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Economic and Fiscal Update Implementation Act, 2021 (S.C. 2022, c. 5)

Assented to 2022-06-09

Economic and Fiscal Update Implementation Act, 2021

S.C. 2022, c. 5

Assented to 2022-06-09

An Act to implement certain provisions of the economic and fiscal update tabled in Parliament on December 14, 2021 and other measures

RECOMMENDATION

Her Excellency the Governor General recommends to the House of Commons the appropriation of public revenue under the circumstances, in the manner and for the purposes set out in a measure entitled “An Act to implement certain provisions of the economic and fiscal update tabled in Parliament on December 14, 2021 and other measures”.

SUMMARY

Part 1 amends the Income Tax Act and the Income Tax Regulations in order to

  • (a) introduce a new refundable tax credit for eligible businesses on qualifying ventilation expenses made to improve air quality;

  • (b) expand the travel component of the northern residents deduction by giving all northern residents the option to claim up to $1,200 in eligible travel expenses even if the individual has not received travel assistance from their employer;

  • (c) expand the School Supplies Tax Credit from 15% to 25% and expand the eligibility criteria to include electronic devices used by eligible educators; and

  • (d) introduce a new refundable tax credit to return fuel charge proceeds to farming businesses in backstop jurisdictions.

Part 2 enacts the Underused Housing Tax Act. This Act implements an annual tax of 1% on the value of vacant or underused residential property directly or indirectly owned by non-resident non-Canadians. It sets out rules for the purpose of establishing owners’ liability for the tax. It also sets out applicable reporting and filing requirements. Finally, to promote compliance with its provisions, this Act includes modern administration and enforcement provisions aligned with those found in other taxation statutes.

Part 3 provides for a six-year limitation or prescription period for the recovery of amounts owing with respect to a loan provided under the Canada Emergency Business Account program established by Export Development Canada.

Part 4 authorizes payments to be made out of the Consolidated Revenue Fund for the purpose of supporting ventilation improvement projects in schools.

Part 5 authorizes payments to be made out of the Consolidated Revenue Fund for the purpose of supporting coronavirus disease 2019 (COVID-19) proof-of-vaccination initiatives.

Part 6 authorizes the Minister of Health to make payments of up to $1.72 billion out of the Consolidated Revenue Fund in relation to coronavirus disease 2019 (COVID-19) tests. It also sets out reporting requirements for the Minister of Health.

Part 7 amends the Employment Insurance Act to specify the maximum number of weeks for which benefits may be paid in a benefit period to certain seasonal workers.

Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:

Short Title

Marginal note:Short title

 This Act may be cited as the Economic and Fiscal Update Implementation Act, 2021.

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

Amendments to the Act

  •  (1) Subsection 87(2) of the Income Tax Act is amended by adding the following after paragraph (g.7):

    • Marginal note:COVID-19 — air quality improvement tax credit

      (g.8) for the purposes of section 127.43, the new corporation is deemed to be the same corporation as, and a continuation of, each predecessor corporation;

  • (2) Subsection (1) is deemed to have come into force on September 1, 2021.

  •  (1) Paragraph 110.7(1)(a) of the Act is replaced by the following:

    • (a) the total of all amounts each of which is the amount, in respect of a particular period during the taxation year, determined by the formula

      A × B

      where

      A
      is the specified percentage for the particular area in which the taxpayer resided during the particular period, and
      B
      is the total trip costs to the taxpayer in respect of trips that begin during the particular period; and
  • (2) Subsection 110.7(3) of the Act is replaced by the following:

    • Marginal note:Restriction

      (3) The total of all amounts determined under paragraph (1)(a) for all taxpayers in a taxation year in respect of an individual shall not be in respect of more than two trips made by the individual that begin in the year (other than trips to obtain medical services that are not available in the locality in which the taxpayer resided).

    • Marginal note:Additional restrictions

      (3.1) For the purpose of paragraph (1)(a), an amount may only be included in the amount determined for B for a particular area for a taxation year if

      • (a) the amount is not otherwise deducted in computing the income for any taxation year of any individual (except by an employer under section 9 if it is included in an employee’s income);

      • (b) the amount is not included in determining an amount deducted under subsection 118.2(1) for any taxation year;

      • (c) the amount is in respect of trips made by the taxpayer or an eligible family member of the taxpayer that begin during the part of the year in which the taxpayer resided in the particular area; and

      • (d) neither the taxpayer nor an eligible family member of the taxpayer is at any time entitled to a reimbursement or any form of assistance (other than a reimbursement or assistance included in computing the income of the taxpayer or the eligible family member) in respect of trips to which paragraph (c) applies.

    • Marginal note:Additional restriction

      (3.2) If all amounts determined under paragraph 7304(2)(a) of the Income Tax Regulations are nil in respect of trips (beginning in the taxation year) made by an individual, the total of all amounts determined for B in paragraph (1)(a) in the taxation year for all taxpayers in respect of the individual must not exceed the standard amount for the individual for the taxation year.

    • Marginal note:Deemed standard amount

      (3.3) If an employer-provided travel benefit was claimed by a taxpayer in respect of an individual in respect of the taxation year, the standard amount for the individual is deemed to be nil for the taxation year.

  • (3) Section 110.7 of the Act is amended by adding the following after subsection (5):

    • Marginal note:Definitions

      (6) The following definitions apply in this section.

      eligible family member

      eligible family member of a taxpayer, at any time, means a member of the taxpayer’s household who is at that time

      • (a) the taxpayer’s spouse or common-law partner;

      • (b) a child of the taxpayer (including a child of the taxpayer’s spouse or common-law partner) under the age of 18; or

      • (c) another individual who is

        • (i) related to the taxpayer,

        • (ii) wholly dependent for support on the taxpayer, the taxpayer’s spouse or common-law partner, or both of them, and

        • (iii) except in the case of a parent or grandparent of the taxpayer, so dependent by reason of mental or physical infirmity. (membre de la famille admissible)

      employer-provided travel benefits

      employer-provided travel benefits, to a taxpayer in respect of a trip made by the taxpayer or their eligible family member, means the total amount of

      • (a) the value of travel assistance, if any, provided to the taxpayer in respect of the taxpayer’s employment in respect of travel expenses for the trip; and

      • (b) the amount, if any, received by the taxpayer in respect of the taxpayer’s employment in respect of travel expenses for the trip. (avantages relatifs aux voyages tirés de l’emploi)

      standard amount

      standard amount, for an individual for a taxation year and subject to subsection (3.3), means $1,200. (montant forfaitaire)

      trip cost

      trip cost has the meaning prescribed by regulation. (frais de voyage)

  • (4) Subsections (1) to (3) apply to the 2021 and subsequent taxation years.

  •  (1) Subparagraph (a)(ii) of the definition eligible supplies expense in subsection 122.9(1) of the Act is replaced by the following:

    • (ii) directly consumed or used in the performance of the duties of the eligible educator’s employment; and

  • (2) Subsection 122.9(2) of the Act is replaced by the following:

    • Marginal note:Deemed overpayment

      (2) An eligible educator who files a return of income for a taxation year and who makes a claim under this subsection is deemed to have paid, at the end of the year, on account of tax payable under this Part for the year, an amount equal to 25% of the least of

      • (a) $1,000;

      • (b) the total of all amounts each of which is an eligible supplies expense of the eligible educator for the year; and

      • (c) if the eligible educator fails to provide the certificate referred to in subsection (3) in respect of the year, as and when requested by the Minister, nil.

  • (3) Subsections (1) and (2) apply to the 2021 and subsequent taxation years.

  •  (1) The Act is amended by adding the following after section 127.41:

    Marginal note:Definitions

    • 127.42 (1) The following definitions apply in this section.

      designated province

      designated province means a province specified by the Minister of Finance for a calendar year. (province déterminée)

      eligible farming expenses

      eligible farming expenses, of a taxpayer for a designated province for a taxation year, means the amount determined by the formula

      A × B

      where

      A
      is
      • (a) nil, if the total of all amounts deducted in the year by the taxpayer in computing income under this Part from farming activities, excluding any deductions arising from inventory adjustments under section 28 and from transactions with persons that do not deal at arm’s length with the taxpayer, is less than $25,000, and

      • (b) in any other case, the total of all amounts deducted in the year by the taxpayer in computing income under this Part from farming activities, excluding any deductions arising from inventory adjustments under section 28 and from transactions with persons that do not deal at arm’s length with the taxpayer; and

      B
      is the taxpayer’s relevant proportion for the designated province for the taxation year. (dépenses agricoles admissibles)
      farming activities

      farming activities means a farming business, including or excluding activities prescribed by regulation. (activités agricoles)

      payment rate

      payment rate, for a calendar year for a designated province, means the rate specified by the Minister of Finance for the calendar year for the designated province. (taux de paiement)

      relevant proportion

      relevant proportion, of eligible farming expenses of a taxpayer for a designated province for a taxation year, means

      • (a) if the taxpayer is an individual, the proportion determined by the formula

        A ÷ B

        where

        A
        is the individual’s income for the year from farming activities that is deemed to have been earned in the year in the designated province in accordance with Part XXVI of the Income Tax Regulations, and
        B
        is the whole of the individual’s income from farming activities for the year;
      • (b) if the taxpayer is a corporation, the proportion determined by the formula

        C ÷ D

        where

        C
        is the corporation’s taxable income that is deemed to have been earned in the year in the designated province in accordance with Part IV of the Income Tax Regulations, and
        D
        is the whole of the corporation’s taxable income for the year; and
      • (c) if the taxpayer is a partnership, the proportion determined by the formula

        E ÷ F

        where

        E
        is the partnership’s income for the fiscal period of the partnership from farming activities that would be deemed to have been earned in the year in the designated province, computed in accordance with Part XXVI of the Income Tax Regulations as if the partnership were an individual, and
        F
        is the whole of the partnership’s income from farming activities for the fiscal period of the partnership. (proportion pertinente)
    • Marginal note:Deemed payment on account of tax

      (2) A taxpayer (other than a partnership) that files a prescribed form containing prescribed information with their return of income for a taxation year is deemed, on their balance-due day for the year, to have paid on account of their tax payable under this Part for the year, the total of all amounts each of which is an amount, for each designated province and for each calendar year a portion of which falls within the taxation year, determined by the formula

      (A × B) × (C ÷ D)

      where

      A
      is the payment rate for the calendar year for the designated province;
      B
      is the taxpayer’s eligible farming expenses for the designated province for the taxation year;
      C
      is the number of days within the taxation year that fall within the calendar year; and
      D
      is the number of days in the taxation year.
    • Marginal note:Deemed payment on account of tax — partnership

      (3) If a taxpayer (other than a partnership) is a member of a partnership at the end of a fiscal period of the partnership that ends in a taxation year of the taxpayer — and the partnership files a prescribed form containing prescribed information for that fiscal period and the taxpayer files a prescribed form containing prescribed information with its return of income for the taxation year — the taxpayer is deemed, on the taxpayer’s balance-due day for the taxation year, to have paid on account of their tax payable under this Part for the year, the total of all amounts each of which is an amount, for each designated province and for each calendar year a portion of which falls within the partnership’s fiscal period, determined by the formula

      (A × B) × (C ÷ D) × E

      where

      A
      is the payment rate for the calendar year for the designated province;
      B
      is the partnership’s eligible farming expenses for the designated province for the fiscal period;
      C
      is the number of days within the fiscal period that fall within the calendar year;
      D
      is the number of days in the fiscal period; and
      E
      is the specified proportion of the taxpayer for the fiscal period.
    • Marginal note:Partnerships

      (4) For the purposes of this section,

      • (a) a taxpayer includes a partnership;

      • (b) the fiscal period of a partnership is deemed to be its taxation year; and

      • (c) if a taxpayer is a member of a particular partnership that is a member of another partnership, the taxpayer is deemed

        • (i) to be a member of the other partnership, and

        • (ii) to have a specified proportion in the other partnership for a fiscal period of the other partnership equal to its specified proportion of the particular partnership — for the last fiscal period of the particular partnership that ends in the fiscal period of the other partnership — multiplied by the particular partnership’s specified proportion of the other partnership for the fiscal period of the other partnership.

    • Marginal note:Authority to specify

      (5) For the purposes of this section, the Minister of Finance may specify for a calendar year

      • (a) the designated provinces; and

      • (b) the payment rate for a designated province.

    • Marginal note:Payment rate not specified

      (6) For the purposes of this section, if the Minister of Finance does not specify the payment rate for a designated province under paragraph (5)(b), the payment rate is deemed to be nil.

    • Marginal note:When assistance received

      (7) For the purposes of this Act, and for greater certainty, an amount that a taxpayer is deemed under subsection (2) or (3) to have paid for a taxation year is assistance received by the taxpayer from a government immediately before the end of the year.

    • Marginal note:Relevant proportion — special rule

      (8) For purposes of determining the relevant proportion of eligible farming expenses of a taxpayer for a designated province in a taxation year,

      • (a) if the income of an individual or partnership from farming activities for the year is nil, the income for the year from farming activities that is deemed to have been earned in the year in the designated province shall be computed in accordance with Part XXVI of the Income Tax Regulations as if the individual or partnership earned $1,000,000 of income from farming activities; and

      • (b) if the taxable income of a corporation is nil, the corporation’s taxable income that is deemed to have been earned in the year in the designated province shall be computed in accordance with Part IV of the Income Tax Regulations as if the corporation had taxable income for the year in the amount of $1,000,000.

  • (2) Subsection (1) applies to the 2021 and subsequent taxation years.

  •  (1) The Act is amended by adding the following after section 127.42:

    COVID-19 – Air Quality Improvement Tax Credit

    Marginal note:Definitions

    • 127.43 (1) The following definitions apply in this section.

      assistance

      assistance means an amount, other than a prescribed amount or an amount deemed under subsection (2) to have been paid, that would be included under paragraph 12(1)(x) in computing an eligible entity’s income for any taxation year if that paragraph were read without reference to subparagraphs 12(1)(x)(v) to (vii). (montant d’aide)

      eligible entity

      eligible entity, for a taxation year, means

      • (a) a qualifying corporation for the taxation year;

      • (b) an individual other than a trust; or

      • (c) a partnership. (entité déterminée)

      qualifying corporation

      qualifying corporation, for a particular taxation year, means a particular corporation that meets the following conditions:

      • (a) it is a Canadian-controlled private corporation or would be a Canadian-controlled private corporation absent the application of subsection 136(1); and

      • (b) it is the case that

        $15,000,000 > A + B

        where

        A
        is the particular corporation’s taxable capital employed in Canada (in this formula, within the meaning assigned by section 181.2 or 181.3) for its immediately preceding taxation year, and
        B
        is the total of all amounts, each of which is the taxable capital employed in Canada of a corporation that is associated in the particular taxation year with the particular corporation for the associated corporation’s last taxation year that ended before the beginning of the particular taxation year. (société admissible)
      qualifying expenditure

      qualifying expenditure means an outlay or expense prescribed by regulation that is made or incurred by an eligible entity during the qualifying period in the course of the eligible entity’s ordinary commercial activities. (dépense admissible)

      qualifying location

      qualifying location, of an eligible entity, means real or immovable property (other than property that is a self-contained domestic establishment, or part of such a self-contained domestic establishment, the land subjacent to the self-contained domestic establishment and such portion of any immediately contiguous land as can reasonably be regarded as contributing to the use and enjoyment of the self-contained domestic establishment as a residence) in Canada used by the eligible entity primarily in the course of its ordinary commercial activities. (emplacement admissible)

      qualifying period

      qualifying period means the period that begins on September 1, 2021 and ends on December 31, 2022. (période d’admissibilité)

      total per location expense

      total per location expense, for a qualifying location of an eligible entity for a taxation year, means the lesser of

      • (a) the amount determined by the formula

        A − B

        where

        A
        is the total of all amounts, each of which is a qualifying expenditure of the eligible entity made or incurred in the taxation year in respect of the qualifying location (or, for the first taxation year that ends after 2021, the qualifying expenditures made or incurred in respect of the qualifying location from the start of the qualifying period to the end of that first taxation year), and
        B
        is the total of all amounts, each of which is an amount of assistance that
        • (i) the eligible entity has received, is entitled to receive or can reasonably be expected to receive, in respect of amounts described in A, and

        • (ii) has not been repaid before the end of the taxation year pursuant to a legal obligation to do so; and

      • (b) the amount determined by the formula

        $10,000 − C

        where

        C
        is the total of all amounts, each of which is a qualifying expenditure in respect of the qualifying location and
        • (i) is a qualifying expenditure of the eligible entity, in respect of which an amount under subsection (2) or (3) is deemed to have been paid in a prior taxation year, or

        • (ii) is a qualifying expenditure of another eligible entity that is affiliated during the qualifying period with the eligible entity, in respect of which an amount under subsection (2) or (3) is deemed to have been paid in any taxation year. (dépense totale par emplacement)

      total ventilation expense

      total ventilation expense, of an eligible entity for a taxation year, means the lesser of

      • (a) the total of all amounts, each of which is a total per location expense for a qualifying location of the eligible entity for the taxation year; and

      • (b) the amount determined by the formula

        $50,000 × X − Y

        where

        X
        is
        • (i) 100%, unless the eligible entity is affiliated at any time in the qualifying period with one or more other eligible entities that are deemed to have paid an amount under subsection (2) in respect of the qualifying period, or, in the case of a partnership, has a member that is deemed to have paid an amount under subsection (3) in respect of the partnership,

        • (ii) a percentage assigned to the eligible entity under an agreement, if

          • (A) the agreement is entered into by the eligible entity and each eligible entity that

            • (I) is affiliated with the eligible entity in the qualifying period, and

            • (II) is deemed to have paid an amount under subsection (2) in respect of the qualifying period, or, in the case of a partnership, has a member that is deemed to have paid an amount under subsection (3) in respect of the partnership,

          • (B) the agreement is filed in prescribed form and manner with the Minister by the eligible entity and each eligible entity referred to in clause (A),

          • (C) the agreement assigns, for the purposes of this definition, a percentage in respect of each eligible entity referred to in clause (A), and

          • (D) the total of all the percentages assigned under the agreement does not exceed 100%, and

        • (iii) in any other case, nil, and

        Y
        is the total of all amounts, each of which is the total ventilation expense of the eligible entity for a prior taxation year in respect of which an amount is deemed to have been paid under subsection (2) or (3). (dépense totale de ventilation)
    • Marginal note:Refundable tax credit

      (2) An eligible entity (other than a partnership) that files a prescribed form containing prescribed information with its return of income for a taxation year that ends after 2021 is deemed to have, on its balance-due day for the year, paid on account of its tax payable under this Part for the year an amount equal to 25% of its total ventilation expense for the taxation year.

    • Marginal note:Refundable tax credit — partnership

      (3) If an eligible entity (other than a partnership) is a member of a partnership at the end of a fiscal period of the partnership that ends after 2021 and that ends in a taxation year of the eligible entity — and the partnership files an information return in prescribed form containing prescribed information for that fiscal period and the eligible entity files a prescribed form containing prescribed information with its return of income for the taxation year — then the eligible entity is deemed to have paid, on the eligible entity’s balance-due day for the taxation year on account of the eligible entity’s tax payable under this Part for the taxation year, an amount determined by the formula

      0.25 × A × B

      where

      A
      is the total ventilation expense of the partnership for the fiscal period; and
      B
      is the specified proportion of the eligible entity for the fiscal period of the partnership.
    • Marginal note:Partnerships

      (4) For the purposes of this section,

      • (a) the fiscal period of a partnership is deemed to be its taxation year; and

      • (b) if an eligible entity is a member of a particular partnership that is a member of another partnership, the eligible entity is deemed

        • (i) to be a member of the other partnership, and

        • (ii) to have a specified proportion in the other partnership for a fiscal period of the other partnership equal to its specified proportion of the particular partnership — for the last fiscal period of the particular partnership that ends in the fiscal period of the other partnership — multiplied by the particular partnership’s specified proportion of the other partnership for the fiscal period of the other partnership.

    • Marginal note:When assistance received

      (5) For the purposes of this Act other than this section, and for greater certainty, an amount that an eligible entity is deemed under subsection (2) or (3) to have paid is assistance received by it from a government immediately before the end of the taxation year to which it relates.

    • Marginal note:Affiliated entities

      (6) For the purposes of this section, if two eligible entities are affiliated with the same eligible entity, they are deemed to be affiliated with each other.

  • (2) Subsection (1) is deemed to have come into force on September 1, 2021.

 
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