Budget 2025 Implementation Act, No. 1 (S.C. 2026, c. 3)

• (1ac.1) For the purposes of this Part, each property of a taxpayer that is a new purpose-built residential rental is prescribed to be a separate class of property.

International Shipping Vessel

• (2d) A separate class is prescribed for each vessel of a taxpayer described in Class 7 in Schedule II, including the furniture, fittings, radiocommunication equipment and other equipment attached to the vessel, that has been used by the taxpayer to earn income that would not be included in computing the income of the taxpayer because of paragraph 81(1)(c.1) of the Act.

• (l) referred to in paragraph 81(1)(c.3) of the Act.

• (20.1) For the purposes of subsections 1100(0.3), (2.02) and (2.021) and 1104(3.1), (4) and (4.01), a particular person or partnership and another person or partnership shall be considered not to be dealing at arm’s length with each other in respect of the acquisition or ownership of a property if, in the absence of this subsection, they would be considered to be dealing at arm’s length with each other and it may reasonably be considered that the principal purpose of any transaction or event, or a series of transactions or events, is to cause

  • (a) the property to qualify as accelerated investment incentive property, reaccelerated investment incentive property or immediate expensing property; or

  • (b) the particular person or partnership and the other person or partnership to satisfy the condition in subparagraph 1100(0.3)(c)(i) or subclause 1100(2.02)(a)(i)(C)(I) or (2.021)(a)(i)(C)(I).

new purpose-built residential rental

new purpose-built residential rental means a purpose-built residential rental that

• (a) was

  • (i) built for use as a purpose-built residential rental if construction began after April 15, 2024 and before 2031, or

  • (ii) previously a building, or part of a building, used as a commercial property that was substantially renovated for use as a purpose-built residential rental if the renovations began after April 15, 2024 and before 2031, and

• (b) becomes available for use before 2036; (nouvel ensemble résidentiel construit spécialement pour la location)

purpose-built residential rental

purpose-built residential rental means a building or a part of a building situated in Canada

• (a) that contains

  • (i) four or more residential rental units at least four of which contain private kitchen facilities, a private bath and a private living area, or

  • (ii) 10 or more residential rental units, and

• (b) in which all or substantially all the residential rental units are rented or offered for rent for continuous periods of not less than 28 consecutive days; (ensemble résidentiel construit spécialement pour la location)

residential rental unit

residential rental unit means a housing unit used or intended for use as a rented residential premises that is not provided to the travelling or vacationing public; (logement locatif)

• (a) is acquired by the taxpayer after November 20, 2018 and before 2025 and becomes available for use before 2028; and

• Marginal note:Definition of reaccelerated investment incentive property

  (4.01) For the purposes of this Part and Schedules II to VI, reaccelerated investment incentive property means property of a taxpayer (other than property included in any of Classes 54 to 56) that

  • (a) is acquired by the taxpayer after 2024 and becomes available for use before 2034; and

  • (b) meets either of the following conditions:

    • (i) the property is not a property in respect of which an amount has been deducted under paragraph 20(1)(a) or subsection 20(16) of the Act by any person or partnership for a taxation year ending before the time the property was acquired by the taxpayer, or

    • (ii) the property was not

      • (A) acquired in circumstances where

        • (I) the taxpayer was deemed to have been allowed or deducted an amount under paragraph 20(1)(a) of the Act in respect of the property in computing income for previous taxation years, or

        • (II) the undepreciated capital cost of depreciable property of a prescribed class of the taxpayer was reduced by an amount determined by reference to the amount by which the capital cost of the property to the taxpayer exceeds its cost amount, or

      • (B) previously owned or acquired by the taxpayer or by a person or partnership with which the taxpayer did not deal at arm’s length at any time when the property was owned or acquired by the person or partnership.

• Marginal note:Deemed separate properties

  (4.11) For the purpose of subparagraph (4.01)(b)(i), if the capital cost to a taxpayer of a depreciable property (referred to in this subsection as the “single property”) includes amounts incurred at different times, then amounts deducted under paragraph 20(1)(a) or subsection 20(16) of the Act in respect of the single property are deemed to have been deducted in respect of a separate property that is not part of the single property to the extent the deducted amounts can reasonably be considered to be in respect of amounts

  • (a) incurred before 2025; or

  • (b) incurred after 2024, if any portion of the single property is considered to have become available for use before the time the single property is first used for the purpose of earning income.

transmission equipment

transmission equipment means equipment used to transmit electrical energy. (matériel de transmission)

eligible electrical generation equipment

eligible electrical generation equipment means property that is electrical generating equipment described in

• (a) subparagraph (d)(iii.1), (v), (vi), (vii), (xiv) or (xix) of Class 43.1 in Schedule II; or

• (b) subparagraph (e)(i) or (iii) of the definition clean electricity property in subsection 127.491(1) of the Act. (matériel générateur d’électricité admissible)

eligible transmission equipment

eligible transmission equipment means property (other than a building) that is transmission equipment of a taxpayer where

• (a) the transmission equipment is used in connection with eligible electrical generation equipment of the taxpayer; and

• (b) on annual basis

  • (i) more than 75% of the electrical energy generated by the eligible electrical generation equipment is transmitted by the transmission equipment, and

  • (ii) more than 75% of the electrical energy transmitted by the transmission equipment is generated by the eligible electrical generation equipment. (matériel de transmission admissible)

• (b) the property utilizes heat obtained from the taxpayer’s system;

Environmental Compliance

• (17) A property that would otherwise be eligible for inclusion in Class 43.1 or Class 43.2 in Schedule II by a taxpayer is deemed not to be eligible for inclusion in either of those classes if, at the time the property becomes available for use, there is substantial non-compliance by the taxpayer with the requirements of any environmental law, by-law or regulation of Canada, a province, a municipality, or a municipal or public body performing a function of government in Canada that is applicable in respect of the property.

J

is the reinsurance contract held amount in respect of a group of reinsurance contracts that is included in the description of H and that is in respect of a liability for incurred claims in respect of a group of insurance contracts that is included in the description of C.

• (b) an expenditure of a capital nature incurred by a taxpayer in respect of

  • (i) the acquisition of property, except any such expenditure that at the time it was incurred

    • (A) was for first term shared-use-equipment or second term shared-use-equipment (as those terms are defined in subsection 127(9) of the Act), or

    • (B) was for the provision of premises, facilities or equipment if, at the time of the acquisition of the premises, facilities or equipment, it was intended

      • (I) that the premises, facilities or equipment would be used during all or substantially all of the operating time of the premises, facilities or equipment in the expected useful life of the premises, facilities or equipment for the prosecution of scientific research and experimental development in Canada, or

      • (II) that all or substantially all of the value of the premises, facilities or equipment would be consumed in the prosecution of scientific research and experimental development in Canada,

  • (ii) the acquisition of property that is qualified property as defined in subsection 127(9) of the Act, or

  • (iii) the acquisition of property that has been used, or acquired for use or lease, for any purpose whatever before it was acquired by the taxpayer;

Marginal note:Special-purpose buildings

2903 For the purposes of this Part and paragraph 37(8)(e) of the Act, a special-purpose building is a building the working areas of which are designed and constructed to have a displacement in any direction of not more than 0.02 µm (micrometres) and to have, per 0.028 cubic metre of interior airspace,

• (a) not more than 350 airborne particles of a size less than or equal to 0.1 µm (micrometres) in diameter and no airborne particles of a size greater than 0.1 µm (micrometres) in diameter,

• (b) not more than 75 airborne particles of a size less than or equal to 0.2 µm (micrometres) in diameter and no airborne particles of a size greater than 0.2 µm (micrometres) in diameter,

• (c) not more than 30 airborne particles of a size less than or equal to 0.3 µm (micrometres) in diameter and no airborne particles of a size greater than 0.3 µm (micrometres) in diameter, or

• (d) not more than 10 airborne particles of a size less than or equal to 0.5 µm (micrometres) in diameter and no airborne particles of a size greater than 0.5 µm (micrometres) in diameter.

• (i) as a form of assistance from a government, municipality or other public authority, whether as a grant, a subsidy, a forgivable loan, a deduction from tax (other than an amount described in clause (b)(i)(B) of the definition tax shelter in subsection 237.1(1) of the Act) or an investment allowance, or as any other form of assistance, other than an excluded loan as defined in subsection 12(11) of the Act, or

• (d) where the amount is an excluded loan as defined in subsection 12(11) of the Act.

• (z.5) navigation device for low vision for an individual who has a vision impairment.

• (iii) the portion of any dividend received in the period and before the particular time by the subject affiliate from another foreign affiliate of the corporation (including, for greater certainty, any dividend deemed under subsection 5905(7) to have been received by the subject affiliate) that was prescribed under paragraph 5900(1)(a) to have been paid out of the payer affiliate’s exempt surplus in respect of the corporation to the extent that it

  • (A) does not give rise to the application of subsection 12.7(3) of the Act in computing the foreign accrual property income of a foreign affiliate of a taxpayer, and

  • (B) is excluded in computing the subject affiliate’s foreign accrual property income because of subparagraph (b)(i) or (ii) of the description of A, or because an amount is determined for H, in the definition foreign accrual property income in subsection 95(1) of the Act,

• (iv) the portion of any dividend received in the period and before the particular time by the subject affiliate from another foreign affiliate of the corporation (including, for greater certainty, any dividend deemed under subsection 5905(7) to have been received by the subject affiliate) that was prescribed under paragraph 5900(1)(a.1) to have been paid out of the payer affiliate’s hybrid surplus in respect of the corporation to the extent that it

  • (A) does not give rise to the application of subsection 12.7(3) of the Act in computing the foreign accrual property income of a foreign affiliate of a taxpayer, and

  • (B) is excluded in computing the subject affiliate’s foreign accrual property income because of subparagraph (b)(i) or (ii) of the description of A, or because an amount is determined for H, in the definition foreign accrual property income in subsection 95(1) of the Act, or

• (iii) the total of all amounts each of which is an amount determined by the formula

  C × D ÷ E

  where

  C

  is the amount that was prescribed under paragraph 5900(1)(c.1) to have been the foreign tax applicable to the portion (referred to in this subparagraph as the “relevant portion”) of a dividend received in the period and before the particular time by the subject affiliate from another foreign affiliate of the corporation (including, for greater certainty, a dividend deemed under subsection 5905(7) to have been received by the subject affiliate) that was prescribed under paragraph 5900(1)(a.1) to have been paid out of the payer affiliate’s hybrid surplus in respect of the corporation,

  D

  is the amount included under subparagraph (iv) of the description of A in the definition hybrid surplus, in respect of the relevant portion of the dividend received, in computing the subject affiliate’s hybrid surplus, and

  E

  is the relevant portion of the dividend received, or

• (iii) the portion of any dividend received in the period and before the particular time by the subject affiliate from another foreign affiliate of the corporation (including, for greater certainty, any dividend deemed under subsection 5905(7) to have been received by the subject affiliate) that was prescribed under paragraph 5900(1)(b) to have been paid out of the payer affiliate’s taxable surplus in respect of the corporation to the extent that it

  • (A) does not give rise to the application of subsection 12.7(3) of the Act in computing the foreign accrual property income of a foreign affiliate of a taxpayer, and

  • (B) is excluded in computing the subject affiliate’s foreign accrual property income because of subparagraph (b)(i) or (ii) of the description of A, or because an amount is determined for H, in the definition foreign accrual property income in subsection 95(1) of the Act,

• (iv) the total of all amounts each of which is an amount determined by the formula

  C × D ÷ E

  where

  C

  is the amount that was prescribed under paragraph 5900(1)(d) to have been the foreign tax applicable to the portion (referred to in this subparagraph as the “relevant portion”) of a dividend received in the period and before the particular time by the subject affiliate from another foreign affiliate of the corporation (including, for greater certainty, a dividend deemed under subsection 5905(7) to have been received by the subject affiliate) that was prescribed under paragraph 5900(1)(b) to have been paid out of the payer affiliate’s taxable surplus in respect of the corporation,

  D

  is the amount included under subparagraph (iii) of the description of A in the definition taxable surplus, in respect of the relevant portion of the dividend received, in computing the subject affiliate’s taxable surplus, and

  E

  is the relevant portion of the dividend received, or