used or held principally for the purpose of gaining or producing income from an active business carried on by it, or
(iii) for each election made for the year under subsection 93.4(2) by the corporation or by a partnership of which the corporation is a member (or of which the corporation is deemed to be a member under subsection 93.1(3)),
(A) the portion of the FABI amount (within the meaning of subsection 93.4(2)(a)) in respect of the election that is included in computing the corporation’s income under subsection 91(1) for the year or, if the election was made by a partnership of which the corporation is a member, the portion of the FABI amount included in the partnership’s income under subsection 91(1) that is included in the corporation’s income for the year in accordance with subsection 96(1), or
(B) the portion of the amount deducted under subsection 91(4) that is determined under subparagraph 93.4(2)(b)(i) to be in respect of the FABI amount to which the election relates. (revenu ou perte)
(3) Subsection 129(4) of the French version of the Act is amended by adding the following in alphabetical order:
revenu ou perte Revenu ou perte d’une société pour une année d’imposition provenant d’une source qui est un bien qui, à la fois :
a) comprend le revenu ou la perte provenant d’une entreprise de placement déterminée qu’elle exploite au Canada, sauf celui ou celle provenant d’une source à l’étranger;
b) ne comprend pas, selon le cas :
(i) le revenu ou la perte provenant d’un bien qui se rapporte directement ou accessoirement à une entreprise qu’elle exploite activement,
(ii) le revenu ou la perte provenant d’un bien qui est utilisé ou détenu principalement pour tirer un revenu d’une entreprise qu’elle exploite activement,
(iii) pour chaque choix exercé pour l’année en application du paragraphe 93.4(2) par la société ou par une société de personnes dont la société est un associé (ou dont la société est réputée être un associé en vertu du paragraphe 93.1(3)), selon le cas :
(A) la fraction du montant REATE (au sens de l’alinéa 93.4(2)a)) relativement au choix qui est incluse dans le calcul du revenu de la société en application du paragraphe 91(1) pour l’année ou, si le choix a été exercé par un société de personnes dont la société est un associé, la fraction du montant REATE incluse au revenu de la société de personnes en vertu du paragraphe 91(1) qui est incluse dans le revenu de la société pour l’année conformément au paragraphe 96(1),
(B) la fraction du montant déduit en vertu du paragraphe 91(4) qui est déterminée en application du sous-alinéa 93.4(2)b)(i) relativement au montant REATE auquel le choix se rapporte. (income or loss)
(4) Subsections (1) to (3) apply to taxation years that begin on or after April 7, 2022.
62 (1) The portion of subsection 131(8) of the Act before paragraph (a) is replaced by the following:
Marginal note:Meaning of mutual fund corporation
(8) Subject to subsections (8.1) to (8.3), a corporation is, for the purposes of this section, a mutual fund corporation at any time in a taxation year if, at that time, it was a prescribed labour-sponsored venture capital corporation or
(2) Section 131 of the Act is amended by adding the following after subsection (8.1):
Marginal note:Substantial interest
(8.2) A corporation (other than a prescribed labour-sponsored venture capital corporation) is deemed not to be a mutual fund corporation after a particular time if, at that time,
(a) a person or partnership, or any combination of persons or partnerships that do not deal with each other at arm’s length (in either case, referred to in this subsection and subsection (8.3) as “specified persons”) own, in the aggregate, shares of the capital stock of the corporation having a fair market value of more than 10% of the fair market value of all of the issued and outstanding shares of the capital stock of the corporation; and
(b) the corporation is controlled by or for the benefit of one or more specified persons.
Marginal note:Exception
(8.3) Subsection (8.2) does not apply to a corporation if, at the particular time referred to in that subsection,
(a) the corporation was incorporated not more than two years before the particular time; and
(b) the aggregate fair market value of the shares of the capital stock of the corporation owned by specified persons does not exceed $5,000,000.
(3) Subsections (1) and (2) apply to taxation years that begin after 2024, except that if a corporation was controlled by or for the benefit of a real estate investment trust (as defined in subsection 122.1(1) of the Act) on April 16, 2024, subsections (1) and (2) apply to taxation years of the corporation that begin after 2025.
63 Paragraph (a) of the definition tax deferred cooperative share in subsection 135.1(1) of the Act is replaced by the following:
(a) issued, after 2005 and before 2031, by an agricultural cooperative corporation to a person or partnership that is at the time the share is issued an eligible member of the agricultural cooperative corporation, pursuant to an allocation in proportion to patronage;
64 (1) Subsection 136(1) of the Act is replaced by the following:
136 (1) Notwithstanding any other provision of this Act, a cooperative corporation that would, but for this section, be a private corporation is deemed not to be a private corporation except for the purposes of paragraphs 87(2)(vv) and (ww) (including, for greater certainty, in applying those paragraphs as provided under paragraph 88(1)(e.2)), the definitions excessive eligible dividend designation, general rate income pool and low rate income pool in subsection 89(1), subsections 89(4) to (6) and (8) to (10), sections 123.4, 125, 125.1, 127 and 127.1, the definition mark-to-market property in subsection 142.2(1), sections 152 and 157, subsection 185.2(3), the definitions qualifying cooperative business and small business corporation in subsection 248(1) (as it applies for the purposes of paragraph 39(1)(c)) and subsection 249(3.1).
(2) Subsection (1) is deemed to have come into force on January 1, 2024.
65 (1) Subsection 142.7(4) of the Act is replaced by the following:
Marginal note:Deemed fair market value
(4) If a Canadian affiliate of an entrant bank and the entrant bank make an election under subsection (3) in respect of a transfer of property by the Canadian affiliate to the entrant bank, for the purposes of subsections 15(1), 52(2), 69(1), (4) and (5), 246(1) and 247(2.02) in respect of the transfer, the fair market value of the property is deemed to be the amount agreed by the Canadian affiliate and the entrant bank in their election.
(2) Subsection (1) applies to taxation years and fiscal periods that begin after November 4, 2025.
66 (1) The definition issuer in subsection 146(1) of the Act is replaced by the following:
- issuer
issuer means the person referred to in the definition retirement savings plan
(a) with whom an annuitant has a contract or arrangement described in paragraph (a) or (b) of that definition, or
(b) that established an arrangement described in paragraph (c) of that definition; (émetteur)
(2) The definition benefit in subsection 146(1) of the Act is amended by striking out “and” at the end of paragraph (c), by adding “and” at the end of paragraph (c.1) and by adding the following after paragraph (c.1):
(c.2) an amount that is paid or transferred to an unclaimed property authority in respect of an unlocated individual
(3) The portion of the definition refund of premiums in subsection 146(1) of the Act before paragraph (a) is replaced by the following:
- refund of premiums
refund of premiums means any amount paid out of or under an RRSP (other than a tax-paid amount in respect of the plan or an amount paid from an arrangement described in paragraph (c) of the definition retirement savings plan in this subsection) as a consequence of the death of the annuitant under the plan,
(4) The definition retirement savings plan in subsection 146(1) of the Act is amended by striking out “or” at the end of paragraph (a), by adding “or” at the end of paragraph (b) and by adding the following after paragraph (b):
(c) an arrangement established at the direction of an unclaimed property authority to receive property from an RRSP or registered pension plan in respect of an unlocated individual; (régime d’épargne-retraite)
(5) Subsection 146(3) of the Act is amended by adding the following after paragraph (b):
(c) does not meet the conditions in subsection (2), if the plan is an arrangement described in paragraph (c) of the definition retirement savings plan in subsection (1);
(6) Subsection 146(16) of the French version of the Act is amended by adding the following after paragraph (a.1):
a.2) soit à un CELIAPP au profit du rentier, si le paragraphe (8.3) ne s’appliquait pas à un montant relativement à un bien lorsque le rentier a plutôt reçu le bien à titre de prestations dans le cadre d’un régime enregistré d’épargne-retraite;
(7) Section 146 of the Act is amended by adding the following after subsection (22):
Marginal note:Unclaimed property authority
(23) If an unclaimed property authority has established an RRSP to receive property in respect of an unlocated individual,
(a) subsections (8.8) to (8.93) do not apply to the unlocated individual in respect of the property (or property substituted for it) while such property is held under the RRSP;
(b) paragraph (4)(c) does not apply to any trust governed by the RRSP; and
(c) subsection (20) is to be read without reference to its paragraph (c) in respect of an amount credited or added to a deposit while the property (or property substituted for it) is held under the RRSP.
Marginal note:Unclaimed property authority — transfers
(24) If an unclaimed property authority has established an RRSP to receive property in respect of an unlocated individual and the property (or property substituted for it) is claimed by an individual that is eligible to receive it in accordance with applicable law, the individual who made the claim is deemed to be the annuitant under the RRSP for the purposes of subsection (16), provided that individual is or was
(a) if the property was received by the authority from a registered pension plan, the member (as defined in subsection 147.1(1)) of the registered pension plan;
(b) if the property was received by the authority from an RRSP, the annuitant (as defined in subsection 146(1)) of the RRSP;
(c) a spouse or common-law partner of an individual described in paragraph (a) or (b), immediately before the death of that individual; or
(d) a child or grandchild of an individual described in paragraph (a) or (b) who was, immediately before the death of that individual, financially dependent on that individual for support because of mental or physical infirmity.
(8) Subsections (1) and (3) to (5) come into force on January 1, 2027.
(9) Subsection (2) applies in respect of amounts paid or transferred to an unclaimed property authority after December 31, 2026.
(10) Subsection (6) is deemed to have come into force on June 20, 2024.
(11) Subsection (7) applies in respect of RRSPs established by an unclaimed property authority after December 31, 2026.
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