Budget 2025 Implementation Act, No. 2

Part 1 implements certain measures in respect of the Income Tax Act and the Income Tax Regulations by (a) providing temporary immediate expensing for eligible manufacturing or processing buildings; (b) delivering automatic federal benefits for lower-income individuals; (c) expanding the anti-avoidance rule for direct trust to-trust transfers to include indirect transfers of trust property to other trusts; (d) limiting the deferral of tax on investment income resulting from the use of tiered corporate structures with mismatched year ends; (e) clarifying the expenses that qualify as Canadian exploration expenses; (f) implementing the Crypto-Asset Reporting Framework; (g) removing bankrupt corporations, trusts and partnerships from the exception to the debt forgiveness rules; (h) introducing a supplementary rule to strengthen the tax debt anti-avoidance rule; (i) expanding the clean hydrogen investment tax credit to include hydrogen produced from methane pyrolysis as an eligible production pathway; (j) enhancing the efficiency and effectiveness of information gathering during tax audits; (k) providing that no Canada Carbon Rebate payments would be made in respect of tax returns, or adjustment requests, filed after October 30, 2026; (l) simplifying, streamlining and harmonizing the qualified investment rules; and (m) making a number of technical amendments, including to correct inconsistencies and to better align the law with its intended policy objectives. It also amends the Excise Tax Act, in relation to certain measures in respect of the Income Tax Act, and the Income Tax Conventions Implementation Act, 1996, which suspends the operation of the Canada-Russia Income Tax Agreement. Finally, it amends the Air Travellers Security Charge Act, the Excise Act, 2001 and the Select Luxury Items Tax Act in relation to certain measures in respect of the Income Tax Act. Part 2 amends the Global Minimum Tax Act to, among other things, implement the UTPR that subjects the Canadian constituent entities of certain MNE groups to top-up tax in respect of the low-taxed profits of constituent entities of those MNE groups not already subject to an IIR or qualified domestic minimum top-up tax, implement certain aspects of the administrative guidance in respect of the GloBE Model Rules approved by the Inclusive Framework and published by the OECD and implement a number of technical amendments to correct mistakes or inconsistencies and to better align that Act with its intended policy objectives. This Part also makes amendments to the Access to Information Act, the Income Tax Conventions Interpretation Act and the Tax Court of Canada Act. Part 3 amends the Excise Tax Act, the Excise Act, the Excise Act, 2001 and other related texts to implement various measures. Division 1 of Part 3 implements certain measures in respect of the Excise Tax Act and related texts by (a) clarifying the tax treatment of federally regulated credit unions for Goods and Services Tax/Harmonized Sales Tax (GST/HST) purposes; (b) extending the application of the special GST/HST rules for certain investment plans to first home savings accounts; (c) clarifying the application of the imported supply rules to financial institutions in respect of insurance policies or loans relating to persons resident in, or property located in, Canada; (d) clarifying the GST/HST treatment of certain services supplied by the Canadian Payments Association or any of its members as a consequence of a recent amendment to the Canadian Payments Act; (e) ensuring that special GST/HST rules for financial institutions apply correctly to certain small investment plans, master pension entities, insurers that issue only annuities and sureties of performance bonds; (f) making technical corrections to the input tax credit rules respecting the change in use of property following a sale of a business and to the GST/HST rules for financial institutions relating to mergers of investment plans; (g) ensuring that the GST/HST applies properly to Lloyd’s Insurance; (h) clarifying, in respect of financial institutions that do business in an HST province and at least one other province, filing requirements and rules related to the recovery of embedded GST/HST amounts; (i) providing a six-month period, following the death of an individual who is a GST/HST registrant, during which no return of the individual or their estate is required to be filed; (j) ensuring that a GST/HST reporting election between a supplier and its agent continues to apply despite the amalgamation, merger or wind-up of either party; (k) authorizing the Canada Revenue Agency to share information with international tax authorities with which Canada has an information-sharing agreement, in a manner consistent with the Income Tax Act; and (l) making a number of technical amendments to correct inconsistencies and to better align the law with its intended policy objectives. Division 2 of Part 3 implements certain measures in respect of the Excise Act, the Excise Act, 2001 and other related texts by (a) making technical corrections in respect of the computation of the additional excise duty on cigars and the computation of negative amounts generated by statutory formulas; (b) clarifying the tax treatment of certain cannabis and vaping products that are unaccounted for or that are taken for use; (c) implementing a new limit in respect of packaged raw leaf tobacco for importation for personal use and making consequential amendments to ensure the proper enforcement of the new limit; (d) allowing the Canada Revenue Agency to consider and grant relief to brewers in certain circumstances; (e) extending the maximum validity period for certain licences from two years to three years; and (f) authorizing the Canada Revenue Agency to share information with international tax authorities with which Canada has an information-sharing agreement, in a manner consistent with the Income Tax Act. Part 4 enacts an Act and amends several Acts in order to implement various measures. Division 1 of Part 4 amends the Trust and Loan Companies Act, the Bank Act and the Insurance Companies Act to prohibit financial institutions from issuing documents in bearer form and provide for the replacement of documents that are currently in bearer form. Division 2 of Part 4 amends the Trust and Loan Companies Act, the Bank Act and the Insurance Companies Act to provide that no action lies against His Majesty in right of Canada and federal government officials for any acts or omissions made in good faith under those Acts. Division 3 of Part 4 amends the Bank Act to require an institution to offer or sell deposit products in a non-discriminatory manner in certain circumstances. Division 4 of Part 4 amends the Financial Administration Act to provide the Governor in Council with authority to make regulations with respect to the conditions under which contracts may be entered into by His Majesty or a Crown corporation. The Division also amends the Department of Public Works and Government Services Act to provide the Governor in Council with authority to make regulations respecting the complaints that may be reviewed by the Procurement Ombudsman and the persons who may file a complaint. The Division also makes a related amendment to the National Capital Act. Division 5 of Part 4 increases the maximum amounts for accessing the Tax Court of Canada’s informal procedure for appeals under the Income Tax Act and Part IX of the Excise Tax Act. Division 6 of Part 4 amends Schedule II to the Access to Information Act to prohibit the disclosure of confidential information obtained under the Retail Payment Activities Act or prepared from information obtained under that Act. Division 7 of Part 4 amends the National Housing Act to increase the total of Canada Mortgage and Housing Corporation outstanding guarantees that are in force. The Division also amends the Protection of Residential Mortgage or Hypothecary Insurance Act to increase the limit for loans that are insured under that Act. Division 8 of Part 4 amends the Bankruptcy and Insolvency Act to provide the Superintendent of Bankruptcy with the power to request various orders from the court if an unlicensed person acts or represents itself as a licensed trustee, and if a person solicits from another person insolvency filings under that Act or makes representations that are false or misleading in a material respect in relation to bankruptcy and insolvency. The Division also increases the maximum fines for certain offences under that Act. Division 9 of Part 4 amends the Canada Labour Code to, among other things, prohibit non-compete clauses and other employment-related restrictions, except in certain circumstances. Division 10 of Part 4 amends the Canadian Human Rights Act to eliminate the position of Deputy Chief Commissioner of the Canadian Human Rights Commission and to provide that the person holding that office is deemed to have been appointed as Chief Commissioner. Division 11 of Part 4 amends the International Development Research Centre Act to, among other things, reduce the number of members of the Board of Governors of the International Development Research Centre from 14 to 12. Division 12 of Part 4 amends the Tobacco and Vaping Products Act to provide that a review of the provisions and operation of that Act must be undertaken within five years after the report on the previous review has been tabled in both Houses of Parliament rather than every two years and to specify the period within which the report on the review must be tabled. Division 13 of Part 4 amends the Pest Control Products Act to replace the mandatory re-evaluation of registered pest control products with a requirement for the Minister of Health to initiate a re-evaluation if, after carrying out an assessment, that Minister has reasonable grounds to believe that the health or environmental risks of a product have increased significantly. Division 14 of Part 4 amends the Territorial Lands Act to, among other things, (a) empower the Governor in Council, if the Governor in Council is of the opinion that it is in the national interest, to make orders (i) to take certain measures with respect to certain lands in Nunavut, including to cancel licences to prospect, the recording of claims or leases of recorded claims or to provide that claims are not to be recorded, that leases of recorded claims are not to be issued or that licences to prospect or leases of recorded claims are not to be renewed, and (ii) to provide for prohibitions associated with those measures for the persons that are the subject of the orders, including prohibiting the making of an application for a licence to prospect, to record a claim or to lease a recorded claim; (b) provide that the Minister of Northern Affairs may determine whether compensation is to be paid to certain mineral rights holders that are the subject of the orders referred to in paragraph (a) and, if so, the amount; and (c) empower the Governor in Council to make regulations respecting the implementation of the orders referred to in paragraph (a) and the compensation referred to in paragraph (b). Division 15 of Part 4 amends the Red Tape Reduction Act to, among other things, ensure that the provisions of the Official Languages Act, or the provisions of an instrument made under that Act, cannot be the subject of an exemption under Part 2 of the Red Tape Reduction Act. Division 16 of Part 4 contains measures relating to procurement, production and investment in respect of national defence and national security. Subdivision A of Division 16 enacts the Defence Investment Agency Act. That Act establishes the Defence Investment Agency, whose mandate is to assist the Minister who presides over that Agency in the exercise of the Minister’s powers and performance of the Minister’s duties and functions relating to production, procurement and investment in respect of national defence or national security. That Act also provides for certain other powers, duties and functions of that Minister. Subdivision A also makes related and consequential amendments to other Acts. Subdivision B of Division 16 amends the Defence Production Act to, among other things, (a) extend the application of that Act to supplies and projects related to national security and to services related to national defence and national security; (b) provide that the Minister who presides over the Defence Investment Agency has exclusive authority to acquire supplies and services related to national defence and national security that are required for the purposes of a department, board or agency of the Government of Canada, subject to certain exceptions; (c) extend the purposes for which that Minister may engage in stockpiling to include national defence and national security, including economic security, and the defence and security of an associated government or other state; (d) provide that Minister with new financial authorities, including the authority to enter into financial transactions for the purpose of investment in national defence and national security sectors; and (e) establish procurement rules in relation to national defence and national security. Subdivision B also makes consequential amendments and terminology changes to certain legislative texts. Division 17 of Part 4 amends the Canada Transportation Act to, among other things, (a) authorize the Governor in Council to choose to have the backlog of air travel complaints resolved by third parties engaged by the Minister of Transport or the Canadian Transportation Agency; (b) transfer responsibility for the resolution of air travel complaints from the Canadian Transportation Agency to the Minister of Transport; (c) authorize the Governor in Council to choose to have future air travel complaints resolved by third parties approved by the Minister of Transport; (d) transfer authority to make regulations respecting air passenger rights from the Canadian Transportation Agency to the Minister of Transport; (e) remove mandatory confidentiality requirements regarding air travel complaints; and (f) increase the maximum administrative penalty payable by corporations for certain violations of the Canada Transportation Act or its regulations.