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

Assented to 2026-03-26

PART 2Digital Services Tax (Repeals and Other Measures) (continued)

Consequential Amendments (continued)

R.S., c. 1 (5th Supp.)Income Tax Act (continued)

146 The portion of subsection 221.2(2) of the Act before paragraph (a) is replaced by the following:

1999, c. 17; 2005, c. 38, s. 35Canada Revenue Agency Act

147 Paragraph (a) of the definition program legislation in section 2 of the Canada Revenue Agency Act is amended by adding “and” at the end of subparagraph (x) and by repealing subparagraph (xi).

2002, c. 9, s. 5Air Travellers Security Charge Act

148 Subsection 40(4) of the Air Travellers Security Charge Act is replaced by the following:

2002, c. 22Excise Act, 2001

150 Subsection 189(4) of the Act is replaced by the following:

2022, c. 5, s. 10Underused Housing Tax Act

151 Section 34 of the Underused Housing Tax Act is replaced by the following:

Marginal note:Restriction on payment by Minister

34 An amount under section 33 is not to be paid to a person by the Minister at any time, unless all returns of which the Minister has knowledge and that are required to be filed at or before that time by the person under this Act, the Excise Tax Act, the Income Tax Act, the Excise Act, 2001, the Air Travellers Security Charge Act, Part 1 of the Greenhouse Gas Pollution Pricing Act, the Select Luxury Items Tax Act and the Global Minimum Tax Act have been filed with the Minister.

2022, c. 10, s. 135Select Luxury Items Tax Act

152 Section 45 of the Select Luxury Items Tax Act is replaced by the following:

Marginal note:Restriction on rebate

45 A rebate under this Subdivision is not to be paid to a person at any time unless all returns of which the Minister has knowledge and that are required to be filed at or before that time by the person under this Act, the Excise Tax Act, the Income Tax Act, the Air Travellers Security Charge Act, the Excise Act, 2001, Part 1 of the Greenhouse Gas Pollution Pricing Act, the Underused Housing Tax Act and the Global Minimum Tax Act have been filed with the Minister.

153 Section 48 of the Act is replaced by the following:

Marginal note:Restriction — bankruptcy

48 If a trustee is appointed under the Bankruptcy and Insolvency Act to act in the administration of the estate or succession of a bankrupt, a rebate under this Division that the bankrupt was entitled to claim before the appointment must not be paid after the appointment unless all returns required to be filed in respect of the bankrupt under this Act, the Excise Tax Act, the Income Tax Act, the Air Travellers Security Charge Act, the Excise Act, 2001, Part 1 of the Greenhouse Gas Pollution Pricing Act, the Underused Housing Tax Act and the Global Minimum Tax Act in respect of periods ending before the appointment have been filed and all amounts required to be paid under that Part and those Acts by the bankrupt in respect of those periods have been paid.

154 The portion of subsection 53(3) of the Act before the formula is replaced by the following:

155 Subsection 57(6) of the Act is replaced by the following:

156 Section 94 of the Act is replaced by the following:

Marginal note:Restriction on payment by Minister

94 An amount under section 92 or 93 is not to be paid to a person by the Minister at any time, unless all returns of which the Minister has knowledge and that are required to be filed at or before that time by the person under this Act, the Excise Tax Act, the Income Tax Act, the Air Travellers Security Charge Act, the Excise Act, 2001, Part 1 of the Greenhouse Gas Pollution Pricing Act, the Underused Housing Tax Act and the Global Minimum Tax Act have been filed with the Minister.

2024, c. 17, s. 81Global Minimum Tax Act

157 The description of B in paragraph 67(2)(a) of the Global Minimum Tax Act is replaced by the following:

B
is the total of all amounts, if any, the transferee was assessed under paragraph 97.44(1)(b) of the Customs Act, subsection 325(2) of the Excise Tax Act, subsection 160(2) of the Income Tax Act, subsection 297(3) of the Excise Act, 2001, subsection 161(1) of the Greenhouse Gas Pollution Pricing Act, subsection 80(3) of the Underused Housing Tax Act or subsection 150(4) of the Select Luxury Items Tax Act in respect of the property, and

158 Section 77 of the Act is replaced by the following:

Marginal note:Restriction — unfulfilled filing requirements

77 The Minister must not, in respect of a person, refund, repay, apply to other debts or set off amounts under this Act until the person has filed with the Minister all returns and other records of which the Minister has knowledge that are required to be filed under this Act, the Income Tax Act, the Excise Tax Act, the Excise Act, 2001, the Air Travellers Security Charge Act, the Greenhouse Gas Pollution Pricing Act, the Underused Housing Tax Act and the Select Luxury Items Tax Act.

PART 3Amendments to the Excise Tax Act (GST/HST), the Underused Housing Tax Act, the Select Luxury Items Tax Act and Other Related Texts

DIVISION 1GST/HST Measures

R.S., c. E-15Excise Tax Act

  • 159 (1) The portion of subsection 181(5) of the Excise Tax Act before paragraph (a) is replaced by the following:

    • Marginal note:Redemption of coupon

      (5) For the purposes of this Part, if, in full or partial consideration for a taxable supply of property or a service, a supplier that is a registrant accepts a coupon that may be exchanged for the property or service or that entitles the recipient of the supply to a reduction of, or a discount on, the price of the property or service and a particular person at any time pays, exclusively in the course of commercial activities of the particular person, an amount to the supplier for the redemption of the coupon, the following rules apply:

  • (2) Section 181 of the Act is amended by adding the following after subsection (5):

    • Marginal note:Redemption – commercial activities

      (6) For the purposes of subsection (5), a payment is made by a person exclusively in the course of commercial activities of the person only if

      • (a) the person is not a financial institution and all or substantially all of the activities in the course of which the payment is made are commercial activities; or

      • (b) the person is a financial institution and all of the activities in the course of which the payment is made are commercial activities.

  • (3) Subsections (1) and (2) are deemed to have come into force on August 16, 2025. They also apply in respect of any payment made by a person before August 16, 2025 to a supplier for the redemption of a coupon if the person has not claimed an input tax credit in respect of the payment in a return under Division V of Part IX of the Act that is filed before August 16, 2025.

  • 160 (1) Subsection 191(9) of the Act is replaced by the following:

    • Marginal note:Substantial completion

      (9) For the purposes of this section, subsection 256.2(3.1) and the Real Property (GST/HST) Regulations, the construction or substantial renovation of a multiple unit residential complex or a condominium complex, or the construction of an addition to a multiple unit residential complex, shall be deemed to be substantially completed not later than the day all or substantially all of the residential units in the complex or addition are occupied after the construction or substantial renovation is begun.

  • (2) Subsection (1) is deemed to have come into force on September 14, 2023.

  • 161 (1) Section 256.2 of the Act is amended by adding the following after subsection (2):

    • Marginal note:Purpose-built rental housing – student residence

      (2.01) For the purposes of applying this section and the Real Property (GST/HST) Regulations (other than prescribed provisions) in respect of a taxable supply of property that is a residential complex or an addition to a residential complex, if the taxable supply and the property meet the conditions described in paragraph (3.1)(a) or (b), clause (a)(iii)(A) of the definition qualifying residential unit in subsection (1) is to be read as follows:

      • (A) as the primary place of residence of the person or a relation of the person, or of a lessor of the complex or a relation of that lessor, for a period of at least one year or for a shorter period where the next use of the unit after that shorter period is as described in clause (B),

      • (A.1) if the person is a university that is established and operated otherwise than for profit, a public college that is established and operated otherwise than for profit or a school authority that is established and operated otherwise than for profit, as a place of residence for students attending the university, the public college or a school of the school authority, or

  • (2) The portion of subsection 256.2(3) of the Act after paragraph (d) and before the first formula in that subsection is replaced by the following:

    the Minister shall, subject to subsections (3.1) to (3.4), (7) and (8), pay a rebate to the person equal to the total of all amounts each of which is an amount, in respect of a residential unit that forms part of the residential complex or addition, as the case may be, and is a qualifying residential unit of the person at the particular time, determined by the formula

  • (3) The description of B in subsection 256.2(3.2) of the Act is replaced by the following:

    B
    is the unit’s percentage of total floor space.

  • (4) Section 256.2 of the Act is amended by adding the following after subsection (3.2):

    • Marginal note:Purpose-built rental housing – student residence

      (3.3) The rules set out in subsection (3.4) apply in respect of the construction or substantial renovation of a residential complex or an addition to a multiple unit residential complex if the following conditions are met:

      • (a) the builder of the residential complex or addition is a university, a public college or a school authority;

      • (b) the construction or substantial renovation of the residential complex or addition is carried out primarily for the purpose of providing a place of residence for students attending the university, the public college or a school of the school authority;

      • (c) the builder would, in the absence of subsection 191(6), be deemed under section 191 to have made and received, at a particular time, a taxable supply by way of sale of the residential complex or addition; and

      • (d) in respect of the taxable supply referred to in paragraph (c) that would, in the absence of subsection 191(6), be deemed under section 191 to have been made and received by the builder, it is the case that

        • (i) the residential complex or addition is property prescribed for the purposes of subsection (3.1), determined as if the deemed purchase referred to in subparagraph (3)(a)(ii) were the taxable supply and the particular time referred to in paragraph (3)(b) were the particular time referred to in paragraph (c), and

        • (ii) the taxable supply and the residential complex or addition meet the conditions prescribed for the purposes of subsection (3.1) and the conditions described in paragraph (3.1)(a) or (b).

    • Marginal note:Amount of rebate – student residence

      (3.4) If the conditions set out in subsection (3.3) are met in respect of the construction or substantial renovation of a residential complex or an addition to a multiple unit residential complex, for the purposes of applying subsection (3) in respect of the construction or substantial renovation of the residential complex or addition, the following rules apply:

      • (a) the conditions in subparagraph (3)(a)(ii) and paragraphs (3)(b) to (d) are deemed to be met at the particular time referred to in paragraph (3.3)(c);

      • (b) the deemed purchase referred to in subparagraph (3)(a)(ii) is deemed to be the taxable supply referred to in paragraph (3.3)(c) that would, in the absence of subsection 191(6), be deemed under section 191 to have been made and received by the builder of the residential complex or addition;

      • (c) the particular time referred to in paragraph (3)(b) is deemed to be the particular time referred to in paragraph (3.3)(c); and

      • (d) despite subsections (3.1) and (3.2), the amount of the rebate under subsection (3) in respect of the construction or substantial renovation of the residential complex or addition is equal to the amount determined as if the first formula in subsection (3) and the descriptions for that formula were read as follows:

        A × B

        where

        A
        is the amount that, in the absence of subsection 191(6), the person would have been entitled to claim under section 193 or 257 in respect of the deemed purchase of the residential complex or addition determined as if the references in section 193 or 257, as the case may be, to “basic tax content” were read as references to “qualifying portion of basic tax content (as defined in subsection 256.2(1))”, and
        B
        is the unit’s percentage of total floor space.

  • (5) Paragraph 256.2(7)(a) of the Act is amended by striking out “and” at the end of subparagraph (ii) and by adding the following after that subparagraph:

    • (ii.1) in the case of a rebate under subsection (3), the amount of which is determined under subsection (3.4), in respect of the construction or substantial renovation of a residential complex or an addition to a multiple unit residential complex, the end of the month that includes the particular time referred to in paragraph (3.3)(c) in respect of the construction or renovation of the residential complex or addition, and

  • (6) Subsections (1) to (5) are deemed to have come into force on September 14, 2023.

  • (7) If a person is, or would be in the absence of paragraph 256.2(7)(a) of the Act (as amended by subsection (5)), entitled to a rebate under subsection 256.2(3) of the Act (as amended by subsection (2)) in respect of the construction or substantial renovation of a residential complex or an addition to a multiple unit residential complex, if the construction or renovation is substantially completed before the day on which this Act receives royal assent and if the amount of the rebate is determined under subsection 256.2(3.4) of the Act (as enacted by subsection (4)), the rebate may, despite paragraph 256.2(7)(a) of the Act (as amended by subsection (5)), be paid to the person if the person files an application for the rebate before the second anniversary of the day on which this Act receives royal assent.

  • (8) If a person is, or would be in the absence of paragraph 256.2(7)(a) of the Act (as amended by subsection (5)), entitled to a rebate under subsection 256.2(3) of the Act (as amended by subsection (2)) in respect of the construction or substantial renovation of a residential complex or an addition to a multiple unit residential complex, if the construction or renovation is substantially completed before the day on which this Act receives royal assent, if the amount of the rebate is determined under subsection 256.2(3.2) of the Act (as amended by subsection (3)) and if the rebate is in respect of a taxable supply described in subsection 256.2(2.1) of the Act, the rebate may, despite paragraph 256.2(7)(a) of the Act (as amended by subsection (5)), be paid to the person if the person files an application for the rebate before the second anniversary of the day on which this Act receives royal assent.

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