Government consults Canadians on Budget 2023 measures to grow the clean economy, close tax loopholes, and deliver tax relief for Canadians

Update - September 29, 2023:
Labour Requirements Related for Investment Tax Credits: To allow for additional due diligence as the Investment Tax Credits for Clean Technology, Clean Hydrogen, Clean Electricity, and Carbon Capture, Utilization, and Storage are finalized, the effective date for the labour requirements will be the date that enabling legislation for these labour force requirements is first tabled.

August 4, 2023 - Ottawa, Ontario - Department of Finance Canada

The Government of Canada is today moving forward with consultations to advance key budget priorities to grow the clean economy and ensure tax fairness for Canadians and Canadian businesses. These consultations advance key components of the government’s clean economy plan to create new opportunities for Canadian workers today and for generations to come. The government is also consulting on ways to close tax loopholes, including those used by the wealthiest and multinational companies, and deliver tax relief for Canadian workers and businesses.

Canadians are invited to share their views and feedback on draft legislative proposals for various measures as the government works towards legislative implementation in the coming months.

The Department of Finance Canada is consulting Canadians on:

Measures to Grow Canada’s Clean Economy

• The Carbon Capture, Utilization and Storage (CCUS) Investment Tax Credit;
• The Clean Technology Investment Tax Credit;
• Labour Requirements Related to Certain Investment Tax Credits;
• Enhancing the Reduced Tax Rates for Zero-Emission Technology Manufacturers; and,
• Flow-Through Shares and the Critical Mineral Exploration Tax Credit – Lithium from Brines.

Measures to Deliver Tax Relief for Canadian Workers and Businesses

• Employee Ownership Trusts;
• Registered Compensation Arrangements;
• Strengthening the Intergenerational Business Transfer Framework; and,
• The Income Tax and GST/HST Treatment of Credit Unions.

Measures to Close Tax Loopholes

• The Alternative Minimum Tax for High-Income Individuals;
• A Tax on Repurchases of Equity, including share buybacks; and,
• Modernizing the General Anti-Avoidance Rule.

Measures to Ensure Tax Fairness

• Global Minimum Tax (Pillar Two): the draft legislation being released today will be updated as necessary to reflect elements of the administrative guidance (including on the treatment of transferable and other tax credits) released this summer by the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting not already included in legislative proposals; and,
• Digital Services Tax: to ensure tax fairness for Canadian businesses competing in the global economy and in the absence of any firm and binding multilateral timeline to implement Pillar One, the government is publishing revised draft legislation, first released for comment in December 2021.

Sales and Excise Tax Measures

• Technical amendments to Goods and Services Tax / Harmonized Sales Tax (GST/HST) rules for financial institutions;
• Enhancements to the vaping product taxation framework; and,
• Tax-exempt sales of motive fuels for export.

Tax Improvements and Other Tax Measures

• Proposed amendments to implement technical tax amendments in order to improve the certainty and integrity of the tax system.

Previously Announced Measures

• Excessive Interest and Financing Expenses Limitations (EIFEL);
• Extending the quarterly duty remittance option to all licensed cannabis producers; and,
• Revised Luxury Tax draft regulations to provide greater clarity on the tax treatment of luxury items.

The Government of Canada invites Canadians and stakeholders, including Indigenous governments, organizations and associations, to share their feedback on these proposals by emailing Consultation-Legislation@fin.gc.ca. 

Submissions for all draft legislative proposals should be submitted by September 8, 2023, except for submissions regarding the Global Minimum Tax (Pillar Two), which will remain open until September 29, 2023. References to "Announcement Date" in all draft proposals and explanatory notes refer to today’s release date.

The government will also soon release details on the Clean Hydrogen Investment Tax Credit, recognizing the importance of finalizing design details and introducing legislation as quickly as possible. The government intends for the cleanest forms of blue hydrogen (hydrogen produced from natural gas where emissions are abated using CCUS) to be eligible for the investment tax credit, which would include hydrogen produced using clean powered autothermal reforming with a high rate of carbon capture.

In addition, the government is continuing to invite stakeholder feedback regarding the Substantive Canadian-Controlled Private Corporation (CCPC) proposal announced in Budget 2022. This proposal would amend the Income Tax Act to apply the same relevant tax factor in respect of certain amounts earned and distributed by foreign affiliates of individuals, CCPCs, and substantive CCPCs for taxation years beginning on or after April 7, 2022.