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2024 Federal Fall Economic Statement Highlights

The federal government released the 2024 Fall Economic Statement on December 16, 2024. It is uncertain whether the changes announced in this Statement will be enacted because Canada has a minority federal government and needs support of opposition political parties to pass into law.

Here is a summary of the key highlights:

  • Corporate tax;
    • SR&ED;
      • Enhanced 35% tax credit to $4.5 million, up from $3 million, for CCPCs
      • More favorable taxable capital phase-out thresholds between $15 million and $75 million (up from $10 million to $50 million).
      • Allow certain Canadian public corporations to qualify enhanced 35% tax credit on expenditures up to $4.5 million and reduce the enhanced credit expenditure limit where the average gross revenue of the corporation or consolidated corporate group is between $15 million and $75 million over the three preceding years.
      • Allow CCPCs to elect to have expenditure limit for the enhanced credit determined based on the same gross revenue phase-out structure proposed for Canadian public corporations.
      • Allow business to claim capital expenditures for property acquired on or after December 16, 2024.
    • Accelerated investment incentive;
      • Reinstates the accelerated investment incentive for qualifying capital property acquired on or after January 1, 2025 that becomes available for use before 2030, and is phased out for property that becomes available for use between 2030 and 2033.
    • Immediate expensing;
      • Reinstates measures for certain qualifying property acquired on or after January 1, 2025 and becomes available for use before 2030, and is phased out for property that becomes available for use between 2030 and 2033;
        • CCA Class 53, manufacturing or processing machinery and equipment.
        • CCA Class 43.1 and 43.2 for property acquired before 2025, clean energy generation and energy conservation equipment.
        • CCA Class 54, 55 and 56, zero-emission vehicles.
  • Personal tax;
    • Capital gains deferral on small business share rollovers;
      • Enhances the capital gains rollover, effective for qualifying dispositions that occur on or after January 1, 2025
        • Increase the period to acquire replacement Eligible Small Business Corporation (ESBC) shares to encompass the year of disposition and the entire calendar year after the year of disposition (from 120 days).
        • Increase the limit to the carrying value of the assets of the ESB and related corporations to $100 million (from $50 million).
        • Provide that an ESBC share would include both common and preferred shares.
    • Canada disability benefit, effective for the 2025 and subsequent taxation years;
      • Exempts amounts received under the Canada disability benefit from income under the Income Tax Act.
  • Non-profit organizations;
    • Reporting by NPOs, effective for the 2026 and subsequent taxation years;
      • Requires NPOs with total gross revenues over $50,000 to file the annual NPO information return.
      • Requires NPOs that do not meet the NPO information return filing thresholds to file a new, short-form return with basic information about the organization.
  • Clean economy;
    • Canada carbon rebate for small business;
      • Adjusts the rebate to extend eligibility to cooperative corporations and credit unions.
      • Change the calculation for corporations with employees in multiple provinces and phase out the payment amount once the number of employees across Canada is between 300 and 500.
    • Clean Electricity investment tax credit;
      • Provides that any financing provided by the Canada Infrastructure Bank would not reduce the cost of eligible property for the purpose of computing the credit for eligible property that is acquired and becomes available for use on or after December 16, 2024.
    • EV supply chain investment tax credit;
      • Announces the design details of this credit, including outline eligible corporations, eligible property, investment requirements, recapture rules and phase-out details.
    • Clean hydrogen investment tax credit;
      • Expands the credit to include methane pyrolysis as an eligible hydrogen production pathway, applicable to property that is acquired and becomes available for use in an eligible project on or after December 16, 2024.
  • Fiscal plan;
    • Deficit of $61.9 billion for 2023-2024.
    • Anticipates a deficit of $48.3 billion for 2024-2025, deficit of $42.2 billion for 2025-2026, deficit of $31 billion for 2026-2027.
  • Other;
    • CRA funding to address tax evasion;
      • Provides $451.5 million to the CRA over five years starting in 2025-2026 to conclude audits of emergency business subsidy amounts and close major tax compliance gaps.
    • Tariffs, trade restrictions and forced labour.

Disclaimer

This blog post has been drafted for communication purposes only and should not be construed as an opinion issued. If you have any questions or concerns, please feel free to contact us.

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