Budget 2025 Implementation Act, No. 1 (S.C. 2026, c. 3)
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Assented to 2026-03-26
PART 1Amendments to the Income Tax Act and Other Legislation (continued)
R.S., c. 1 (5th Supp.)Income Tax Act (continued)
9 (1) Clause 53(1)(e)(ix)(A) of the Act is replaced by the following:
(A) the taxpayer’s share of the amount (other than an amount that is received as an excluded loan as defined in subsection 12(11)) of any assistance or benefit that the partnership received or became entitled to receive after 1971 and before that time from a government, municipality or other public authority, whether as a grant, subsidy, forgivable loan, deduction from royalty or tax, investment allowance or any other form of assistance or benefit, in respect of or related to a Canadian resource property or an exploration or development expense incurred in Canada
(2) Subparagraph 53(1)(e)(xiii) of the Act is replaced by the following:
(xiii) any amount required by subsection 127(30) or 127.45(17), section 127.48, subsection 127.49(17) or section 127.491 or 211.92 to be added to the taxpayer’s tax otherwise payable under this Act for a taxation year that ended before that time in respect of the interest in the partnership;
(3) Paragraph 53(2)(c) of the Act is amended by adding the following after subparagraph (vi.4):
(vi.5) an amount equal to that portion of all amounts deemed deducted under subsection 127.491(10) in computing the tax otherwise payable by the taxpayer under this Part for the taxpayer’s taxation years ending before that time that may reasonably be attributed to amounts added in computing the clean electricity investment tax credit (as defined in subsection 127.491(1)) of the taxpayer because of subsection 127.491(12),
(4) Subparagraph 53(2)(k)(i) of the Act is amended by striking out “or” at the end of clause (C), by replacing “and” at the end of clause (D) with “or” and by adding the following after clause (D):
(E) an amount received as an excluded loan as defined in subsection 12(11), and
(5) Subsections (1) and (4) are deemed to have come into force on January 1, 2020 and apply to loans made after December 31, 2019.
(6) Subsections (2) and (3) are deemed to have come into force on April 16, 2024.
10 (1) Paragraph 55(5)(c) of the Act is replaced by the following:
(c) the income earned or realized by a corporation for a period throughout which it was a private corporation is deemed to be its income for the period otherwise determined on the assumption that
(i) no amounts were deductible by the corporation under section 37.1 of this Act, as that section applies for taxation years that ended before 1995, or paragraph 20(1)(gg) of the Income Tax Act, chapter 148 of the Revised Statutes of Canada, 1952, and
(ii) any amount deductible under section 113 and included in the corporation’s capital dividend account (as defined in subsection 89(1)) under paragraph (h) of that definition was not included in the corporation’s income;
(2) Subsection (1) applies to taxation years that begin on or after April 7, 2022.
11 (1) Subparagraph 56(1)(a)(i) of the Act is amended by striking out “and” at the end of clause (F), by adding “and” at the end of clause (G) and by adding the following after clause (G):
(H) an amount paid or transferred from a registered pension plan, in respect of an unlocated individual, to an unclaimed property authority,
(2) Subsection (1) applies in respect of amounts paid or transferred to an unclaimed property authority after December 31, 2026.
12 (1) Subparagraph (ii) of the description of A in paragraph 64(a) of the Act is amended by striking out “and” at the end of clause (P) and by adding the following after clause (Q):
(R) where the taxpayer has a severe and prolonged impairment in physical functions, for the cost of an ergonomic work chair prescribed by a medical practitioner, including related amounts paid for an ergonomic assessment to a person engaged in the business of providing such services,
(S) where the taxpayer has a severe and prolonged impairment in physical functions, for the cost of a bed positioning device prescribed by a medical practitioner, including related amounts paid for an ergonomic assessment to a person engaged in the business of providing such services,
(T) where the taxpayer has a severe and prolonged impairment in physical functions, for the cost of a mobile computer cart prescribed by a medical practitioner,
(U) where the taxpayer has an impairment in physical or mental functions, for the cost of an alternative input device prescribed by a medical practitioner to allow the taxpayer to use a computer,
(V) where the taxpayer has an impairment in physical or mental functions, for the cost of a digital pen device prescribed by a medical practitioner to allow the taxpayer to use a computer,
(W) where the taxpayer has a vision impairment, for the cost of a navigation device for low vision that is prescribed by a medical practitioner,
(X) where the taxpayer has an impairment in mental functions, for the cost of memory or organizational aids that are prescribed by a medical practitioner, and
(Y) where the taxpayer is blind or profoundly deaf or has severe autism, severe diabetes, severe epilepsy, severe mental impairment or a severe and prolonged impairment that markedly restricts the use of the taxpayer’s arms or legs, for the cost of medical expenses described in subparagraphs 118.2(2)(l)(i) to (iv) if the references in those subparagraphs to the “patient” were read as references to the “taxpayer”,
(2) Subsection (1) applies to the 2024 and subsequent taxation years.
13 (1) The definition assistance in subsection 66(15) of the Act is replaced by the following:
- assistance
assistance means any amount, other than a prescribed amount or an excluded loan as defined in subsection 12(11), received or receivable at any time from a person or government, municipality or other public authority whether the amount is by way of a grant, subsidy, rebate, forgivable loan, deduction from royalty or tax, rebate of royalty or tax, investment allowance or any other form of assistance or benefit; (montant à titre d’aide)
(2) Subsection (1) is deemed to have come into force on January 1, 2020 and applies to loans made after December 31, 2019.
14 (1) Subsection 66.2(2) of the Act is amended by striking out “and” at the end of paragraph (c), by adding “and” at the end of paragraph (d) and by adding the following after paragraph (d):
(e) the amount determined by the formula
A(B − C)
where
- A
- is
(i) for taxation years that end before 2030, 15%,
(ii) for taxation years that begin before 2030 and end after 2029, the amount determined by the formula
0.15(I/J) + 0.075(K/J)
where
- I
- is the total of all reaccelerated Canadian development expenses incurred by the taxpayer before 2030 and in the taxation year,
- J
- is the total of all reaccelerated Canadian development expenses incurred by the taxpayer in the taxation year, and
- K
- is the total of all reaccelerated Canadian development expenses incurred by the taxpayer after 2029 and in the taxation year, and
(iii) for taxation years that begin after 2029, 7.5%,
- B
- is the total of all reaccelerated Canadian development expenses incurred by the taxpayer in the taxation year, and
- C
- is the amount determined by the formula
(D − E) − (F − G − H)
where
- D
- is the total of the amounts determined for E to O in the definition cumulative Canadian development expense in subsection (5) at the end of the taxation year,
- E
- is the total of the amounts determined for E to O in the definition cumulative Canadian development expense in subsection (5) at the beginning of the taxation year,
- F
- is the total of the amounts determined for A to D.1 in the definition cumulative Canadian development expense in subsection (5) at the end of the taxation year,
- G
- is the total of the amounts determined for A to D.1 in the definition cumulative Canadian development expense in subsection (5) at the end of the preceding taxation year, and
- H
- is the amount determined for B.
(2) Paragraph (b) of the definition accelerated Canadian development expense in subsection 66.2(5) of the Act is replaced by the following:
(b) is incurred after November 20, 2018 and before 2025, and
(3) Subsection 66.2(5) of the Act is amended by adding the following in alphabetical order:
- reaccelerated Canadian development expense
reaccelerated Canadian development expense, of a taxpayer, means any cost or expense incurred by the taxpayer during a taxation year if the cost or expense
(a) qualifies as a Canadian development expense at the time it is incurred, other than
(i) an expense in respect of which the taxpayer is a successor, within the meaning of subsection 66.7(4), and
(ii) a cost in respect of a Canadian resource property acquired by the taxpayer, or a partnership in which the taxpayer is a member, from a person or partnership with which the taxpayer does not deal at arm’s length,
(b) is incurred after 2024 and before 2034, other than expenses deemed to have been incurred on December 31, 2033 because of subsection 66(12.66), and
(c) if the Canadian development expense is deemed to be a Canadian development expense incurred by the taxpayer because of paragraph 66(12.63)(a), is an amount renounced under an agreement entered into after 2024; (frais d’aménagement au Canada réaccélérés)
(4) Subsections (1) to (3) are deemed to have come into force on January 1, 2025.
15 (1) Subsection 66.4(2) of the Act is amended by striking out “and” at the end of paragraph (b), by adding “and” at the end of paragraph (c) and by adding the following after paragraph (c):
(d) the amount determined by the formula
A(B − C)
where
- A
- is
(i) for taxation years that end before 2030, 5%,
(ii) for taxation years that begin before 2030 and end after 2029, the amount determined by the formula
0.05(I/J) + 0.025(K/J)
where
- I
- is the total of all reaccelerated Canadian oil and gas property expenses incurred by the taxpayer before 2030 and in the taxation year,
- J
- is the total of all reaccelerated Canadian oil and gas property expenses incurred by the taxpayer in the taxation year, and
- K
- is the total of all reaccelerated Canadian oil and gas property expenses incurred by the taxpayer after 2029 and in the taxation year, and
(iii) for taxation years that begin after 2029, 2.5%,
- B
- is the total of all reaccelerated Canadian oil and gas property expenses incurred by the taxpayer in the taxation year, and
- C
- is the amount determined by the formula
(D − E) − (F − G − H)
where
- D
- is the total of the amounts determined for E to J in the definition cumulative Canadian oil and gas property expense in subsection (5) at the end of the taxation year,
- E
- is the total of the amounts determined for E to J in the definition cumulative Canadian oil and gas property expense in subsection (5) at the beginning of the taxation year,
- F
- is the total of the amounts determined for A to D.1 in the definition cumulative Canadian oil and gas property expense in subsection (5) at the end of the taxation year,
- G
- is the total of the amounts determined for A to D.1 in the definition cumulative Canadian oil and gas property expense in subsection (5) at the end of the preceding taxation year, and
- H
- is the amount determined for B.
(2) Paragraph (b) of the definition accelerated Canadian oil and gas property expense in subsection 66.4(5) of the Act is replaced by the following:
(b) is incurred after November 20, 2018 and before 2025; (frais à l’égard de biens canadiens relatifs au pétrole et au gaz accélérés)
(3) Subsection 66.4(5) of the Act is amended by adding the following in alphabetical order:
- reaccelerated Canadian oil and gas property expense
reaccelerated Canadian oil and gas property expense, of a taxpayer, means any cost or expense incurred by the taxpayer during a taxation year, if the cost or expense
(a) qualifies as a Canadian oil and gas property expense at the time it is incurred, other than
(i) an expense in respect of which the taxpayer is a successor, within the meaning of subsection 66.7(5), and
(ii) a cost in respect of a Canadian resource property acquired by the taxpayer, or a partnership in which the taxpayer is a member, from a person or partnership with which the taxpayer does not deal at arm’s length, and
(b) is incurred after 2024 and before 2034; (frais à l’égard de biens canadiens relatifs au pétrole et au gaz réaccélérés)
(4) Subsections (1) to (3) are deemed to have come into force on January 1, 2025.
16 (1) Subclause 66.8(1)(a)(ii)(B)(I) of the Act is replaced by the following:
(I) the total of all amounts required by subsections 127(8), 127.44(11), 127.45(8), 127.48(12), 127.49(8) and 127.491(12) in respect of the partnership to be added in computing the investment tax credit, the CCUS tax credit (as defined in subsection 127.44(1)), the clean technology investment tax credit (as defined in subsection 127.45(1)), the clean hydrogen tax credit (as defined in subsection 127.48(1)), the CTM investment tax credit (as defined in subsection 127.49(1)) or the clean electricity investment tax credit (as defined in subsection 127.491(1)) of the taxpayer in respect of the fiscal period, and
(2) Subsection (1) is deemed to have come into force on April 16, 2024.
17 (1) Subparagraph 69(11)(a)(i) of the Act is replaced by the following:
(i) any deduction (other than a deduction under section 110.6, 110.61 or 110.62 in respect of a capital gain from a disposition of a share acquired by the taxpayer in an acquisition to which subsection 85(3) or 98(3) applied) in computing income, taxable income, taxable income earned in Canada or tax payable under this Act, or
(2) Subsection (1) is deemed to have come into force on January 1, 2024.
18 (1) Paragraphs 74.2(2)(a) and (b) of the Act are replaced by the following:
(a) for the purposes of sections 3 and 111, as they apply for the purposes of sections 110.6 to 110.62, such portion of the gain or loss as may reasonably be considered to relate to the disposition of a property by another person in the year shall be deemed to arise from the disposition of that property by the individual in the year; and
(b) for the purposes of sections 110.6 to 110.62, that property shall be deemed to have been disposed of by the individual on the day on which it was disposed of by the other person.
(2) Subsection (1) applies to the 2024 and subsequent taxation years.
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