On January 6, 2025, it was announced that Governor General Mary Simon granted Prime Minister Justin Trudeau’s request to prorogue (or suspend) Parliament until March 24, 2025, bringing the first session of the 44th Parliament to an end. It is looking more and more likely that a Federal Election will be triggered shortly after the House of Commons reconvenes. This puts tax measures previously announced by the current Government that have not yet received Royal Assent in jeopardy.

Tax measures that may never become law

Prior to the prorogation, there were no government bills amending the Income Tax Act (“ITA”) tabled in Parliament. Notwithstanding the foregoing, tax measures previously announced by the current Government may be impacted should a Federal Election be triggered once Parliament resumes in March. Previously announced income tax measures, including those announced in Budget 2024, which have not yet become law and are potentially affected include:

    • A Notice of Ways and Means Motion was tabled in Parliament on September 23, 2024 (the “NWMM”). However an order of the day for consideration was never designated and a bill was never introduced in Parliament.
    • The Canada Revenue Agency has recently confirmed that notwithstanding the prorogation, it will be administering the changes to the capital gains inclusion rate effective June 25, 2024, based on the proposals included in the NWMM tabled September 23, 2024. This is consistent with long-standing convention that tax proposals are effective as soon as the NWMM is tabled in the House of Commons.
  • The proposed increase to the lifetime capital gains exemption for a disposition of “qualified small business corporation shares” or “qualified farm or fishing property” to $1.25 million of eligible capital gains.
  • The introduction of the new Canadian Entrepreneurs’ Incentive, which proposed to reduce the capital gains inclusion rate to one-half of the prevailing inclusion rate at the time of disposition, up to a lifetime maximum of $2 million of eligible capital gains.
  • The Clean Electricity Investment Tax Credit, the EV Supply Chain Investment Tax Credit, and various expansions for eligibility of other Clean Economy Investment Tax Credits.
  • Accelerated Capital Cost Allowance for certain classes, such a purpose-built rental housing.
  • The repeal of the exception to the debt forgiveness rules and the loss restriction rule that applies to bankrupt corporations.
  • Non-taxability of the Canada carbon rebate for CCPCs.
  • Other measures and technical amendments that affect corporations, trusts, and individuals.

Recently-announced tax measures that are already law

Previously announced measures that have already received Royal Assent include:

  • The new intergenerational business transfer framework in section 84.1.
  • Changes to the alternative minimum tax (except some subsequently-announced further amendments).
  • The introduction of employee ownership trusts and the new $10 million income tax exemption on a sale by an individual to an employee ownership trust (excepting proposed draft amendments released August 2024).
  • Changes to the general anti-avoidance rule.
  • The introduction of specific anti-avoidance rules in relation to “substantive CCPCs”. (excepting proposed draft amendments released August 2024).
  • The “excessive interest and financing expenses limitation” (“EIFEL”) rules (excepting proposed draft amendments released August 2024).

How we can help

The experienced members of the Miller Thomson LLP Corporate Tax group are here to help support you through this uncertain tax landscape. Contact us today to discuss how this latest political development affects you.