Department of Finance Canada has published draft legislative proposals for consultation to implement a package of previously announced and technical tax measures, primarily through amendments to the Income Tax Act and related rules, alongside changes to the Global Minimum Tax Act. The package is framed as tightening anti-avoidance, clarifying the operation of existing regimes, and aligning tax credits and other measures with intended policy outcomes. Key proposals include clarifications to the qualified investment regime for registered plans, an expansion of an anti-avoidance rule for trust-to-trust transfers to capture indirect transfers, and rules to support the wind-down of fuel charge proceeds return mechanisms by providing that no Canada Carbon Rebate payments would be made for returns or adjustment requests filed after October 30, 2026. Other Budget 2025-related items include immediate expensing for certain manufacturing or processing buildings acquired on or after Budget Day and used for manufacturing or processing before 2030 with a subsequent four-year phase-out, measures to prevent deferral of corporate income tax on investment income through staggered year ends, refinements to the Canadian Exploration Expense definition around mineral resource quality testing, and clarification that certain foreign affiliate income of Canadian insurance companies supporting Canadian insurance risks is taxable in Canada. The draft legislation also makes technical changes linked to the 2024 Fall Economic Statement, including modifications to non-profit information reporting proposals and an expansion of the Clean Hydrogen investment tax credit to include methane pyrolysis as an eligible pathway from December 16, 2024, and proposes technical amendments to the Clean Hydrogen and Carbon Capture, Utilization, and Storage investment tax credits with stated application dates of March 28, 2023 and January 1, 2022, respectively, including permitting designation of specific geological formations under the CCUS credit. Additional elements cover a second package of hybrid mismatch amendments under OECD/G20 BEPS Action 2 and draft Global Minimum Tax Act “de-consolidation” amendments for certain private corporations controlling publicly listed groups, updated from a summer 2025 draft. Comments on the draft proposals are invited by February 27, 2026.
Department of Finance (Canada) 2026-01-29
Department of Finance Canada launches consultation on draft legislation implementing Budget 2025 measures and other technical tax changes
The Department of Finance Canada has released draft legislative proposals for consultation, aiming to implement tax measures through amendments to the Income Tax Act and Global Minimum Tax Act, focusing on anti-avoidance, tax credit alignment, and technical changes. Key elements include clarifications to investment regimes, anti-avoidance rules, and tax credits, with comments invited by February 27, 2026.