Report on Federal Tax Expenditures - Concepts, Estimates and Evaluations 2024: part 2
Report on Federal Tax Expenditures - Concepts, Estimates and Evaluations 2024: part 2
Tax Expenditure Estimates and Projections
Introduction
Part 2 presents the estimates of the fiscal cost of federal tax expenditures for the years 2018 to 2025. It presents estimates for a wide range of tax expenditures, measures that are not considered tax expenditures (i.e., measures that are considered part of the benchmark tax system), and refundable tax credits that are classified as transfer payments. To increase transparency in government reporting on support to the fossil fuel sector, a second table grouping tax expenditures that provide such support is also presented. These estimates are followed by a third set of tables that present background statistics on total tax revenues by tax base, as well as some other useful statistics, such as the number of filers and tax paid by income tax bracket. Finally, key changes that have been made to tax expenditures since the last edition are described.
Notes:
The elimination of a tax expenditure would not necessarily yield the full tax revenues shown in the table. See Part 1 of this report for a discussion of the reasons for this.
A structural measure is one whose main objective is internal to the tax system. The classification of a measure as structural or non-structural is not indicative of the relevance and performance of the measure. A measure could pursue both structural and non-structural objectives, in which case it is categorized based on an assessment of whether the structural or non-structural component predominates (see explanation in Amounts under $500,000 are reported as "S" ("small"), amounts between $500,000 and $5 million are rounded to the nearest $1 million, and amounts above $5 million are rounded to the nearest $5 million.
Symbols:
Measure | Tax | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | Type | Subject | Category |
---|---|---|---|---|---|---|---|---|---|---|---|---|
Deduction for self-employed artists | PIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Arts and culture | Structural |
Cash basis accounting | PIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Business - farming and fishing | Structural |
Cash basis accounting | CIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Business - farming and fishing | Structural |
Deferral of income from destruction of livestock | PIT | -2 | S | S | S | 3 | n.a. | n.a. | n.a. | Tax expenditure | Business - farming and fishing | Structural |
Deferral of income from destruction of livestock | CIT | S | 1 | 1 | S | 4 | n.a. | n.a. | n.a. | Tax expenditure | Business - farming and fishing | Structural |
Deferral of income from sale of livestock in a region of drought, flood or excessive moisture | PIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Business - farming and fishing | Structural |
Deferral of income from sale of livestock in a region of drought, flood or excessive moisture | CIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Business - farming and fishing | Structural |
Deferral of capital gains through intergenerational rollovers of family farms or fishing businesses | PIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Business - farming and fishing | Non-structural |
Deferral of income from grain sold through cash purchase tickets | PIT | -10 | -20 | 15 | 3 | 60 | n.a. | n.a. | n.a. | Tax expenditure | Business - farming and fishing | Non-structural |
Deferral of income from grain sold through cash purchase tickets | CIT | -15 | -20 | 25 | 4 | 80 | n.a. | n.a. | n.a. | Tax expenditure | Business - farming and fishing | Non-structural |
Exemption for insurers of farming and fishing property | CIT | 20 | – | – | – | – | – | – | – | Tax expenditure | Business - farming and fishing | Non-structural |
Patronage dividends paid as shares by agricultural cooperatives | PIT | 2 | S | 1 | 1 | S | 1 | 1 | 1 | Tax expenditure | Business - farming and fishing | Non-structural |
Patronage dividends paid as shares by agricultural cooperatives | CIT | 4 | S | 3 | 1 | 1 | 2 | 2 | 2 | Tax expenditure | Business - farming and fishing | Non-structural |
Tax treatment of farm savings accounts (AgriInvest and Agri-Québec) | PIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Business - farming and fishing | Non-structural |
Tax treatment of farm savings accounts (AgriInvest and Agri-Québec) | CIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Business - farming and fishing | Non-structural |
Zero-rating of agricultural and fish products and purchases | GST | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Business - farming and fishing | Non-structural |
Accelerated capital cost allowance for liquefied natural gas facilities (sunset in 2024) | PIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Business - natural resources | Non-structural |
Accelerated capital cost allowance for liquefied natural gas facilities (sunset in 2024) | CIT | X | X | X | X | X | X | X | X | Tax expenditure | Business - natural resources | Non-structural |
Accelerated capital cost allowance for mining and oil sands assets | PIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Business - natural resources | Non-structural |
Accelerated capital cost allowance for mining and oil sands assets | CIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Business - natural resources | Non-structural |
Accelerated deductibility of some Canadian Exploration Expenses | PIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Business - natural resources | Non-structural |
Accelerated deductibility of some Canadian Exploration Expenses | CIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Business - natural resources | Non-structural |
Corporate Mineral Exploration and Development Tax Credit | CIT | 80 | 4 | 45 | 15 | 35 | 30 | 30 | 30 | Tax expenditure | Business - natural resources | Non-structural |
Critical Mineral Exploration Tax Credit for Flow-Through Share Investors | PIT | – | – | – | – | 45 | 35 | 35 | 35 | Tax expenditure | Business - natural resources | Non-structural |
Earned depletion (phased out) | PIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Business - natural resources | Non-structural |
Earned depletion (phased out) | CIT | S | S | 1 | S | S | S | S | S | Tax expenditure | Business - natural resources | Non-structural |
Flow-through share deductions | PIT | 120 | 115 | 175 | 265 | 210 | 195 | 190 | 185 | Tax expenditure | Business - natural resources | Non-structural |
Flow-through share deductions | CIT | 20 | 15 | 25 | 50 | 35 | 30 | 25 | 30 | Tax expenditure | Business - natural resources | Non-structural |
Mineral Exploration Tax Credit for Flow-Through Share Investors (sunset in 2024) | PIT | 50 | 60 | 100 | 145 | 25 | 50 | -10 | -3 | Tax expenditure | Business - natural resources | Non-structural |
Reclassification of expenses under flow-through shares (phased out) | PIT | -4 | -3 | -2 | -2 | -1 | -1 | -1 | S | Tax expenditure | Business - natural resources | Non-structural |
Reclassification of expenses under flow-through shares (phased out) | CIT | -1 | S | S | S | S | S | S | S | Tax expenditure | Business - natural resources | Non-structural |
Expensing of current expenditures on scientific research and experimental development | PIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Business - research and development | Non-structural |
Expensing of current expenditures on scientific research and experimental development | CIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Business - research and development | Non-structural |
Scientific Research and Experimental Development Investment Tax Credit | PIT | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | Tax expenditure | Business - research and development | Non-structural |
Scientific Research and Experimental Development Investment Tax Credit (non-refundable portion for CIT) | CIT | 1,425 | 1,430 | 1,445 | 1,910 | 1,775 | 1,810 | 1,855 | 1,935 | Tax expenditure | Business - research and development | Non-structural |
Small suppliers’ threshold | GST | 240 | 275 | 185 | 215 | 265 | 270 | 270 | 270 | Tax expenditure | Business - small businesses | Structural |
Deduction of allowable business investment losses | PIT | 35 | 50 | 40 | 40 | 25 | 35 | 35 | 35 | Tax expenditure | Business - small businesses | Non-structural |
Deduction of allowable business investment losses | TRU | S | S | S | S | S | S | S | S | Tax expenditure | Business - small businesses | Non-structural |
Deduction of allowable business investment losses | CIT | 10 | 10 | 10 | 15 | 5 | 10 | 10 | 10 | Tax expenditure | Business - small businesses | Non-structural |
Non-taxation of provincial assistance for venture investments in small businesses | PIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Business - small businesses | Non-structural |
Non-taxation of provincial assistance for venture investments in small businesses | CIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Business - small businesses | Non-structural |
Preferential tax rate for small businesses | CIT | 4,160 | 4,930 | 5,450 | 6,085 | 6,615 | 5,910 | 6,155 | 6,200 | Tax expenditure | Business - small businesses | Non-structural |
Rollovers of investments in small businesses | PIT | 15 | 10 | 10 | 15 | 15 | 10 | 10 | 10 | Tax expenditure | Business - small businesses | Non-structural |
Deductibility of costs of capital assets and eligibility for investment tax credits before asset is put in use | PIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Business - other | Structural |
Deductibility of costs of capital assets and eligibility for investment tax credits before asset is put in use | CIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Business - other | Structural |
Deductibility of earthquake reserves | CIT | S | S | S | -1 | S | S | S | S | Tax expenditure | Business - other | Structural |
Deferral through five-year capital gain reserve | PIT | 20 | 15 | 20 | 35 | 10 | 10 | 15 | 15 | Tax expenditure | Business - other | Structural |
Deferral through five-year capital gain reserve | TRU | 5 | -2 | S | 2 | S | 1 | 1 | 1 | Tax expenditure | Business - other | Structural |
Deferral through five-year capital gain reserve | CIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Business - other | Structural |
Deferral through rollover of capital gains and capital cost allowance recapture in respect of involuntary dispositions | PIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Business - other | Structural |
Deferral through rollover of capital gains and capital cost allowance recapture in respect of involuntary dispositions | CIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Business - other | Structural |
Deferral through use of billed-basis accounting by professionals and professional corporations | PIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Business - other | Structural |
Deferral through use of billed-basis accounting by professionals and professional corporations | CIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Business - other | Structural |
Exemption from branch tax for transportation, communications, and iron ore mining corporations | CIT | 10 | 25 | 40 | 70 | 45 | 45 | 50 | 50 | Tax expenditure | Business - other | Structural |
Exemption from GST for domestic financial services | GST | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Business - other | Structural |
Expensing of advertising costs | PIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Business - other | Structural |
Expensing of advertising costs | CIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Business - other | Structural |
Expensing of incorporation expenses | CIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Business - other | Structural |
Holdback on progress payments to contractors | PIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Business - other | Structural |
Holdback on progress payments to contractors | CIT | 55 | 40 | 40 | 80 | 115 | 115 | 120 | 125 | Tax expenditure | Business - other | Structural |
Tax status of certain federal Crown corporations | CIT | X | X | X | X | X | X | X | X | Tax expenditure | Business - other | Structural |
Accelerated capital cost allowance for manufacturing or processing machinery and equipment (sunset in 2025) | PIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Business - other | Non-structural |
Accelerated capital cost allowance for manufacturing or processing machinery and equipment (sunset in 2025) | CIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Business - other | Non-structural |
Accelerated capital cost allowance for vessels | PIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Business - other | Non-structural |
Accelerated capital cost allowance for vessels | CIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Business - other | Non-structural |
Accelerated Investment Incentive (sunset in 2027) | PIT/CIT | 280 | 3,510 | 2,815 | 2,330 | 2,315 | 2,055 | -740 | -90 | Tax expenditure | Business - other | Non-structural |
Additional Tax on Banks and Life Insurers | CIT | – | – | – | – | -260 | -540 | -555 | -575 | Tax expenditure | Business - other | Non-structural |
Canada Recovery Dividend | CIT | – | – | – | – | -695 | -695 | -695 | -695 | Tax expenditure | Business - other | Non-structural |
Atlantic Investment Tax Credit (non-refundable portion for CIT) | PIT | 10 | 10 | 10 | 10 | 10 | 10 | 10 | 10 | Tax expenditure | Business - other | Non-structural |
Atlantic Investment Tax Credit (non-refundable portion for CIT) | CIT | 225 | 210 | 135 | 200 | 345 | 305 | 320 | 320 | Tax expenditure | Business - other | Non-structural |
Tax on Repurchases of Equity | CIT | – | – | – | – | – | – | 425 | 600 | Tax expenditure | Business - other | Non-structural |
Deferral for asset transfers to a corporation and corporate reorganizations | PIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Business - other | Non-structural |
Deferral for asset transfers to a corporation and corporate reorganizations | CIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Business - other | Non-structural |
Deferral through 10-year capital gain reserve | PIT | 40 | 45 | 35 | 95 | 60 | 45 | 45 | 50 | Tax expenditure | Business - other | Non-structural |
Deferral through rollover of capital gains and capital cost allowance recapture in respect of dispositions of land and buildings | PIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Business - other | Non-structural |
Deferral through rollover of capital gains and capital cost allowance recapture in respect of dispositions of land and buildings | CIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Business - other | Non-structural |
Expensing of employee training costs | PIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Business - other | Non-structural |
Expensing of employee training costs | CIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Business - other | Non-structural |
Foreign Convention and Tour Incentive Program | GST | 5 | 5 | 1 | S | 2 | 5 | 5 | 5 | Tax expenditure | Business - other | Non-structural |
Immediate expensing for small businesses | PIT | – | – | – | – | 305 | 240 | 195 | -200 | Tax expenditure | Business - other | Non-structural |
Immediate expensing for small businesses | CIT | – | – | – | 665 | 1,175 | 975 | -400 | -720 | Tax expenditure | Business - other | Non-structural |
Lifetime Capital Gains Exemption | PIT | 1,855 | 1,805 | 1,725 | 2,550 | 2,525 | 2,155 | 1,995 | 2,080 | Tax expenditure | Business - other | Non-structural |
Non-deductibility of advertising expenses in foreign media | PIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Business - other | Non-structural |
Non-deductibility of advertising expenses in foreign media | CIT | S | S | S | S | S | S | S | S | Tax expenditure | Business - other | Non-structural |
Additional deduction for gifts of medicine | CIT | X | X | X | X | X | – | – | – | Tax expenditure | Donations, gifts, charities, and non-profit organizations | Non-structural |
Charitable Donation Tax Credit | PIT | 2,980 | 3,060 | 3,290 | 3,615 | 3,620 | 3,625 | 3,705 | 3,805 | Tax expenditure | Donations, gifts, charities, and non-profit organizations | Non-structural |
Charitable Donation Tax Credit | TRU | 30 | 30 | 45 | 45 | 45 | 50 | 50 | 50 | Tax expenditure | Donations, gifts, charities, and non-profit organizations | Non-structural |
Deductibility of charitable donations | CIT | 690 | 890 | 715 | 1,030 | 990 | 835 | 865 | 870 | Tax expenditure | Donations, gifts, charities, and non-profit organizations | Non-structural |
Deduction for certain contributions by individuals who have taken vows of perpetual poverty | PIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Donations, gifts, charities, and non-profit organizations | Non-structural |
Exemption from GST for certain supplies made by charities and non-profit organizations | GST | 1,345 | 1,405 | 1,455 | 1,510 | 1,640 | 1,740 | 1,815 | 1,885 | Tax expenditure | Donations, gifts, charities, and non-profit organizations | Non-structural |
Non-taxation of capital gains on donations of cultural property | PIT | 5 | 3 | 5 | 5 | 4 | 4 | 4 | 4 | Tax expenditure | Donations, gifts, charities, and non-profit organizations | Non-structural |
Non-taxation of capital gains on donations of cultural property | CIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Donations, gifts, charities, and non-profit organizations | Non-structural |
Non-taxation of capital gains on donations of ecologically sensitive land | PIT | 3 | 2 | 2 | 3 | 4 | 3 | 3 | 3 | Tax expenditure | Donations, gifts, charities, and non-profit organizations | Non-structural |
Non-taxation of capital gains on donations of ecologically sensitive land | TRU | S | S | S | S | S | S | S | S | Tax expenditure | Donations, gifts, charities, and non-profit organizations | Non-structural |
Non-taxation of capital gains on donations of ecologically sensitive land | CIT | 1 | 1 | S | 1 | 2 | 1 | 2 | 2 | Tax expenditure | Donations, gifts, charities, and non-profit organizations | Non-structural |
Non-taxation of capital gains on donations of publicly listed securities | PIT | 75 | 125 | 100 | 130 | 95 | 100 | 105 | 110 | Tax expenditure | Donations, gifts, charities, and non-profit organizations | Non-structural |
Non-taxation of capital gains on donations of publicly listed securities | TRU | 2 | 1 | S | 2 | 1 | 1 | 2 | 2 | Tax expenditure | Donations, gifts, charities, and non-profit organizations | Non-structural |
Non-taxation of capital gains on donations of publicly listed securities | CIT | 85 | 220 | 120 | 180 | 85 | 145 | 150 | 155 | Tax expenditure | Donations, gifts, charities, and non-profit organizations | Non-structural |
Non-taxation of non-profit organizations | PIT/CIT | 135 | 90 | 50 | 95 | 210 | 255 | 255 | 255 | Tax expenditure | Donations, gifts, charities, and non-profit organizations | Non-structural |
Non-taxation of registered charities | PIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Donations, gifts, charities, and non-profit organizations | Non-structural |
Non-taxation of registered charities | CIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Donations, gifts, charities, and non-profit organizations | Non-structural |
Rebate for poppies and wreaths | GST | X | X | X | X | X | X | X | X | Tax expenditure | Donations, gifts, charities, and non-profit organizations | Non-structural |
Rebate for qualifying non-profit organizations | GST | 80 | 80 | 75 | 80 | 85 | 90 | 95 | 95 | Tax expenditure | Donations, gifts, charities, and non-profit organizations | Non-structural |
Rebate for registered charities | GST | 320 | 335 | 300 | 330 | 375 | 390 | 405 | 420 | Tax expenditure | Donations, gifts, charities, and non-profit organizations | Non-structural |
Deduction for tuition assistance for adult basic education | PIT | 2 | 2 | 3 | 3 | 5 | 4 | 3 | 3 | Tax expenditure | Education | Structural |
Education Tax Credit (phasing out) | PIT | 325 | 230 | 190 | 115 | 45 | S | S | S | Tax expenditure | Education | Structural |
Textbook Tax Credit (phasing out) | PIT | 55 | 35 | 30 | 20 | 5 | S | S | S | Tax expenditure | Education | Structural |
Tuition Tax Credit | PIT | 1,630 | 1,735 | 2,100 | 2,065 | 2,100 | 2,220 | 2,270 | 2,270 | Tax expenditure | Education | Structural |
Exemption from GST for tuition and educational services | GST | 895 | 945 | 910 | 940 | 965 | 985 | 1,005 | 1,025 | Tax expenditure | Education | Non-structural |
Exemption of scholarship, fellowship and bursary income | PIT | 565 | 585 | 705 | 690 | 655 | 560 | 510 | 515 | Tax expenditure | Education | Non-structural |
Rebate for book purchases made by certain organizations | GST | 15 | 15 | 10 | 10 | 10 | 10 | 15 | 15 | Tax expenditure | Education | Non-structural |
Rebate for schools, colleges and universities | GST | 885 | 860 | 795 | 875 | 1,005 | 1,065 | 1,100 | 1,135 | Tax expenditure | Education | Non-structural |
Registered Education Savings Plans | PIT | 35 | 35 | 15 | 20 | 60 | 105 | 195 | 310 | Tax expenditure | Education | Non-structural |
Student Loan Interest Credit | PIT | 50 | 55 | 25 | 20 | 20 | 25 | 20 | 20 | Tax expenditure | Education | Non-structural |
Apprentice vehicle mechanics’ tools deduction | PIT | 3 | 3 | 4 | 5 | 5 | 4 | 4 | 4 | Tax expenditure | Employment | Structural |
Canada Employment Credit | PIT | 2,495 | 2,595 | 2,750 | 2,755 | 2,795 | 3,005 | 3,145 | 3,235 | Tax expenditure | Employment | Structural |
Child Care Expense Deduction | PIT | 1,270 | 1,325 | 975 | 1,210 | 1,260 | 1,100 | 1,000 | 950 | Tax expenditure | Employment | Structural |
Deductibility of certain costs incurred by musicians | PIT | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | Tax expenditure | Employment | Structural |
Deductibility of expenses by employed artists | PIT | S | S | S | S | S | S | S | S | Tax expenditure | Employment | Structural |
Deduction for tradespeople’s tool expenses | PIT | 2 | 2 | 2 | 2 | 2 | 4 | 4 | 4 | Tax expenditure | Employment | Structural |
Deduction of other employment expenses | PIT | 910 | 920 | 1,145 | 1,270 | 1,285 | 1,155 | 1,180 | 1,210 | Tax expenditure | Employment | Structural |
Deduction of union and professional dues | PIT | 1,030 | 1,075 | 1,075 | 1,160 | 1,205 | 1,270 | 1,270 | 1,275 | Tax expenditure | Employment | Structural |
Labour Mobility Deduction for Tradespeople | PIT | – | – | – | – | 2 | 3 | 3 | 3 | Tax expenditure | Employment | Structural |
Moving expense deduction | PIT | 110 | 110 | 105 | 150 | 160 | 150 | 130 | 130 | Tax expenditure | Employment | Structural |
Non-taxation of allowances for diplomats and other government employees posted abroad | PIT | 35 | 35 | 35 | 35 | 35 | 35 | n.a. | n.a. | Tax expenditure | Employment | Structural |
Non-taxation of allowances for members of legislative assemblies and certain municipal officers (repealed) | PIT | 20 | – | – | – | – | – | – | – | Tax expenditure | Employment | Structural |
Non-taxation of certain non-monetary employment benefits | PIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Employment | Structural |
Rebate to employees and partners | GST | 50 | 50 | 40 | 40 | 45 | 50 | 50 | 55 | Tax expenditure | Employment | Structural |
Apprenticeship Job Creation Tax Credit | PIT | 2 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | Tax expenditure | Employment | Non-structural |
Apprenticeship Job Creation Tax Credit | CIT | 85 | 85 | 95 | 95 | 95 | 95 | 100 | 100 | Tax expenditure | Employment | Non-structural |
Employee benefit plans | PIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Employment | Non-structural |
Employee stock option deduction | PIT | 770 | 920 | 920 | 1,645 | 1,170 | 1,190 | 1,220 | 1,270 | Tax expenditure | Employment | Non-structural |
Non-taxation of income earned by military and police deployed to international operational missions | PIT | 40 | 40 | 30 | 35 | 35 | 40 | n.a. | n.a. | Tax expenditure | Employment | Non-structural |
Northern Residents Deductions | PIT | 230 | 230 | 220 | 230 | 240 | 250 | 250 | 250 | Tax expenditure | Employment | Non-structural |
Deductibility of contributions to a qualifying environmental trust | PIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Environment | Structural |
Deductibility of contributions to a qualifying environmental trust | CIT | 60 | 50 | 50 | 45 | 50 | 50 | 50 | 50 | Tax expenditure | Environment | Structural |
Accelerated capital cost allowance for clean energy generation equipment (Class 43.2 sunset in 2024) | PIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Environment | Non-structural |
Accelerated capital cost allowance for clean energy generation equipment (Class 43.2 sunset in 2024) | CIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Environment | Non-structural |
Accelerated capital cost allowance for zero-emission automotive equipment and vehicles (sunset in 2027) | PIT/CIT | – | 3 | 5 | 5 | 10 | 5 | -5 | -5 | Tax expenditure | Environment | Non-structural |
Accelerated deductibility of Canadian Renewable and Conservation Expenses | PIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Environment | Non-structural |
Accelerated deductibility of Canadian Renewable and Conservation Expenses | CIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Environment | Non-structural |
Rate reduction for zero-emission technology manufacturers | CIT | – | – | – | – | 10 | 20 | 40 | 45 | Tax expenditure | Environment | Non-structural |
Adoption Expense Tax Credit | PIT | 2 | 2 | 1 | 2 | 2 | 2 | 2 | 2 | Tax expenditure | Families and households | Structural |
Canada Caregiver Credit | PIT | 220 | 235 | 240 | 245 | 250 | 260 | 270 | 275 | Tax expenditure | Families and households | Structural |
Eligible Dependant Credit | PIT | 940 | 1,025 | 1,265 | 1,355 | 1,245 | 1,315 | 1,375 | 1,420 | Tax expenditure | Families and households | Structural |
Goods and Services Tax/Harmonized Sales Tax Credit | GST | 4,650 | 4,935 | 10,450 | 5,030 | 7,335 | 7,790 | 5,725 | 6,045 | Tax expenditure | Families and households | Structural |
Spouse or Common-Law Partner Credit | PIT | 1,740 | 1,740 | 1,680 | 1,935 | 2,135 | 2,255 | 2,375 | 2,455 | Tax expenditure | Families and households | Structural |
Deferral of capital gains through transfers to a spouse, spousal trust or alter ego trust | PIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Families and households | Non-structural |
Exemption from GST for child care | GST | 210 | 220 | 110 | 150 | 165 | 175 | 180 | 195 | Tax expenditure | Families and households | Non-structural |
Exemption from GST for personal care services | GST | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Families and households | Non-structural |
Investment Tax Credit for Child Care Spaces (phased out) | PIT | S | S | S | S | S | S | S | S | Tax expenditure | Families and households | Non-structural |
Investment Tax Credit for Child Care Spaces (phased out) | CIT | X | X | X | X | X | X | X | X | Tax expenditure | Families and households | Non-structural |
Non-taxation of up to $10,000 of death benefits | PIT | 5 | 5 | 5 | 5 | 5 | 5 | 10 | 10 | Tax expenditure | Families and households | Non-structural |
Tax treatment of alimony and maintenance payments | PIT | 95 | 120 | 100 | 105 | 115 | 125 | 135 | 140 | Tax expenditure | Families and households | Non-structural |
Zero-rating of feminine hygiene products | GST | 45 | 45 | 50 | 50 | 55 | 55 | 60 | 60 | Tax expenditure | Families and households | Non-structural |
Disability supports deduction | PIT | 3 | 3 | 3 | 3 | 3 | 3 | 3 | 3 | Tax expenditure | Health | Structural |
Disability Tax Credit | PIT | 1,150 | 1,200 | 1,250 | 1,450 | 1,600 | 1,650 | 1,700 | 1,750 | Tax expenditure | Health | Structural |
Medical Expense Tax Credit | PIT | 1,645 | 1,700 | 1,600 | 1,850 | 1,950 | 2,050 | 2,150 | 2,250 | Tax expenditure | Health | Structural |
Exemption from GST for health care services | GST | 950 | 1,065 | 880 | 955 | 1,080 | 1,145 | 1,190 | 1,265 | Tax expenditure | Health | Non-structural |
Exemption from GST for hospital parking | GST | 15 | 15 | 10 | 10 | 15 | 15 | 15 | 15 | Tax expenditure | Health | Non-structural |
Home Accessibility Tax Credit | PIT | 15 | 15 | 15 | 25 | 35 | 40 | 40 | 40 | Tax expenditure | Health | Non-structural |
Non-taxation of benefits from private health and dental plans | PIT | 3,050 | 3,170 | 3,150 | 3,530 | 3,650 | 3,845 | 3,910 | 4,015 | Tax expenditure | Health | Non-structural |
Rebate for hospitals, facility operators and external suppliers | GST | 695 | 745 | 980 | 965 | 1,055 | 1,115 | 1,155 | 1,185 | Tax expenditure | Health | Non-structural |
Rebate for specially equipped motor vehicles | GST | S | S | S | S | S | S | S | S | Tax expenditure | Health | Non-structural |
Registered Disability Savings Plans | PIT | 65 | 70 | 70 | 90 | 90 | 95 | 110 | 125 | Tax expenditure | Health | Non-structural |
Zero-rating of face masks and face shields | GST | – | – | 5 | 85 | 70 | 50 | 45 | 50 | Tax expenditure | Health | Non-structural |
Zero-rating of medical and assistive devices | GST | 465 | 520 | 530 | 585 | 620 | 645 | 665 | 685 | Tax expenditure | Health | Non-structural |
Zero-rating of prescription drugs | GST | 880 | 920 | 955 | 1,005 | 1,045 | 1,090 | 1,135 | 1,185 | Tax expenditure | Health | Non-structural |
Exemption from GST for sales of used residential housing and other personal-use real property | GST | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Housing | Structural |
Enhanced rebate for new residential rental property | GST | – | – | – | – | – | S | 20 | 520 | Tax expenditure | Housing | Non-structural |
Exemption from GST for certain residential rent | GST | 1,915 | 2,075 | 2,240 | 2,315 | 2,440 | 2,695 | 2,815 | 2,925 | Tax expenditure | Housing | Non-structural |
Exemption from GST for short-term accommodation | GST | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Housing | Non-structural |
First-Time Home Buyers’ Tax Credit | PIT | 105 | 110 | 130 | 150 | 240 | 205 | 190 | 205 | Tax expenditure | Housing | Non-structural |
Non-taxation of capital gains on principal residences | PIT | 5,585 | 5,645 | 7,810 | 13,355 | 9,370 | 4,790 | 5,470 | 6,455 | Tax expenditure | Housing | Non-structural |
Rebate for new housing | GST | 495 | 420 | 425 | 460 | 400 | 425 | 415 | 410 | Tax expenditure | Housing | Non-structural |
Rebate for new residential rental property | GST | 170 | 215 | 215 | 225 | 230 | 230 | 270 | 315 | Tax expenditure | Housing | Non-structural |
Tax-Free First Home Savings Account | PIT | – | – | – | – | – | 125 | 465 | 595 | Tax expenditure | Housing | Non-structural |
Non-taxation of certain veterans’ benefits | PIT | 200 | 200 | 185 | 190 | 180 | 180 | 180 | 180 | Tax expenditure | Income support | Non-structural |
Non-taxation of Guaranteed Income Supplement and Allowance benefits | PIT | 225 | 235 | 245 | 210 | 230 | 380 | 385 | 400 | Tax expenditure | Income support | Non-structural |
Non-taxation of investment income on certain amounts received as damages in respect of personal injury or death | PIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Income support | Non-structural |
Non-taxation of RCMP pensions and other compensation in respect of injury, disability or death | PIT | 40 | 50 | 55 | 70 | 80 | 80 | 85 | 90 | Tax expenditure | Income support | Non-structural |
Non-taxation of social assistance benefits | PIT | 300 | 340 | 425 | 370 | 340 | 320 | 300 | 300 | Tax expenditure | Income support | Non-structural |
Non-taxation of workers’ compensation benefits | PIT | 720 | 755 | 830 | 855 | 865 | 880 | 880 | 895 | Tax expenditure | Income support | Non-structural |
Income tax exemption for certain public bodies | CIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Intergovernmental tax arrangements | Structural |
Rebate for municipalities | GST | 2,670 | 2,765 | 2,765 | 2,910 | 3,120 | 3,235 | 3,335 | 3,435 | Tax expenditure | Intergovernmental tax arrangements | Structural |
Refunds for Indigenous self-governments | GST | 10 | 10 | 10 | 10 | 10 | 10 | 10 | 15 | Tax expenditure | Intergovernmental tax arrangements | Structural |
Logging Tax Credit | PIT | 2 | 1 | 1 | 2 | 1 | 1 | 1 | 1 | Tax expenditure | Intergovernmental tax arrangements | Non-structural |
Logging Tax Credit | TRU | X | X | X | X | X | X | X | X | Tax expenditure | Intergovernmental tax arrangements | Non-structural |
Logging Tax Credit | CIT | 80 | 25 | 60 | 275 | 190 | 70 | 75 | 80 | Tax expenditure | Intergovernmental tax arrangements | Non-structural |
Deductibility of countervailing and anti-dumping duties when paid | PIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | International | Structural |
Deductibility of countervailing and anti-dumping duties when paid | CIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | International | Structural |
Exemption for international shipping and aviation by non-residents | PIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | International | Structural |
Exemption for international shipping and aviation by non-residents | CIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | International | Structural |
Non-taxation of certain importations | GST | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | International | Structural |
Non-taxation of life insurance companies’ foreign income | CIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | International | Structural |
Travellers’ exemption | GST | 310 | 330 | 80 | 100 | 265 | 315 | 335 | 350 | Tax expenditure | International | Structural |
Exemptions from non-resident withholding tax | PIT/CIT | 8,530 | 8,840 | 8,930 | 11,465 | 11,305 | 11,530 | 11,810 | 12,310 | Tax expenditure | International | Non-structural |
Tax treatment of active business income of foreign affiliates of Canadian corporations and deductibility of expenses incurred to invest in foreign affiliates | CIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | International | Non-structural |
Deferred Profit-Sharing Plans | PIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Retirement | Non-structural |
Partial inclusion of U.S. Social Security benefits | PIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Retirement | Non-structural |
Pension Income Credit | PIT | 1,235 | 1,255 | 1,270 | 1,300 | 1,310 | 1,400 | 1,430 | 1,470 | Tax expenditure | Retirement | Non-structural |
Pension income splitting | PIT | 1,380 | 1,415 | 1,470 | 1,515 | 1,725 | 1,890 | 2,045 | 2,195 | Tax expenditure | Retirement | Non-structural |
Pooled Registered Pension Plans | PIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Retirement | Non-structural |
Registered Pension Plans | PIT | 22,995 | 26,155 | 22,755 | 27,740 | 19,675 | 32,855 | 32,600 | 31,365 | Tax expenditure | Retirement | Non-structural |
Registered Retirement Savings Plans | PIT | 14,050 | 16,210 | 15,505 | 19,480 | 13,355 | 22,290 | 21,810 | 20,950 | Tax expenditure | Retirement | Non-structural |
Saskatchewan Pension Plan | PIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Retirement | Non-structural |
$200 capital gains exemption on foreign exchange transactions | PIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Savings and investment | Structural |
Capital gains exemption on personal-use property | PIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Savings and investment | Structural |
Capital gains exemption on personal-use property | CIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Savings and investment | Structural |
Tax treatment of investment income from life insurance policies | PIT | 215 | 230 | 235 | 230 | 245 | 245 | 285 | 300 | Tax expenditure | Savings and investment | Structural |
Taxation of capital gains upon realization | PIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Savings and investment | Structural |
Taxation of capital gains upon realization | CIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Savings and investment | Structural |
Labour-Sponsored Venture Capital Corporations Credit | PIT | 155 | 160 | 180 | 175 | 185 | 190 | 190 | 195 | Tax expenditure | Savings and investment | Non-structural |
Partial inclusion of capital gains | PIT | 8,700 | 8,560 | 10,780 | 19,440 | 13,515 | 11,425 | 10,420 | 10,830 | Tax expenditure | Savings and investment | Non-structural |
Partial inclusion of capital gains | TRU | 750 | 915 | 1,180 | 2,015 | 1,465 | 1,250 | 1,155 | 1,205 | Tax expenditure | Savings and investment | Non-structural |
Partial inclusion of capital gains | CIT | 11,915 | 11,175 | 10,405 | 16,835 | 18,025 | 15,390 | 14,235 | 14,835 | Tax expenditure | Savings and investment | Non-structural |
Tax-Free Savings Account | PIT | 1,375 | 1,895 | 1,700 | 3,220 | 2,015 | 3,200 | 3,680 | 4,050 | Tax expenditure | Savings and investment | Non-structural |
Age Credit | PIT | 3,625 | 3,820 | 3,945 | 4,110 | 4,160 | 4,770 | 5,180 | 5,505 | Tax expenditure | Social | Non-structural |
Credit for subscriptions to Canadian digital news media | PIT | – | – | 10 | 15 | 15 | 20 | 20 | S | Tax expenditure | Social | Non-structural |
Deduction for clergy residence | PIT | 95 | 95 | 95 | 100 | 100 | 105 | 105 | 105 | Tax expenditure | Social | Non-structural |
Exemption from GST and rebate for legal aid services | GST | 50 | 50 | 45 | 45 | 55 | 60 | 60 | 65 | Tax expenditure | Social | Non-structural |
Exemption from GST for ferry, road and bridge tolls | GST | 15 | 15 | 10 | 10 | 15 | 15 | 15 | 15 | Tax expenditure | Social | Non-structural |
Exemption from GST for municipal transit | GST | 225 | 235 | 105 | 100 | 145 | 170 | 180 | 190 | Tax expenditure | Social | Non-structural |
Exemption from GST for water, sewage and basic garbage collection services | GST | 325 | 335 | 350 | 375 | 400 | 430 | 445 | 460 | Tax expenditure | Social | Non-structural |
Political Contribution Tax Credit | PIT | 30 | 45 | 30 | 40 | 30 | 35 | 35 | 45 | Tax expenditure | Social | Non-structural |
Search and Rescue Volunteers Tax Credit | PIT | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | Tax expenditure | Social | Non-structural |
Tax-free amount for emergency services volunteers | PIT | 3 | 3 | 3 | 3 | 3 | 3 | 3 | 3 | Tax expenditure | Social | Non-structural |
Volunteer Firefighters Tax Credit | PIT | 20 | 15 | 15 | 20 | 20 | 20 | 20 | 20 | Tax expenditure | Social | Non-structural |
Zero-rating of basic groceries | GST | 4,705 | 4,885 | 5,385 | 5,480 | 5,800 | 6,195 | 6,360 | 6,595 | Tax expenditure | Social | Non-structural |
Non-taxation of personal property of status Indians and Indian bands situated on reserve | PIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Other | Non-structural |
Non-taxation of personal property of status Indians and Indian bands situated on reserve | GST | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax expenditure | Other | Non-structural |
Non-capital loss carry-overs | PIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax measure other than tax expenditure | Business - other | Structural |
Non-capital loss carry-overs | TRU | 145 | 245 | 140 | 195 | 235 | 210 | 215 | 220 | Tax measure other than tax expenditure | Business - other | Structural |
Non-capital loss carry-overs | CIT | 7,790 | 8,720 | 8,760 | 11,290 | 14,475 | 12,755 | 13,055 | 13,005 | Tax measure other than tax expenditure | Business - other | Structural |
Partial deduction of and partial input tax credits for meals and entertainment | PIT | 200 | 200 | 135 | 170 | 200 | 175 | 180 | 185 | Tax measure other than tax expenditure | Business - other | Structural |
Partial deduction of and partial input tax credits for meals and entertainment | CIT | 330 | 345 | 225 | 190 | 335 | 295 | 305 | 310 | Tax measure other than tax expenditure | Business - other | Structural |
Partial deduction of and partial input tax credits for meals and entertainment | GST | 185 | 190 | 130 | 115 | 175 | 155 | 160 | 165 | Tax measure other than tax expenditure | Business - other | Structural |
Non-taxation of strike pay | PIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax measure other than tax expenditure | Employment | Structural |
Tax treatment of Canada Pension Plan and Quebec Pension Plan contributions and benefits | PIT | 10,615 | 11,540 | 11,845 | 13,860 | 15,700 | 17,300 | 18,425 | 19,425 | Tax measure other than tax expenditure | Employment | Structural |
Tax treatment of Employment Insurance and Quebec Parental Insurance Plan premiums and benefits | PIT | 4,240 | 4,330 | 4,180 | 4,615 | 4,990 | 5,380 | 5,570 | 5,890 | Tax measure other than tax expenditure | Employment | Structural |
Non-taxation of lottery and gambling winnings | PIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax measure other than tax expenditure | Intergovernmental tax arrangements | Structural |
Quebec Abatement | PIT | 5,130 | 5,415 | 5,515 | 6,275 | 6,605 | 6,895 | 7,175 | 7,155 | Tax measure other than tax expenditure | Intergovernmental tax arrangements | Structural |
Quebec Abatement | TRU | 70 | 90 | 135 | 210 | 120 | 145 | 150 | 150 | Tax measure other than tax expenditure | Intergovernmental tax arrangements | Structural |
Transfer of income tax points to provinces | PIT | 24,410 | 25,270 | 26,125 | 29,160 | 30,780 | 32,185 | 33,500 | 33,725 | Tax measure other than tax expenditure | Intergovernmental tax arrangements | Structural |
Transfer of income tax points to provinces | TRU | 535 | 875 | 1,050 | 1,465 | 805 | 1,115 | 1,160 | 1,165 | Tax measure other than tax expenditure | Intergovernmental tax arrangements | Structural |
Transfer of income tax points to provinces | CIT | 3,650 | 3,435 | 3,680 | 5,250 | 5,640 | 4,695 | 5,395 | 5,190 | Tax measure other than tax expenditure | Intergovernmental tax arrangements | Structural |
Foreign tax credit for individuals | PIT | 1,825 | 1,975 | 2,055 | 2,070 | 2,055 | 2,090 | 2,120 | 2,145 | Tax measure other than tax expenditure | International | Structural |
Foreign tax credit for individuals | TRU | 50 | 30 | 35 | 50 | 45 | 50 | 50 | 50 | Tax measure other than tax expenditure | International | Structural |
Capital loss carry-overs | PIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax measure other than tax expenditure | Savings and investment | Structural |
Capital loss carry-overs | TRU | 750 | 900 | 710 | 1,810 | 1,310 | 1,120 | 1,035 | 1,080 | Tax measure other than tax expenditure | Savings and investment | Structural |
Capital loss carry-overs | CIT | 745 | 555 | 980 | 825 | 915 | 940 | 975 | 1,005 | Tax measure other than tax expenditure | Savings and investment | Structural |
Deduction of interest and carrying charges incurred to earn investment income | PIT | 1,855 | 1,945 | 1,890 | 2,215 | 2,430 | 2,545 | 2,570 | 2,635 | Tax measure other than tax expenditure | Savings and investment | Structural |
Deduction of interest and carrying charges incurred to earn investment income | CIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax measure other than tax expenditure | Savings and investment | Structural |
Dividend gross-up and tax credit | PIT | 4,925 | 4,895 | 4,660 | 5,170 | 5,640 | 5,800 | 5,995 | 6,260 | Tax measure other than tax expenditure | Savings and investment | Structural |
Dividend gross-up and tax credit | TRU | 285 | 255 | 250 | 315 | 320 | 325 | 335 | 350 | Tax measure other than tax expenditure | Savings and investment | Structural |
Investment corporation deduction | CIT | S | S | S | S | S | S | S | S | Tax measure other than tax expenditure | Savings and investment | Structural |
Non-taxation of capital dividends | PIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax measure other than tax expenditure | Savings and investment | Structural |
Non-taxation of capital dividends | CIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | Tax measure other than tax expenditure | Savings and investment | Structural |
Refundable capital gains tax for investment corporations, mutual fund corporations and mutual fund trusts | TRU | 2,400 | 4,910 | 5,915 | 7,980 | 5,785 | 4,945 | 4,575 | 4,765 | Tax measure other than tax expenditure | Savings and investment | Structural |
Refundable capital gains tax for investment corporations, mutual fund corporations and mutual fund trusts | CIT | 1,030 | 1,085 | 1,115 | 1,995 | 1,355 | 1,155 | 1,070 | 1,115 | Tax measure other than tax expenditure | Savings and investment | Structural |
Credit for the Basic Personal Amount | PIT | 36,440 | 38,780 | 44,490 | 49,570 | 47,775 | 50,845 | 53,625 | 55,685 | Tax measure other than tax expenditure | Other | Structural |
Non-taxation of payments to Canadian Armed Forces members and veterans in respect of pain and suffering | PIT | 345 | 295 | 300 | 395 | 400 | 440 | 355 | 330 | Tax measure other than tax expenditure | Other | Structural |
Refundable taxes on investment income of private corporations | CIT | -2,540 | -2,690 | -3,115 | -5,320 | -6,735 | -7,255 | -7,515 | -7,445 | Tax measure other than tax expenditure | Other | Structural |
Special tax computation for certain retroactive lump-sum payments | PIT | 1 | 2 | S | 1 | 1 | 1 | 1 | 1 | Tax measure other than tax expenditure | Other | Structural |
10% Temporary Wage Subsidy for Employers | PIT/CIT | – | – | 1,770 | – | – | – | – | – | Refundable tax credit classified as transfer payment | Employment | N/A |
Atlantic Investment Tax Credit (refundable portion) | CIT | 25 | 25 | 30 | 25 | 30 | 30 | 30 | 30 | Refundable tax credit classified as transfer payment | Business - other | N/A |
Canada Child Benefit | PIT | 23,900 | 24,300 | 26,800 | 24,500 | 24,600 | 25,600 | 27,300 | 28,900 | Refundable tax credit classified as transfer payment | Families and households | N/A |
Quarterly payments for families with young children entitled to the Canada Child Benefit (2021) – Children’s Benefits | PIT | – | – | 560 | 1,680 | – | – | – | – | Refundable tax credit classified as transfer payment | Families and households | N/A |
Carbon Capture, Utilization and Storage Investment Tax Credit | CIT | – | – | – | – | 25 | 100 | 300 | 720 | Refundable tax credit classified as transfer payment | Environment | N/A |
Canada Emergency Rent Subsidy & Lockdown Support | PIT/CIT | – | – | 2,080 | 5,575 | – | – | – | – | Refundable tax credit classified as transfer payment | Business - other | N/A |
Canada Emergency Wage Subsidy | PIT/CIT | – | – | 70,605 | 29,625 | – | – | – | – | Refundable tax credit classified as transfer payment | Employment | N/A |
Canada Recovery Hiring Program | PIT/CIT | – | – | – | 955 | 480 | – | – | – | Refundable tax credit classified as transfer payment | Employment | N/A |
Canada Training Credit | PIT | S | S | 100 | 180 | 220 | 240 | 255 | 275 | Refundable tax credit classified as transfer payment | Employment | N/A |
Canadian Film or Video Production Tax Credit | CIT | 270 | 300 | 255 | 290 | 330 | 335 | 345 | 360 | Refundable tax credit classified as transfer payment | Arts and culture | N/A |
Canadian Journalism Labour Tax Credit | PIT | – | n.a. | 1 | S | S | S | S | S | Refundable tax credit classified as transfer payment | Business - other | N/A |
Canadian Journalism Labour Tax Credit | CIT | – | 35 | 35 | 35 | 40 | 65 | 65 | 70 | Refundable tax credit classified as transfer payment | Business - other | N/A |
Clean Hydrogen Investment Tax Credit | CIT | – | – | – | – | – | 75 | 150 | 835 | Refundable tax credit classified as transfer payment | Environment | Non-structural |
Clean Technology Investment Tax Credit | CIT | – | – | – | – | – | 1,100 | 970 | 1,035 | Refundable tax credit classified as transfer payment | Environment | Non-structural |
Clean Technology Manufacturing Investment Tax Credit | PIT | – | – | – | – | – | – | 3 | 3 | Refundable tax credit classified as transfer payment | Environment | Non-structural |
Clean Technology Manufacturing Investment Tax Credit | CIT | – | – | – | – | – | – | 790 | 870 | Refundable tax credit classified as transfer payment | Environment | Non-structural |
Film or Video Production Services Tax Credit | CIT | 310 | 325 | 350 | 405 | 360 | 365 | 375 | 390 | Refundable tax credit classified as transfer payment | Arts and culture | N/A |
Hardest-Hit Business Recovery Program | PIT/CIT | – | – | – | 310 | 350 | – | – | – | Refundable tax credit classified as transfer payment | Employment | N/A |
Local Lockdown Program | PIT/CIT | – | – | – | n.a. | n.a. | – | – | – | Refundable tax credit classified as transfer payment | Employment | N/A |
Multigenerational Home Renovation Tax Credit | PIT | – | – | – | – | – | 25 | 25 | 25 | Refundable tax credit classified as transfer payment | Housing | Non-structural |
Refundable Medical Expense Supplement | PIT | 165 | 170 | 120 | 150 | 175 | 190 | 210 | 230 | Refundable tax credit classified as transfer payment | Health | N/A |
Scientific Research and Experimental Development Investment Tax Credit (refundable portion) | CIT | 1,410 | 1,835 | 1,840 | 1,975 | 1,965 | 2,005 | 2,050 | 2,140 | Refundable tax credit classified as transfer payment | Business - research and development | N/A |
Small Businesses Air Quality Improvement Tax Credit | PIT | – | – | – | – | S | – | – | – | Refundable tax credit classified as transfer payment | Health | N/A |
Small Businesses Air Quality Improvement Tax Credit | CIT | – | – | – | – | 1 | S | – | – | Refundable tax credit classified as transfer payment | Health | N/A |
Teacher and Early Childhood Educator School Supply Tax Credit | PIT | 5 | 5 | 5 | 10 | 10 | 10 | 10 | 10 | Refundable tax credit classified as transfer payment | Education | N/A |
Tourism and Hospitality Recovery Program | PIT/CIT | – | – | – | 1,055 | 1,655 | – | – | – | Refundable tax credit classified as transfer payment | Employment | N/A |
Working Income Tax Benefit (replaced) | PIT | 1,105 | – | – | – | – | – | – | – | Refundable tax credit classified as transfer payment | Employment | N/A |
Canada Workers Benefit | PIT | – | 2,005 | 900 | 2,400 | 3,300 | 4,285 | 4,500 | 4,605 | Refundable tax credit classified as transfer payment | Employment | N/A |
Tax Expenditures Supporting the Fossil Fuel Sector
Canada has routinely published estimates of its tax expenditures for over two decades, including those that favour the fossil fuel sector.
In July of 2023, the Government of Canada released the Inefficient Fossil Fuel Subsidies Government of Canada Self‑Review Assessment Framework (the "Framework) and the Inefficient Fossil Fuel Subsidies Government of Canada Guidelines (the "Guidelines"). The purpose of the Inefficient Fossil Fuel Subsidies Assessment Framework is to provide a transparent methodology for assessing whether federal measures, including tax expenditures, constitute inefficient fossil fuel subsidies, and ensuring that new measures do not constitute inefficient fossil fuel subsidies as outlined in the Guidelines.
Consistent with the Framework and Guidelines, Canada has been phasing out tax measures that are inefficient fossil fuel subsidies. Nine tax measures supporting the fossil fuel sector have been phased out or rationalized.
The data in the following table presents information about the revenue forgone for fossil fuel production or exploration, for each tax expenditure that provides support specifically to that sector. For example, "Flow-through share deductions" are an authorized tax shelter arrangement that are available to corporations in the mining and renewable energy sectors and were previously available to companies in the oil and gas sector. The revenue forgone presented in the table below for "Flow-through share deductions for oil and gas and coal mining" represents a subset of the amounts listed in the main table, and represents only the portion that can be attributed to fossil fuel exploration and development. In contrast, "Reclassification of expenses under flow-through shares", which is a measure that has been phased out, was only available to corporations in the oil and gas sector. The amounts presented below in this case are the same as those presented in the main table. By construction, it would therefore not be accurate to sum the amounts presented below with those presented in the main table, as these are duplicative.
The measures in the table below relate to the nine measures supporting the fossil fuel sector that have been phased out or rationalized in line with the Government's commitment on inefficient fossil fuel subsidies. Some of the nine measures are combinedFootnote 1 and the table does not include the Budget 2011 reduction in the deduction rates for intangible capital expenses in oil sands projects, to align with rates in the conventional oil and gas sector, which is part of the benchmark tax system (and therefore not a tax expenditure). In addition, the table includes the earned depletion for oil and gas and coal mining which was phased out in 1990.
Estimates | Projections | ||||||||
---|---|---|---|---|---|---|---|---|---|
2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | ||
TAX EXPENDITURES | |||||||||
FOSSIL FUEL SECTOR | |||||||||
Non-structural | |||||||||
Accelerated capital cost allowance for liquefied natural gas facilities (sunset in 2024)1 | PIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. |
CIT | X | X | X | X | X | X | X | X | |
Accelerated capital cost allowance for coal mining and oil sands assets (phased out)1 | PIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. |
CIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | |
Accelerated deductibility of some pre-production development expenses of oil sands mines, pre-production development expenses of coal mines, and for oil and gas discovery wells (all phased out)1 | PIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. |
CIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | |
Earned depletion for oil and gas and coal mining (phased out)2 | PIT | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. |
CIT | S | S | 1 | S | S | S | S | S | |
Flow-through share deductions for oil and gas and coal mining (phased out)3 | PIT | 15 | 5 | 3 | 3 | 3 | 3 | 2 | 1 |
CIT | 10 | 10 | 5 | 5 | 5 | 10 | 5 | 4 | |
Reclassification of expenses under flow-through shares (phased out)4 | PIT | -4 | -3 | -2 | -2 | -1 | -1 | -1 | S |
CIT | -1 | S | S | S | S | S | S | S | |
Atlantic Investment Tax Credit for oil and gas and coal mining (non-refundable portion for CIT, phased out)5 | PIT | S | S | S | S | S | S | S | S |
CIT | X | X | X | X | X | X | X | X | |
1 For more information on the costing of accelerated deductions and the difficulties in providing accurate estimates, see the annex to Part 1. 2 While corporations have not been able to add expenditures to the earned depletion base since 1989, expenses incurred prior to that year could be pooled and carried forward indefinitely, as is generally the case for depreciable capital expenses. 3 Budget 2022 announced the elimination of the flow-through share regime for fossil fuel sector activities. This will be done by no longer allowing expenditures related to oil, gas, and coal exploration and development to be renounced to flow-through share investors for flow-through share agreements entered into after March 31, 2023. 4 A negative number represents an increase in revenue. While this measure currently results in an increase in government revenues, it has previously resulted in a cost to government, consistent with the intent of the measure to provide a preference to the oil and gas sector. For more information on the costing of accelerated deductions, see the annex to Part 1. 5 Unused credits accumulated prior to the complete phase-out of the measure in 2017 can be carried forward indefinitely. |
Revenues (billions of dollars) |
Share of total revenues (%) |
Share of gross domestic product (%) |
|
---|---|---|---|
Personal income taxes | 218.0 | 47.8 | 7.6 |
Corporate income taxes | 79.8 | 17.5 | 2.8 |
Non-resident withholding taxes | 13.4 | 2.9 | 0.5 |
Goods and Services Tax | 52.1 | 11.4 | 1.8 |
Other excise duties and taxes and customs import duties | 18.8 | 4.1 | 0.7 |
Total tax revenues | 382.1 | 83.8 | 13.3 |
Non-tax revenues | 74.1 | 16.2 | 2.6 |
Total revenues | 456.2 | 100.0 | 15.9 |
Notes: Non-tax revenues include revenues from consolidated Crown corporations, net income from enterprise Crown corporations, returns on investments, foreign exchange revenues, proceeds from the sales of goods and services, proceeds from the pollution pricing framework, and Employment Insurance premium revenues. Totals may not add due to rounding. Source: Department of Finance Canada, 2023 Fall Economic Statement. |
Tax Brackets | Taxfilers | Taxes Paid | ||||
---|---|---|---|---|---|---|
Income range | Rate | Number (millions) |
Share (%) |
Amount (billions of dollars) |
Share (%) |
|
First bracket | Under $49,020 | 15% | 9.2 | 30 | 18.3 | 10 |
Second bracket | $49,020 - $98,040 | 20.5% | 7.8 | 26 | 58.9 | 33 |
Third bracket | $98,040 - $151,978 | 26% | 1.8 | 6 | 32.5 | 18 |
Fourth bracket | $151,978 - $216,511 | 29% | 0.5 | 2 | 16.8 | 9 |
Fifth bracket | Over $216,511 | 33% | 0.5 | 2 | 53.9 | 30 |
Taxable filers | 19.8 | 66 | 180.4 | 100 | ||
Non-taxable filers | 9.6 | 34 | ||||
All taxfilers | 29.4 | 100 | ||||
Notes: These statistics are presented on a public accounts basis and calculated using the T1 microdata from individual tax returns for the 2021 taxation year provided by the Canada Revenue Agency. Taxes paid reflect the total amount of net federal tax reported on line 42000 of the Income Tax and Benefit Return less the Quebec Abatement. Totals may not add due to rounding. Source: T1 Income Tax and Benefit Return micro data. |
Taxable Income | Corporations Reporting Income | Taxes Paid | ||||
---|---|---|---|---|---|---|
Amount (billions of dollars) |
Share (%) |
Number (thousands) |
Share (%) |
Amount (billions of dollars) |
Share (%) |
|
Canadian-controlled private corporations | 278.9 | 53 | 1,114.1 | 98 | 38.5 | 53 |
Business income taxed at the preferential tax rate for small businesses | 103.1 | 19 | 887.6 | 78 | ||
Other business income taxed at the general rate | 131.4 | 25 | 165.1 | 15 | ||
Other income | 44.4 | 8 | 394.2 | 35 | ||
Other corporations | 251.2 | 47 | 22.8 | 2 | 34.5 | 47 |
Business income taxed at the general rate | 244.2 | 46 | 22.7 | 2 | ||
Other income | 6.9 | 1 | 11.3 | 1 | ||
Total | 530.1 | 100 | 1,137.2 | 100 | 73.0 | 100 |
Notes: The sum of the number of corporations reporting each type of income does not add up to the total number of corporations, as a corporation may report income of more than one type. Totals may not add due to rounding. Source: T2 Corporation Income Tax Return (Corporation Tax Processing System) data. |
Changes to Tax Expenditures Since the 2023 Edition
New tax measures were introduced and others modified since the last edition of this report. Changes affecting tax expenditures in this report are described below. As this report considers tax expenditures as of December 31, 2023, changes announced in Budget 2024 are not listed below or taken into account in the estimates and projections.
Personal Income Tax
Goods and Services Tax/Harmonized Sales Tax Credit
Budget 2023 introduced the Grocery Rebate, which provided temporary support to low- and modest-income Canadians equivalent to twice the amount they received for January 2023 under the Goods and Services Tax/Harmonized Sales Tax Credit. The extra amount was paid out as a one-time, lump-sum payment starting on July 5, 2023, through the Goods and Services Tax/Harmonized Sales Tax Credit system.
Registered Disability Savings Plans—Qualifying Family Members
Budget 2023 extended by three years (i.e., until the end of 2026), the temporary federal measure that allows a qualifying family member to become the plan holder of a Registered Disability Savings Plan (RDSP) for an adult individual whose ability to enter into an RDSP contract is in doubt and who does not have a legal representative.
Budget 2023 also broadened the definition of a "qualifying family member" to include a brother or sister of the beneficiary who is 18 years of age or older. This will enable a sibling, in addition to parents and spouses and common-law partners, to use the temporary federal measure to establish an RDSP for an eligible beneficiary.
Critical Mineral Exploration Tax Credit for Flow-Through Share Investors
Budget 2023 proposed to expand the eligibility of the Critical Mineral Exploration Tax Credit (CMETC) and access to flow-through shares to lithium from brines. Individual flow-through share investors will be able to use the CMETC to reduce federal tax otherwise payable and to apply Canadian Exploration Expenses and Canadian Development Expenses renounced as part of flow-through share agreements against their taxable income.
The expansion of the eligibility for the CMETC would apply to flow-through share agreements entered into, and eligible expenses made, after March 28, 2023.
Deduction for Tradespeople's Tool Expenses
Budget 2023 doubled the maximum employment deduction for tradespeople's tool expenses from $500 to $1,000, effective for the 2023 and subsequent taxation years. As a consequence, the threshold for recognition of apprentice vehicle mechanics' tool expenses has changed. Apprentice vehicle mechanics may deduct extraordinary tool costs that exceed either the combined value of the deduction for tradespeople's tool expenses (which has increased from $500 to $1,000) and the Canada Employment Credit ($1,368 in 2023) or 5% of their income from employment as an apprentice mechanic, whichever is greater.
Registered Education Savings Plan Educational Assistance Payments
Budget 2023 raised the limits on certain withdrawals of Educational Assistance Payments (EAPs) from Registered Education Savings Plans (RESPs). EAPs consist of government grants and bonds as well as income earned in the RESP account. For students enrolled in a qualifying educational program (i.e., in a program of at least three consecutive weeks' duration requiring at least 10 hours per week of courses or work in the program), the limit on withdrawals of EAPs in the first 13 weeks of study was raised to $8,000 from $5,000. For students enrolled in a specified educational program (i.e., in a program of at least three consecutive weeks' duration requiring at least 12 hours per month of courses or work in the program), the limit on withdrawals of EAPs was raised to $4,000 from $2,500 per 13-week period of study.
Corporate Income Tax
Flow-through Share Deductions
Budget 2023 proposed to expand the access to flow-through shares to lithium from brines. Corporate flow-through share investors will be able to apply Canadian Exploration Expenses and Canadian Development Expenses renounced as part of flow-through share agreements against their taxable income.
The ability to issue flow-through shares would apply to eligible expenses made after March 28, 2023.
Clean Technology Investment Tax Credit
The 2022 Fall Economic Statement proposed a refundable tax credit for the capital cost of investments in certain clean technologies. A 30-per-cent refundable credit will be available to businesses investing in eligible technologies.
As outlined in Budget 2023, businesses will have to adhere to certain labour requirements, including ensuring that workers are paid prevailing wages and that apprenticeship opportunities are being created, in order to qualify for the 30-per-cent rate. If the labour requirements are not met, investments would receive a 20-per-cent tax credit rate.
Budget 2023 proposed to expand the list of eligible technologies to include geothermal energy systems that generate electrical energy or heat energy, or both electrical and heat energy, that are eligible for Class 43.1 of Schedule II of the Income Tax Regulations. The labour requirements apply to covered work that is performed on or after November 28, 2023, the date that a Notice of Ways and Means Motion for the enabling legislation of these labour requirements was first tabled in the House of Commons.
The credit would be available for investments made on or after March 28, 2023. Budget 2023 also proposed to modify the phase-out schedule of the Clean Technology Investment Tax Credit announced in the 2022 Fall Economic Statement. Rather than starting the phase-out in 2032, the full credit rate will remain at 30% for property that becomes available for use in 2032 and 2033 and will be reduced to 15% in 2034. The credit will be unavailable after 2034.
The 2023 Fall Economic Statement proposed to expand eligibility for the Clean Technology Investment Tax Credit to include certain systems that generate electricity, heat or both electricity and heat from waste biomass that are acquired and become available for use on or after November 21st, 2023.
Carbon Capture, Utilization, and Storage (CCUS) Investment Tax Credit.
Budget 2023 introduced enhancements to the CCUS Investment Tax Credit, which expand the list of eligible CCUS equipment and approved jurisdictions for dedicated geological storage.
Specifically, it is proposed that the CCUS Investment Tax Credit announced in Budget 2022 include the following design features:
- Eligible equipment be expanded to include dual use heat and/or power equipment and water use equipment. Dual use power or heat production equipment would be eligible only if the energy balance is expected to be primarily used (i.e., more than 50%) to support the CCUS process or hydrogen production that is eligible for the proposed Clean Hydrogen Investment Tax Credit and on a pro-rated basis in proportion to the expected energy balance or material balance supporting the CCUS process over the first 20 years of the project.
- Approved jurisdictions for dedicated geological storage be expanded to include British Columbia.
- Projects storing CO2 in concrete would be required to have their concrete storage process validated by a third-party, based on an International Organization for Standardization (ISO) standard, prior to claiming the investment tax credit.
- A recovery calculation for the investment tax credit in respect of refurbishment property would be included. Total eligible refurbishment costs over the first 20 years of the project would be limited to a maximum of 10% of the total pre-operational costs that were eligible for the CCUS Investment Tax Credit. Projects would not be eligible for Refurbishment ITCs on costs incurred after the end of the 20‑year period.
Labour requirements, including ensuring that workers are paid prevailing wages and that apprenticeship opportunities are being created, would apply to the tax credit, which if not met, would reduce the credit rate by 10 percentage points. The labour requirements apply to covered work that is performed on or after November 28, 2023, the date that a Notice of Ways and Means Motion for the enabling legislation of these labour requirements was first tabled in the House of Commons.
Tax on Repurchases of Equity
The 2022 Fall Economic Statement announced the government's intention to introduce a 2% tax on share buybacks by public corporations in Canada. Budget 2023 announced that the tax would apply as of January 1, 2024 to the annual net value of repurchases of equity by public corporations and certain publicly traded trusts and partnerships in Canada. A business would not be subject to the tax in a year if its gross repurchases of equity were less than $1 million.
Rate Reduction for Zero-Emission Technology Manufacturers
Budget 2023 proposed an extension to the availability of the 50% reduction in the general corporate and small business income tax rates for zero-emission technology manufacturers by an additional three years. Hence, the reduced rates will be gradually phased out starting in taxation years that begin in 2032 and fully phased out for taxation years that begin after 2034.
Budget 2023 also proposes to extend eligibility for the reduced rates to include the manufacturing of nuclear energy equipment and the processing and recycling of nuclear fuels and heavy water, effective for taxation years beginning after 2023.
Clean Technology Manufacturing Investment Tax Credit
Budget 2023 proposed a refundable tax credit equal to 30% of the cost of investments in new machinery and equipment used to manufacture or process key clean technologies, and extract, process, or recycle key critical minerals, including:
- Extraction, processing, or recycling of critical minerals essential for clean technology supply chains, specifically: lithium, cobalt, nickel, graphite, copper, and rare earth elements;
- Manufacturing of renewable or nuclear energy equipment;
- Processing or recycling of nuclear fuels and heavy water;
- Manufacturing of grid-scale electrical energy storage equipment;
- Manufacturing of zero-emission vehicles; and,
- Manufacturing or processing of certain upstream components and materials for the above activities, such as cathode materials and batteries used in electric vehicles.
This credit would apply to property that is acquired and becomes available for use on or after January 1, 2024, and would no longer be in effect after 2034, subject to a phase-out starting in 2032.
Clean Hydrogen Investment Tax Credit
Budget 2023 announced the design features of the Clean Hydrogen Investment Tax Credit:
- Refundable investment tax credit on eligible property based on the estimated carbon intensity (CI) of the hydrogen produced (i.e., kilogram (kg) of carbon dioxide equivalent (CO2e) per kg of hydrogen), as measured by Environment and Climate Change Canada's Fuel Life Cycle Assessment (LCA) Model:
- 40% for a CI < 0.75 kg;
- 25% for a CI of 0.75 kg to < 2 kg;
- 15% for a CI of 2 kg to < 4 kg; and,
- 15% to convert clean hydrogen to ammonia.
- Projects that produce hydrogen from electrolysis or from natural gas, so long as emissions are abated using carbon capture, utilization, and storage, are eligible.
Labour requirements, including ensuring that workers are paid prevailing wages and that apprenticeship opportunities are being created, would apply to the tax credit, which if not met, would reduce the credit rate by 10 percentage points. The labour requirements apply to covered work that is performed on or after November 28, 2023, the date that a Notice of Ways and Means Motion for the enabling legislation of these labour requirements was first tabled in the House of Commons.
The credit would apply to property that is acquired and becomes available for use on or after March 28, 2023, with the credit rate reduced by one half in 2034, before being fully phased out by 2035.
Tax Treatment of Active Business Income of Foreign Affiliates of Canadian Corporations and Deductibility of Expenses Incurred to Invest in Foreign Affiliates
Budget 2023 reaffirmed Canada's intention, announced in Budget 2022, to introduce legislation implementing the Pillar Two global minimum tax. This will ensure that large multinational corporations are subject to a minimum effective tax rate of 15% on their profits wherever they do business. The primary charging rules of the Global Minimum Tax and Domestic Minimum Top-up Tax are effective for fiscal years of multinational corporations that begin on or after December 31, 2023. The Global Minimum Tax imposes a top-up tax on certain Canadian multinational groups in respect of income earned abroad that is taxed at an effective rate of less than 15%. This new tax relates to the measure "Tax treatment of active business income of foreign affiliates of Canadian corporations and deductibility of expenses incurred to invest in foreign affiliates". Similarly, the Domestic Minimum Top-up Tax imposes a top-up tax on income earned in Canada that is taxed at an effective rate of less than 15%. This other tax is considered to be part of the benchmark income tax system.
Canadian Journalism Labour Tax Credit
The 2023 Fall Economic Statement proposed two enhancements to the Canadian journalism labour tax credit. First, to increase the cap on labour expenditures per eligible newsroom employee to $85,000 from $55,000. Second, to temporarily increase the Canadian journalism labour tax credit rate to 35 per cent from 25 per cent for a period of four years. These changes would apply to qualifying labour expenditures incurred on or after January 1, 2023. The credit rate would return to 25 per cent for expenditures incurred on or after January 1, 2027.
Goods and Services Tax
Enhanced Rebate for New Residential Rental Properties
As announced on September 14, 2023, the government is temporarily enhancing the GST Rental Rebate from 36% to 100% and removing the existing rebate phase-out thresholds, for purpose-built rental housing projects. This measure will apply to projects that begin construction after September 13, 2023 and before 2031, and complete construction before 2036.
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