Bill C-59 in First Reading on November 30

With the late introduction of the Fall Economic Report, Canadian taxpayers and their advisors will face further uncertainty in planning their financial affairs to include the myriad of tax changes the government has introduced publicly recently.  Bill C59 was introduced on November 21, 2023 to encompass some of these provisions and this was submitted on November 30 for First Reading.  The bill will not likely pass before the Christmas break.  Specifics of concern to individuals and their advisors are summarized below:

SUMMARY OF PROVISIONS RELEVANT TO INDIVIDUALS AND BUSINESS OWNERS AS PER BILL C-59 TABLED NOVEMBER 21, 2023

• ensuring that only genuine intergenerational business transfers are excluded from the anti-surplus stripping rule in section 84.‍1 of the Income Tax Act;
• increasing the rate of the rural supplement for Climate Action Incentive payments (CAIP) from 10% to 20% for the 2023 and subsequent taxation years as well as referencing the 2016 census data for the purposes of the CAIP rural supplement eligibility for the 2023 and 2024 taxation years;
• providing a refundable investment tax credit to qualifying businesses for eligible carbon capture, utilization and storage equipment;
• providing a refundable investment tax credit to qualifying businesses for eligible clean technology equipment;
• introducing, under certain circumstances, labour requirements in relation to the new refundable investment tax credits for eligible carbon capture, utilization and storage equipment as well as eligible clean technology equipment;
• permitting a qualifying family member to acquire rights as successor of a holder of a Registered Disability Savings Plan following the death of that plan’s last remaining holder who was also a qualifying family member;
• implementing consequential changes of a technical nature to facilitate the operation of the existing rules for First Home Savings Accounts;
• introducing a technical amendment to the provision that authorizes the sharing of taxpayer information for the purposes of the Canadian Dental Care Plan;
• implementing a number of amendments to the general anti-avoidance rule (GAAR) as well as introducing a new penalty applicable to transactions subject to the GAAR and extending the normal reassessment period for the GAAR by three years in certain circumstances;
• facilitating the creation of employee ownership trusts;
• extending the phase-out by three years, and expanding the eligible activities, in relation to the reduced tax rates for certain zero-emission technology manufacturers.

The Bill also makes amendments to the Excise Tax Act and the Excise Act, 2001; noteworthy are:

Part 2 enacts the Digital Services Tax Act, providing for the implementation of an annual tax of 3% on digital services revenue earned by businesses that meet certain revenue thresholds.  Part 3 expands the GST/HST exemption for professional services rendered by psychotherapists and counselling therapists.