On February 11, 2022, CRA updated the “What’s new for corporations?” page.
The following comment was included in respect of the Budget 2021 proposal to allow immediate expensing of many capital asset purchases by CCPCs:
“As of December 31, 2021, the legislation had not been tabled. The legislation must be tabled in the House of Commons before you can include any claims with your T2 Return.”
Supporting draft legislation was released for consultation on February 4, 2022.
On February 9, 2022 the Federal government announced that the enhanced access to the Local Lockdown Program (LLP) and the Canada Worker Lockdown Benefit (CWLB) (announced on December 22, 2021) would be extended by one month, to March 12, 2022 as follows:
Local Lockdown Program: Eligibility would continue to include employers subject to capacity-limiting restrictions of 50% or more; and the current-month revenue decline threshold requirement would remain at 25%.
Canada Worker Lockdown Benefit: Eligibility would continue to include workers in regions where capacity-limiting restrictions of 50% or more are in place.
Interview with Neil Mather of MatherLaw.com- When CRA Calls About a Client’s Debt.
Source:
Recorded November 3, 2021
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On the evening of February 4, 2022, the Department of Finance released draft legislation which included the following:
immediate expensing of up to $1.5 million of eligible investments by CCPCs, sole proprietors and certain partnerships Expansion of the Eligibility for Tax Support for Business Investments. In the previous announcement, this measure only applied to CCPCs). CRA previously stated they would begin allowing claims “once supporting legislation has been introduced.”
reduce the general corporate and small business income tax rates by 50% for businesses that manufacture zero-emission technologies;
expand access to the accelerated capital cost allowance for certain clean energy equipment and implement certain restrictions;
improve access to the Disability Tax Credit;
include postdoctoral fellowship income in “earned income” for Registered Retirement Savings Plan (RRSP) purposes;
enhance Canada’s income tax mandatory disclosure rules, as further detailed in the backgrounders Mandatory Disclosure Rules and Income Tax Mandatory Disclosure Rules Consultation: Sample Notifiable Transactions;
increase flexibility for plan administrators of defined contribution pension plans to correct for both under-contributions and over-contributions;
improve the fairness of certain taxes applicable to registered investments;
improve the administration of, and compliance with, electronic filing and certification of tax and information returns;
temporarily extend certain timelines for the Canadian Film or Video Production Tax Credit (CPTC) and the Film or Video Production Services Tax Credit (PSTC);
combat the avoidance of tax debts through complex transactions that attempt to circumvent the tax debt collection avoidance rule;
enhance CRA authority to conduct audits and undertake other compliance activities; and
limit the amount of interest and other financing expenses that businesses may deduct for income tax purposes based on a proportion of earnings.
update rules that address tax planning relating to allocations to redeeming fund unit holders in the mutual fund industry.
specify that crypto asset mining would generally not be considered a “supply” for GST/HST purposes. This would mean that the GST/HST would not apply to the provision of crypto asset mining and input tax credits would not be available to the person providing the mining.
Submissions on the following measures should be received by April 5, 2022:
taxes applicable to registered investments;
mandatory disclosure rules;
avoidance of tax debts;
audit authorities;
reporting requirements for trusts;
mutual funds: allocation to redeemers; and
crypto asset mining.
Submissions specifically relating to the interest deductibility limitation measure will be accepted until May 5, 2022.
Submissions on all other measures should be received by March 7, 2022.
Supporting sources:
On February 3, 2022, CRA updated their “What’s new for corporations?” web page. Some items of interest include:
Penalties associated with the proposed changes to the mandatory disclosure rules would apply to transactions that occur as of the date of royal assent. Note that these rules have not yet been included in draft legislation.
The default method of correspondence for businesses that use CRA's My Business Account portal will be changed to electronic as of the date of royal assent.
This phrase “As of June 29, 2021, electronic signatures are accepted for the T183CORP, Information Return for Corporations Filing Electronically.” was changed to “As of the date of royal assent, signatures may be electronic on Form T183CORP, Information Return for Corporations Filing Electronically.”
Full CCA claims for many newly purchased assets, as proposed in Budget 2021, will only be permitted once supporting legislation is introduced. As of December 31, 2021, no such legislation has been tabled.
Commentary has been added in respect of “Interest deductibility limitations”, “Hybrid mismatch arrangements” and “Employee stock option – Employer deduction for non-qualified securities”.