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)
67 (1) Paragraphs 146.2(9)(b) and (c) of the Act are replaced by the following:
(b) there shall be included in computing a taxpayer’s income for a taxation year the total of all amounts each of which is an amount determined by the formula
A − B − C
where
- A
- is the amount of a payment made out of or under the trust, in satisfaction of all or part of the taxpayer’s beneficial interest in the trust, in the taxation year, after the holder’s death and at or before the exemption-end time,
- B
- is the amount designated in respect of the payment as an exempt contribution (as defined in subsection 207.01(1)), and
- C
- is an amount designated by the trust not exceeding the lesser of
(i) the amount by which the amount of the payment exceeds the amount determined for B in respect of the payment, and
(ii) the amount by which the fair market value of all of the property held by the trust immediately before the holder’s death exceeds the total of all amounts each of which is the amount determined for C in respect of any other payment made out of or under the trust prior to the payment; and
(c) there shall be included in computing the trust’s income for its first taxation year, if any, that begins after the exemption-end time the amount determined by the formula
D − E − F
where
- D
- is the sum of the fair market value of all of the property held by the trust at the exemption-end time the total of all payments made out of or under the trust after the holder’s death and at or before the exemption-end time,
- E
- is the sum of
(i) the total of all amounts each of which is an amount determined for B in paragraph (b), and
(ii) the total of all amounts included in a taxpayer’s income under paragraph (b) in respect of the trust, and
- F
- is the fair market value of all of the property held by the trust immediately before the holder’s death.
(2) Subsection (1) comes into force or is deemed to have come into force on January 1, 2026.
68 (1) The definition retirement income fund in subsection 146.3(1) of the Act is replaced by the following:
- retirement income fund
retirement income fund means an arrangement
(a) between a carrier and an annuitant under which, in consideration for the transfer to the carrier of property, the carrier undertakes to pay amounts to the annuitant (and, if the annuitant so elects, to the annuitant’s spouse or common-law partner after the annuitant’s death), the total of which is, in each year in which the minimum amount under the arrangement for the year is greater than nil, not less than the minimum amount under the arrangement for that year, but the amount of any such payment does not exceed the value of the property held in connection with the arrangement immediately before the time of the payment, or
(b) established at the direction of an unclaimed property authority to receive property from a RRIF, RRSP or registered pension plan in respect of an unlocated individual. (fonds de revenu de retraite)
(2) The portion of the definition designated benefit in subsection 146.3(1) of the Act before paragraph (a) is replaced by the following:
- designated benefit
designated benefit of an individual in respect of a RRIF (other than an arrangement described in paragraph (b) of the definition retirement income fund in this subsection) means the total of
(3) The portion of the definition carrier in subsection 146.3(1) of the English version of the Act after paragraph (d) is repealed.
(4) The portion of the definition émetteur in subsection 146.3(1) of the French version of the Act before paragraph (a) is replaced by the following:
émetteur À l’égard d’un fonds de revenu de retraite, l’une des personnes suivantes :
(5) Section 146.3 of the Act is amended by adding the following after subsection (1.5):
Marginal note:Nil minimum amount
(1.6) Despite the definition minimum amount in subsection (1), and subject to subsection (1.7), the minimum amount under a retirement income fund for a year is nil, if at the beginning of the year the fund is held under the direction of an unclaimed property authority in respect of an unlocated individual.
Marginal note:Accumulated minimum amount
(1.7) If an unclaimed property authority directs a carrier of a retirement income fund to transfer all or part of the property held in connection with the fund to a RRIF of an individual who is entitled to claim the property in accordance with applicable law,
(a) despite the definition minimum amount in subsection (1), the minimum amount under the fund for the year that includes the transfer is equal to the total of all amounts each of which is the minimum amount that, in the absence of this subsection and subsection (1.6), would have been the minimum amount under the fund in the year of the transfer or a preceding year to which subsection (1.6) applied; and
(b) an amount that is not less than the minimum amount determined under paragraph (a) must be paid directly to the individual from the fund before the first such transfer.
(6) Section 146.3 of the Act is amended by adding the following after subsection (2):
Marginal note:Idem
(2.1) Despite subsection (2), the Minister may accept for registration for the purposes of this Act any arrangement that does not meet the conditions in subsection (2) if the arrangement is described in paragraph (b) of the definition retirement income fund in subsection (1).
(7) Subsection 146.3(5) of the Act is amended by striking out “or” at the end of paragraph (c), by adding “or” at the end of paragraph (d) and by adding the following after paragraph (d):
(e) an amount that is paid or transferred to an unclaimed property authority in respect of an unlocated individual.
(8) Section 146.3 of the Act is amended by adding the following after subsection (15):
Marginal note:Unclaimed property authority
(16) If an unclaimed property authority has established a RRIF to receive property in respect of an unlocated individual,
(a) subsections (6) to (6.4) do not apply to the unlocated individual in respect of the property (or property substituted for it) while such property is held under the RRIF;
(b) subsection (3.1) does not apply to any trust governed by the RRIF; and
(c) subsection (15) 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 RRIF.
Marginal note:Unclaimed property authority — transfers
(17) If an unclaimed property authority has established a RRIF 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 RRIF for the purposes of paragraphs (2)(d) and (e) and subsection (14.1), 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) if the property was received by the authority from a RRIF, the annuitant (as defined in subsection 146.3(1)) of the RRIF;
(d) a spouse or common-law partner of an individual described in paragraph (a), (b) or (c), immediately before the death of that individual; or
(e) a child or grandchild of an individual described in paragraph (a), (b) or (c) who was, immediately before the death of that individual, financially dependent on that individual for support because of mental or physical infirmity.
(9) Subsections (1) to (6) come into force on January 1, 2027.
(10) Subsection (7) applies in respect of amounts paid or transferred to an unclaimed property authority after December 31, 2026.
(11) Subsection (8) applies in respect of RRIFs established by an unclaimed property authority that receive property in respect of an amount paid or transferred to an unclaimed property authority after December 31, 2026.
69 (1) The definition first home savings account or FHSA in subsection 146.6(1) of the Act is replaced by the following:
- first home savings account
first home savings account or FHSA means a qualifying arrangement registered with the Minister that has not ceased to be a FHSA under subsection 146.6(16). (compte d’épargne libre d’impôt pour l’achat d’une première propriété ou CELIAPP)
(2) The description of C in paragraph (a) of the definition annual FHSA limit in subsection 146.6(1) of the Act is replaced by the following:
- C
- is the amount by which the total of all designated amounts described in paragraph (b) of the definition designated amount in subsection 207.01(1) for the year exceeds the total of all contributions made to a FHSA by the taxpayer after the taxpayer’s first qualifying withdrawal from a FHSA,
(3) The portion of subsection 146.6(15) of the Act before paragraph (c) is replaced by the following:
Marginal note:Deemed transfer or distribution
(15) If an amount is received at any time from the FHSA of a deceased holder by the holder’s legal representative and a survivor of the holder is entitled to all or a portion of the amount (in this subsection referred to as the “survivor’s amount”) under a decree, order or judgment of a competent tribunal or under a written agreement (provided that the entitlement relates to the survivor’s rights or interests in respect of property as a result of marriage or common-law partnership), or as a person beneficially interested under the deceased’s estate, the following rules apply:
(a) if a payment is made from the estate to a FHSA, RRSP or RRIF of the survivor, the payment is deemed to be a transfer from the FHSA to the extent that it does not exceed the survivor’s amount and it is so designated jointly by the legal representative and the survivor in prescribed form filed with the Minister;
(b) if a payment is made from the estate to the survivor, the payment is deemed for the purposes of subsection (14) to have been received by the survivor as a beneficiary to the extent that it does not exceed the survivor’s amount and it is so designated jointly by the legal representative and the survivor in prescribed form filed with the Minister; and
(4) Subsections (1) to (3) are deemed to have come into force on April 1, 2023.
70 (1) Section 147.4 of the Act is amended by adding the following after subsection (3):
Marginal note:Application of subsection (5)
(4) Subsection (5) applies to an amount transferred from an annuity contract described in subsection (1) if
(a) the conditions set out in paragraphs (1)(a) to (e) were satisfied when the annuitant acquired an interest in the annuity contract; and
(b) the transfer is made as a consequence of
(i) an individual who is a spouse or common-law partner or former spouse or common-law partner of the annuitant becoming entitled to an interest in the annuity contract under a decree, order or judgment of a competent tribunal, or under a written agreement, relating to a division of property between the annuitant and the individual, in settlement of rights arising out of, or on a breakdown of, their marriage or common-law partnership, or
(ii) a provision of the Pension Benefits Standards Act, 1985 or a similar law of a province that permits the annuitant to commute all or part of their interest in the annuity contract.
Marginal note:Treatment of amount transferred
(5) Despite paragraph (1)(g), if this subsection applies to an amount transferred from an annuity contract described in subsection (1), the amount transferred is deemed for the purposes of section 147.3
(a) not to be transferred from the annuity contract; and
(b) to be transferred from the registered pension plan described in subsection (1) to fully or partially satisfy the individual’s entitlement to benefits under the benefit provision (as defined in subsection 8500(1) of the Income Tax Regulations) under which the individual’s entitlement to benefits was satisfied by the acquisition of the interest in the annuity contract.
(2) Subsection (1) is deemed to have come into force on January 1, 2018.
71 (1) Paragraphs 150(1.2)(a) to (c) of the Act are replaced by the following:
(a) had been in existence for less than three months;
(b) holds assets with a total fair market value that does not exceed $50,000 throughout the year;
(b.1) meets the following conditions:
(i) each trustee is an individual,
(ii) each beneficiary is an individual and is related to each trustee, and
(iii) the total fair market value of the property of the trust does not exceed $250,000 throughout the year and the only assets held by the trust throughout the year are one or more of
(A) money,
(B) a guaranteed investment certificate issued by a Canadian bank or trust company incorporated under the laws of Canada or of a province,
(C) a debt obligation described in paragraph (a) of the definition fully exempt interest in subsection 212(3),
(D) debt obligations issued by
(I) a corporation, mutual fund trust or limited partnership the shares or units of which are listed on a designated stock exchange in Canada,
(II) a corporation the shares of which are listed on a designated stock exchange outside Canada, or
(III) an authorized foreign bank that are payable at a branch in Canada of the bank,
(E) a share, debt obligation or right listed on a designated stock exchange,
(F) a share of the capital stock of a mutual fund corporation,
(G) a unit of a mutual fund trust,
(H) an interest in a related segregated fund trust (within the meaning assigned by paragraph 138.1(1)(a)),
(I) an interest as a beneficiary under a trust, all the units of which are listed on a designated stock exchange,
(J) personal-use property of the trust, or
(K) a right to receive income or gains on property described in clauses (A) to (J);
(c) is required under the relevant rules of professional conduct or the laws of Canada or a province to hold funds for the purposes of an activity that is regulated under those rules or laws, provided
(i) the trust is not maintained as a separate trust for a particular client or clients, or
(ii) the only assets held by the trust throughout the year are money with a value that does not exceed $250,000;
(2) Subparagraph 150(1.2)(b.1)(ii) of the Act, as enacted by subsection (1), is replaced by the following:
(ii) each beneficiary is
(A) an individual (other than a trust) and is related to each trustee, or
(B) a graduated rate estate (or would be a graduated rate estate in the year if the estate had properly designated itself as a graduated rate estate) of an individual who was a beneficiary described in clause (A) in the year of the individual’s death,
(3) Clauses 150(1.2)(b.1)(iii)(A) and (B) of the Act, as enacted by subsection (1), are replaced by the following:
(A) money, including deposits in a Canadian financial institution as defined in subsection 270(1),
(B) a guaranteed investment certificate issued by a Canadian bank, trust company or credit union incorporated under the laws of Canada or of a province,
(4) Subparagraph 150(1.2)(b.1)(iii) of the Act, as enacted by subsection (1), is amended by striking out “or” at the end of clause (J), by adding “or” at the end of clause (K) and by adding the following after clause (K):
(L) an exempt policy (as defined in subsection 12.2(11)) issued by a Canadian life insurer, the fair market value of which is to be determined by its cash surrender value;
(5) Subparagraph 150(1.2)(c)(ii) of the Act, as enacted by subsection (1), is replaced by the following:
(ii) the only assets held by the trust throughout the year are assets described in clause (b.1)(iii)(A) or (B) with a total fair market value that does not exceed $250,000;
(6) Paragraph 150(1.2)(j) of the Act is replaced by the following:
(j) is, for greater certainty, a graduated rate estate, or would be a graduated rate estate in the year if the estate had properly designated itself as a graduated rate estate;
(7) Paragraph 150(1.2)(n) of the Act is amended by striking out “or” at the end of subparagraph (x), by adding “or” at the end of subparagraph (xi) and by adding the following after subparagraph (xi):
(xii) a retirement compensation arrangement the primary purpose of which is to provide annual or more frequent periodic retirement benefits to supplement the benefits provided out of or under one or more registered pension plans, registered retirement savings plans, deferred profit sharing plans or pooled registered pension plans;
(8) Subsection 150(1.2) of the Act is amended by striking out “or” at the end of paragraph (o), by adding “or” at the end of paragraph (p) and by adding the following after paragraph (p):
(q) is established for the purpose of complying with a statute of Canada or a province and the person or persons acting as trustee of the trust hold the property in trust for a specified purpose.
(9) Subsection 150(1.2) of the Act, as amended by subsection (8), is amended by striking out “or” at the end of paragraph (p), by adding “or” at the end of paragraph (q) and by adding the following after paragraph (q):
(r) is an employee ownership trust.
(10) Subsection 150(1.3) of the Act is repealed.
(11) Section 150 of the Act is amended by adding the following after subsection (1.2):
Marginal note:Deemed trust
(1.3) For the purpose of this section and section 204.2 of the Income Tax Regulations,
(a) a trust includes an express trust that would not otherwise be considered a trust under the Act if, under the trust,
(i) one or more persons (in this subsection and subsection (1.31) referred to as a “legal owner”) have legal ownership of property that is held for the use of, or benefit of, one or more persons or partnerships, and
(ii) the legal owner can reasonably be considered to act as agent for the persons or partnerships who have the use of, or benefit of, the property;
(b) each person that is a legal owner of a trust that is described under paragraph (a) is considered to be a trustee of the trust; and
(c) each person or partnership that has the use or benefit of property under a trust that is described under paragraph (a) is considered to be a beneficiary of the trust.
Marginal note:Deemed trust — exceptions
(1.31) Subsection (1.3) does not apply to a trust for a taxation year if
(a) each person or partnership that is considered to be a beneficiary under paragraph (1.3)(c) at any time in the year is also a legal owner of the property referred to in that paragraph at that time and there are no legal owners that are not considered to be beneficiaries;
(b) the legal owners are individuals that are related persons and the property is real property or immovable that would be the principal residence of one or more of the legal owners for the year if those legal owners had designated the property for the year under the definition principal residence in section 54;
(c) the legal owner is an individual and the property is real property or immovable that
(i) is held for the use of, or benefit of, the legal owner’s spouse or common-law partner during the year, and
(ii) would be the legal owner’s principal residence for the year if the legal owner had designated the property for the year under the definition principal residence in section 54;
(d) under the trust
(i) the property is held throughout the year solely for the use of, or benefit of, a partnership,
(ii) each legal owner is a partner of the partnership, and
(iii) a member of the partnership is, or but for subsection 220(2.1) would be, required under section 229 of the Income Tax Regulations to make an information return for a fiscal period of the partnership that includes December 31 of the taxation year;
(e) the legal owner holds the property as required by an order of a court;
(f) all or substantially all of the property under the trust is Canadian resource property (as defined in subsection 66(15)) that is held solely for the use of, or benefit of, one or more persons or partnerships each of which is
(i) a corporation, the shares of which are listed on a designated stock exchange,
(ii) a corporation that is controlled by one or more corporations described in subparagraph (i),
(iii) a partnership if
(A) a majority-interest partner of the partnership is a corporation described in subparagraph (i) or (ii), or
(B) a majority-interest group of partners (as defined in subsection 251.1(3)) of the partnership consists of two or more corporations described in subparagraph (i) or (ii), or
(iv) a partnership if
(A) a majority-interest partner of the partnership is a person or partnership described in subparagraphs (i) to (iii), or
(B) a majority-interest group of partners (as defined in subsection 251.1(3)) of the partnership consists of two or more persons or partnerships described in subparagraphs (i) to (iii);
(g) under the trust
(i) property is held exclusively for the use of, or benefit of, one or more persons described under subsection 149(1),
(ii) each legal owner is a person described under subsection 149(1), and
(iii) the property consists solely of funds received from His Majesty in right of Canada or a province; or
(h) the trustee is a registered securities dealer acting in that capacity or a trust company regulated under the laws of Canada or a Province acting as an investment entity (as defined in subsection 270(1)), if
(i) at any time, the only property in the trust is described in clauses (1.2)(b.1)(iii)(A) to (I), and
(ii) an information return is issued in respect of all of the income and gains of the trust to all of the beneficiaries of the trust.
Marginal note:Related persons
(1.32) For the purposes of this section,
(a) a related person includes an aunt, uncle, niece and nephew; and
(b) a person is related to himself or herself.
(12) Subsection 150(1.4) of the Act is replaced by the following:
Marginal note:Solicitor-client privilege
(1.4) For greater certainty, subsections (1.1) and (1.2) do not require the disclosure of information that is subject to solicitor-client privilege.
(13) Subsection 150(1.4) of the Act, as enacted by subsection (12), is replaced by the following:
Marginal note:Solicitor-client privilege
(1.4) For greater certainty, subsections (1.1) to (1.3) do not require the disclosure of information that is subject to solicitor-client privilege.
(14) Subsections (1), (6), (8), (10) and (12) apply to taxation years that end after December 30, 2024.
(15) Subsections (2) to (5), (7) and (9) apply to taxation years that end after December 30, 2025.
(16) Subsections (11) and (13) apply to taxation years that end after December 30, 2026.
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