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That it is expedient to amend the Income Tax Act to provide among other things:
Tax-Free Savings Accounts
(1) For the introduction of Tax-Free Savings Accounts, in accordance with proposals described in the budget documents tabled by the Minister of Finance in the House of Commons on February 26, 2008.
Registered Education Savings Plans
(2) That, for the 2008 and subsequent taxation years,
(a) paragraphs (b) and (c) of the definition "specified plan" in subsection 146.1(1) of the Act be replaced by the following:
(b) under which the beneficiary is an individual in respect of whom paragraphs 118.3(1)(a) to (b) apply for the beneficiary's taxation year that ends in the 31st year following the year in which the plan was entered into, and
(c) that provides that, at all times after the end of the 35th year following the year in which the plan was entered into, no other individual may be designated as a beneficiary under the plan;
(b) subparagraphs 146.1(2)(h)(i) and (ii) of the Act be replaced by the following:
(i) in the case of a specified plan, the 35th year following the year in which the plan was entered into, and
(ii) in any other case, the 31st year following the year in which the plan was entered into;
(c) subparagraphs 146.1(2)(i)(i) and (ii) of the Act be replaced by the following:
(i) in the case of a specified plan, the 40th year following the year in which the plan was entered into, and
(ii) in any other case, the 35th year following the year in which the plan was entered into;
(d) clause 146.1(2)(j)(ii)(A) of the Act be replaced by the following:
(A) the beneficiary had not attained 31 years of age before the time of the contribution, or
(3) That section 146.1 of the Act be amended, in respect of cessations of enrolment that occur after 2007, by adding the following after subsection (2.2):
Extension for making educational assistance payments
(2.21) Notwithstanding paragraph (2)(g.1), an education savings plan may allow for the payment of an educational assistance payment to or for an individual at any time in the six-month period immediately following the particular time at which the individual ceases to be enrolled as a student in a qualifying educational program or a specified educational program, as the case may be, if the payment would have complied with the requirements of paragraph (2)(g.1) had the payment been made immediately before the particular time.
Timing of payment
(2.22) An educational assistance payment that is made at any time in accordance with subsection (2.21) but not in accordance with paragraph (2)(g.1) is deemed, for the purposes of applying that paragraph at and after that time, to have been made immediately before the particular time referred to in subsection (2.21).
Excess Corporate Holdings by Private Foundations
(4) That the provisions of the Act relating to the ownership of shares of corporations by private foundations be modified in accordance with proposals described in the budget documents tabled by the Minister of Finance in the House of Commons on February 26, 2008.
Dividend Tax Credit
(5) That, for the 2009 and subsequent taxation years,
(a) subparagraph 82(1)(b)(ii) of the Act be replaced by the following:
(ii) the product of the amount determined under paragraph (a.1) in respect of the taxpayer for the taxation year multiplied by
(A) for the 2009 taxation year, 45%
(B) for the 2010 taxation year, 44 %,
(C) for the 2011 taxation year, 41%, and
(D) for taxation years after 2011, 38%;
(b) paragraph 121(b) of the Act be replaced by the following:
(b) the product of the amount, if any, that is required by subparagraph 82(1)(b)(ii) to be included in computing the individual’s income for the year multiplied by
(i) for the 2009 taxation year, 11/18,
(ii) for the 2010 taxation year, 10/17,
(iii) for the 2011 taxation year, 13/23, and
(iv) for taxation years after 2011, 6/11.
Medical Expense Tax Credit
(6) That, for the 2008 and subsequent taxation years, the portion of paragraph 118.2(2)(l) of the Act before subparagraph (i) be replaced by the following:
(l) on behalf of the patient who is blind or profoundly deaf or has severe autism or severe epilepsy or has a severe and prolonged impairment that markedly restricts the use of the patient’s arms or legs,
(7) That, for expenses incurred after February 25, 2008, paragraph 118.2(2)(n) of the Act be replaced by the following:
(n) for drugs, medicaments or other preparations or substances (other than those described in paragraph (k))
(i) that are manufactured, sold or represented for use in the diagnosis, treatment or prevention of a disease, disorder or abnormal physical state, or its symptoms, or in restoring, correcting or modifying an organic function,
(ii) that can lawfully be acquired for use by the patient only if prescribed by a medical practitioner or dentist, and
(iii) the purchase of which is recorded by a pharmacist;
Registered Disability Savings Plan
(8) That, for the 2008 and subsequent taxation years,
(a) subparagraph 146.4(4)(p)(ii) of the Act be replaced by the following:
(ii) the first calendar year throughout which the beneficiary has no severe and prolonged impairments with the effects described in paragraph 118.3(1)(a.1).
(b) paragraph 146.4(12)(d) of the Act be replaced by the following:
(d) if the failure consists of the plan not being terminated by the time set out in paragraph (4)(p) and the failure was due to the issuer being unaware of, or there being some uncertainty as to, the existence of circumstances requiring that the plan be terminated,
(i) the Minister may specify a later time by which the plan is to be terminated (but no later than is reasonably necessary for the plan to be terminated in an orderly manner), and
(ii) paragraph (4)(p) and the plan terms are, for the purposes of paragraphs (11)(a) and (b), to be read as though they required the plan to be terminated by the time so specified.
Donations of Securities (exchangeable shares)
(9) That the provisions of the Act relating to taxable capital gains arising on the donation of publicly-traded securities be modified in accordance with proposals described in the budget documents tabled by the Minister of Finance in the House of Commons on February 26, 2008.
Northern Residents Deduction – Residency Amount
(10) That for the 2008 and subsequent taxation years, clauses 110.7(1)(b)(ii)(A) and (B) of the Act by replaced by the following:
(A) $8.25 multiplied by the number of days in the year included in the qualifying period in which the taxpayer resided in the particular area, and
(B) $8.25 multiplied by the number of days in the year included in that portion of the qualifying period throughout which the taxpayer maintained and resided in a self-contained domestic establishment in the particular area (except any day included in computing a deduction claimed under this paragraph by another person who resided on that day in the establishment).
Mineral Exploration Tax Credit
(11) That, for expenses renounced under a flow through share agreement made after March 2008,
(a) paragraph (a) of the definition "flow-through mining expenditure" in subsection 127(9) of the Act be replaced by the following:
(a) that is a Canadian exploration expense incurred by a corporation after March 2008 and before 2010 (including, for greater certainty, an expense that is deemed by subsection 66(12.66) to be incurred before 2010) in conducting mining exploration activity from or above the surface of the earth for the purpose of determining the existence, location, extent or quality of a mineral resource described in paragraph (a) or (d) of the definition "mineral resource" in subsection 248(1),
(b) paragraphs (c) and (d) of the definition "flow-through mining expenditure" in subsection 127(9) of the Act be replaced by the following:
(c) an amount in respect of which is renounced in accordance with subsection 66(12.6) by the corporation to the taxpayer (or a partnership of which the taxpayer is a member) under an agreement described in that subsection and made after March 2008 and before April 2009, and
(d) that is not an expense that was renounced under subsection 66(12.6) to the corporation (or a partnership of which the corporation is a member), unless that renunciation was under an agreement described in that subsection and made after March 2008 and before April 2009;
Scientific Research and Experimental Development
(12) That, subject to subsection (14), in respect of expenditures made on or after February 26, 2008, section 37 of the Act be amended by adding the following after subsection (1.3):
Salary or wages for SR&ED outside Canada
(1.4) For the purposes of this section, section 127 and Part XXIX of the Income Tax Regulations, the amount of a taxpayer’s expenditure for a taxation year determined under subsection (1.5) is deemed to be made in the taxation year in respect of scientific research and experimental development carried on in Canada by the taxpayer.
Salary or wages outside Canada – limit determined
(1.5) The amount of a taxpayer’s expenditure for a taxation year determined under this subsection is the lesser of
(a) the amount that is the total of all expenditures made by the taxpayer in the taxation year, each of which is an expenditure made in respect of an expense incurred in the taxation year
(i) for salary or wages paid to an employee who was resident in Canada at the time the expense was incurred,
(ii) in respect of scientific research and experimental development that
(A) was carried on outside Canada,
(B) was directly undertaken by the taxpayer,
(C) related to a business of the taxpayer, and
(D) was solely in support of scientific research and experimental development carried on in Canada by the taxpayer; and
(b) the amount that is 10 per cent of the total of all expenditures, made by the taxpayer in the year, each of which would, if this Act were read without reference to subsection (1.4), be an expenditure made in respect of an expense incurred in the year for salary or wages paid to an employee in respect of scientific research and experimental development that was carried on in Canada, that was directly undertaken by the taxpayer and that related to a business of the taxpayer.
(13) That, in respect of taxation years that end on or after February 26, 2008,
(a) paragraph 37(2)(a) of the Act be replaced by the following:
(a) on scientific research and experimental development carried on outside Canada, directly undertaken by or on behalf of the taxpayer, and related to the business (except to the extent that subsection (1.4) deems the expenditures to have been made in Canada); or
(b) subsection 37(9) of the Act be replaced by the following:
Salary or wages
(9) An expenditure of a taxpayer
(a) does not include, for the purposes of clauses (8)(a)(ii)(A) and (B), remuneration based on profits or a bonus, where the remuneration or bonus, as the case may be, is in respect of a specified employee of the taxpayer; and
(b) includes, for the purpose of paragraph (1.5)(a), an amount paid in respect of an expense incurred in the year for salary or wages paid to an employee only if the taxpayer reasonably believes that the salary or wages is not subject to an income or profits tax imposed, because of the employee’s presence or activity in a country other than Canada, by the government of that other country.
(14) That, for taxation years that include February 26, 2008 the reference in paragraph 37(1.5)(b) of the Act, as proposed by subsection (12), to "10 per cent" be read as a reference to the percentage determined by the formula
10% x A/B
where
A is the number of days in the taxation year that are after February 25, 2008; and
B is the total number of days in the taxation year.
(15) That, subject to subsection (16), for taxation years that end on or after February 26, 2008, subsection 127(10.2) of the Act be replaced by the following:
Expenditure limit determined
(10.2) For the purpose of subsection (10.1), a particular corporation’s expenditure limit for a particular taxation year is the amount determined by the formula
($7 million - 10A) � ($40 million - B)/$40 million
where
A is the greater of
(a) $400,000, and
(b) the amount that is
(i) if the particular corporation is not associated with any other corporation in the particular taxation year, the particular corporation's taxable income for its immediately preceding taxation year (determined before taking into consideration the specified future tax consequences for that preceding year), or
(ii) if the particular corporation is associated with one or more other corporations in the particular taxation year, the total of all amounts each of which is the taxable income of the particular corporation for its, or of one of the other corporations for its, last taxation year that ended in the last calendar year that ended before the end of the particular taxation year (determined before taking into consideration the specified future tax consequences for that last taxation year); and
B is
(a) nil, if the following amount is less than or equal to $10 million:
(i) where the particular corporation is not associated with any other corporation in the particular taxation year, the amount that is its taxable capital employed in Canada (within the meaning assigned by section 181.2) for its immediately preceding taxation year, or
(ii) where the particular corporation is associated with one or more other corporations in the particular taxation year, the amount that is the total of all amounts, each of which is the taxable capital employed in Canada (within the meaning assigned by section 181.2) of the particular corporation for its, or of one of the other corporations for its, last taxation year that ended in the last calendar year that ended before the end of the particular taxation year; or
(b) in any other case, the lesser of $40 million and the amount by which the amount determined under subparagraph (a)(i) or (ii), as the case may be, exceeds $10 million.
(16) That, for taxation years that include February 26, 2008, the expenditure limit of a corporation for the taxation year in subsection 127(10.2) of the Act be determined by the formula
A + [(B-A) � (C/D)]
where
A is the expenditure limit of the corporation for the taxation year determined in accordance with the formula in subsection 127(10.2) as that subsection read in its application to a taxation year that ended immediately before February 26, 2008;
B is the expenditure limit of the corporation for the taxation year determined in accordance with the formula in subsection 127(10.2) as that subsection is proposed to be inacted by subsection (15);
C is the number of days in the taxation year that are after February 25, 2008; and
D is the total number of days in the taxation year.
Graduated Penalties and Remittance of Source Deductions
(17) That, in respect of remittances by a prescribed person that are first due on or after February 26, 2008, section 153 of the Act be amended to add after subsection (1.3) the following:
Exception - remittance to designated financial institution
(1.4) For the purpose of subsection (1), a prescribed person referred to in that subsection is deemed to have remitted an amount to the account of the Receiver General at a designated financial institution if the prescribed person has remitted the amount to the Receiver General at least one day before the day upon which the amount is due.
(18) That, in respect of payments and remittances that are required to be made on or after February 26, 2008, paragraph 227(9)(a) of the Act be replaced by the following:
(a) subject to paragraph (b), if
(i) the Receiver General receives that amount on or before the day it was due, but that amount is not paid in the manner required, 3% of that amount,
(ii) the Receiver General receives that amount
(A) one to three days after it was due, 3% of that amount,
(B) four or five days after it was due, 5% of that amount,
(C) six or seven days after it was due, 7% of that amount, or
(iii) that amount is not paid or remitted on or before the seventh day after it was due, 10% of that amount; or
Enhancing Canada’s Cross-Border Business and Investment Environment
(19) That, in respect of dispositions of property that take place after 2008,
(a) subsection 116(5) of the Act be amended by deleting the word "or" at the end of paragraph (a) and by adding the following after that paragraph:
(a.1) subsection (5.01) applies to the acquisition, or
(b) section 116 of the Act be amended by adding the following after subsection (5):
Treaty-protected property
(5.01) This subsection applies to the acquisition of a property by a person (referred to in this subsection as the "purchaser") from a non-resident person if
(a) the purchaser concludes after reasonable inquiry that the non-resident person is, under a tax treaty that Canada has with a particular country, resident in the particular country;
(b) the property would be treaty-protected property of the non-resident person if the non-resident person were, under the tax treaty referred to in paragraph (a), resident in the particular country; and
(c) the purchaser provides notice under subsection (5.02) in respect of the acquisition.
Notice by purchaser in respect of an acquisition of property
(5.02) A person (referred to in this subsection as the "purchaser") who acquires property from a non-resident person provides notice under this subsection in respect of the acquisition if the purchaser sends to the Minister, on or before the day that is 30 days after the date of the acquisition, a notice setting out
(a) the date of the acquisition;
(b) the name and address of the non-resident person;
(c) a description of the property sufficient to identify it;
(d) the amount paid or payable, as the case may be, by the purchaser for the property; and
(e) the name of the particular country.
(c) subsection 116(6) of the Act be amended by deleting the word "and" at the end of paragraph (g), by adding the word "and" at the end of paragraph (h) and by adding the following after paragraph (h):
(i) a property that is, at the time of its disposition, a treaty-exempt property of the person;
(d) section 116 of the Act be amended by adding the following after subsection (6):
Treaty-exempt property
(6.1) For the purpose of subsection (6), a property is a treaty-exempt property of a non-resident person, at the time of the non-resident person’s disposition of the property to another person (referred to in this subsection as the "purchaser"), if
(a) it is, at that time, a treaty-protected property of the non-resident person; and
(b) where the purchaser and the non-resident person are related at that time, the purchaser provides notice under subsection (5.02) in respect of the disposition.
(e) clauses 150(1)(a)(i)(C) and (D) of the Act be replaced by the following
(C) has a taxable capital gain (otherwise than from an excluded disposition), or
(D) disposes of a taxable Canadian property (otherwise than in an excluded disposition), or
(f) subparagraph 150(1)(a)(ii) of the Act be replaced by the following:
(ii) tax under this Part
(A) is payable by the corporation for the year, or
(B) would be, but for a tax treaty, payable by the corporation for the year (otherwise than in respect of a disposition of taxable Canadian property that is treaty-protected property of the corporation);
(g) subparagraph 150(1.1)(b)(iii) of the Act be replaced by the following:
(iii) where the individual is non-resident throughout the year, the individual has a taxable capital gain (otherwise than from an excluded disposition) or disposes of a taxable Canadian property (otherwise than in an excluded disposition) in the year, or
(h) section 150 of the Act be amended by adding the following after subsection (4):
Definition of "excluded disposition"
(5) For the purposes of this section, a disposition of a property by a taxpayer at any time in a taxation year is an excluded disposition if
(a) the taxpayer is non-resident at that time;
(b) no tax is payable under this Part by the taxpayer for the taxation year;
(c) the taxpayer is, at that time, not liable to pay any amount under this Act in respect of any previous taxation year (other than an amount for which the Minister has accepted, and holds, adequate security under section 116 or 220); and
(d) each taxable Canadian property disposed of by the taxpayer in the taxation year is
(i) excluded property within the meaning assigned by subsection 116(6), or
(ii) a property in respect of the disposition of which the Minister has issued to the taxpayer a certificate under subsection 116(2), (4) or (5.2).
Donation of Medicines for the Developing World
(20) That, in respect of gifts of medicine that are made on or after July 1, 2008,
(a) paragraphs 110.1(8)(b) and (c) of the Act be replaced by the following:
(b) the property that is the subject of the gift is a medicine that is available to be used by the donee at least six months prior to the expiration date, within the meaning of the Food and Drug Regulations, of the medicine;
(c) the medicine qualifies as a drug, within the meaning of the Food and Drugs Act, and the drug
(i) meets the requirements of that Act, or would meet those requirements if that Act were read without reference to its subsection 37(1), and
(ii) is not a food, cosmetic or device (as those terms are defined in that Act), a natural health product (as defined in the Natural Health Products Regulations) or a veterinary drug;
(b) paragraph 110.1(8)(e) of the Act be replaced by the following:
(e) the donee is a registered charity that, in the opinion of the Minister of International Cooperation (or, if there is no such Minister, the Minister responsible for the Canadian International Development Agency) meets conditions prescribed by regulation.
Provincial Component of SIFT Tax
(21) That, for the 2009 and subsequent taxation years,
(a) the description of D in subsection 122(1) of the Act be replaced by the following:
D is the provincial SIFT tax rate of the SIFT trust for the taxation year, and
(b) the description of C in the definition "taxable SIFT trust distributions" in subsection 122(3) of the Act be replaced by the following:
C is the provincial SIFT tax rate of the SIFT trust for the taxation year.
(c) the description of C in subsection 197(2) of the Act be replaced by the following:
C is the provincial SIFT tax rate of the SIFT partnership for the taxation year.
(d) the definition "provincial SIFT tax factor" in subsection 248(1) of the Act be replaced by the following:
"provincial SIFT tax rate"
� taux d’imposition provincial des EIPD �
"provincial SIFT tax rate" of a SIFT trust or SIFT partnership for a taxation year means the prescribed amount determined in respect of the SIFT trust or SIFT partnership for the taxation year;
Notice of Ways and Means Motion to Amend the Excise Tax Act Relating to the Goods and Services Tax and Harmonized Sales Tax (GST/HST)
That it is expedient to amend the Excise Tax Act as follows:
Health Measures
1. (1) Section 5 of Part II of Schedule V to the Excise Tax Act is replaced by the following:
5. A supply of a consultative, diagnostic, treatment or other health care service (other than a surgical or dental service that is performed for cosmetic purposes and not for medical or reconstructive purposes) that is rendered by a medical practitioner to an individual.
(2) Subsection (1) applies to any supply made after February 26, 2008.
2. (1) Section 6 of Part II of Schedule V to the Act is replaced by the following:
6. A supply of a nursing service rendered to an individual by a registered nurse, a registered nursing assistant, a licensed or registered practical nurse or a registered psychiatric nurse, if the service is rendered within a nurse-patient relationship.
(2) Subsection (1) applies to any supply made after February 26, 2008.
3. (1) The portion of section 7 of Part II of Schedule V to the Act before paragraph (a) is replaced by the following:
7. A supply of any of the following services if the service is rendered to an individual by a practitioner of the service:
(2) Subsection (1) applies to any supply made after February 26, 2008.
4. (1) Sections 7.1 and 7.2 of Part II of Schedule V to the Act are replaced by the following:
7.1 A supply of a dietetic service rendered by a practitioner of the service, if the service is rendered to an individual or the supply is made to a public sector body or to the operator of a health care facility.
7.2 A supply of a service rendered in the practice of the profession of social work where
(a) the service is rendered to an individual within a professional-client relationship between the particular individual who renders the service and the individual and is provided for the prevention, assessment or remediation of, or to assist the individual in coping with, a physical, emotional, behavioural or mental disorder or disability of the individual or of another individual to whom the individual is related or to whom the individual provides care or supervision otherwise than in a professional capacity; and
(b) either
(i) if the particular individual is required to be licensed or otherwise certified to practise the profession of social work in the province in which the service is supplied, the particular individual is so licensed or certified, or
(ii) if the particular individual is not required to be licensed or otherwise certified to practise that profession in that province, the particular individual has the qualifications equivalent to those necessary to be licensed or certified to practise that profession in a province in which such a requirement exists.
(2) Subsection (1) applies to any supply made after February 26, 2008.
5. (1) Section 10 of Part II of Schedule V to the Act is replaced by the following:
10. A supply of a prescribed diagnostic, treatment or other health care service rendered to an individual if made on the order of
(a) a medical practitioner or practitioner; or
(b) a registered nurse authorized under the laws of a province to order such a service if the order is made within a nurse-patient relationship.
(2) Subsection (1) applies to any supply made after February 26, 2008.
6. (1) Part II of Schedule V to the Act is amended by adding the following after section 13:
14. A supply (other than a zero-rated supply or a prescribed supply) of a training service if
(a) the training is specially designed to assist individuals with a disorder or disability in coping with the effects of the disorder or disability or to alleviate or eliminate those effects and is given to a particular individual with the disorder or disability or to another individual who provides personal care or supervision to the particular individual otherwise than in a professional capacity; and
(b) one of the following circumstances exists:
(i) a person acting in the capacity of a practitioner, medical practitioner, social worker or registered nurse, and in the course of a professional-client relationship between the person and the particular individual, has certified in writing that the training is an appropriate means to assist the particular individual in coping with the effects of the disorder or disability or to alleviate or eliminate those effects,
(ii) a prescribed person, or a member of a prescribed class of persons, has, subject to prescribed circumstances or conditions, certified in writing that the training is an appropriate means to assist the particular individual in coping with the effects of the disorder or disability or to alleviate or eliminate those effects, or
(iii) the supplier
(A) is a government,
(B) is paid an amount to make the supply by a government or organization administering a government program targeted at assisting individuals with a disorder or disability, or
(C) receives evidence satisfactory to the Minister that, for the purpose of the acquisition of the service, an amount has been paid or is payable to a person by a government or organization administering a government program targeted at assisting individuals with a disorder or disability.
15. For the purposes of section 14, a training service does not include training that is similar to the training ordinarily given to individuals who
(a) do not have a disorder or disability; and
(b) do not provide personal care or supervision to an individual with a disorder or disability.
(2) Subsection (1) applies to any supply made after February 26, 2008.
7. (1) The definition of "prescription" in section 1 of Part I of Schedule VI to the Act is replaced by the following:
"prescription"
� ordonnance �
"prescription" means a written or verbal order, given to a pharmacist by a medical practitioner or authorized individual, directing that a stated amount of any drug or mixture of drugs specified in the order be dispensed for the individual named in the order.
(2) Section 1 of Part I of Schedule VI to the Act is amended by adding the following in alphabetical order:
"authorized individual"
� particulier autorisé �
"authorized individual" means an individual, other than a medical practitioner, who is authorized under the laws of a province to make an order directing that a stated amount of a drug or mixture of drugs specified in the order be dispensed for the individual named in the order;
(3) Subsections (1) and (2) apply to any supply made
(a) after February 26, 2008; or
(b) on or before February 26, 2008 if no amount was charged, collected or remitted on or before that day as or on account of tax under Part IX of the Act in respect of the supply.
8. (1) Paragraph 2(b) of Part I of Schedule VI to the Act is replaced by the following:
(b) a drug included in Schedule F to the Food and Drug Regulations, other than a drug or mixture of drugs that may, pursuant to the Food and Drugs Act or those Regulations, be sold to a consumer with neither a prescription nor a written order signed by the Director (as defined in those Regulations),
(2) Paragraph 2(d) of Part I of Schedule VI to the Act is replaced by the following:
(d) a drug that contains a substance included in the schedule to the Narcotic Control Regulations, other than a drug or mixture of drugs that may, pursuant to the Controlled Drugs and Substances Act or regulations made under that Act, be sold to a consumer with neither a prescription nor an exemption by the Minister of Health in respect of the sale,
(3) Subsections (1) and (2) apply to any supply made after February 26, 2008.
9. (1) Paragraph 3(b) of Part I of Schedule VI to the Act is replaced by the following:
(b) on the prescription of a medical practitioner or authorized individual for the personal consumption or use of the individual named in the prescription.
(2) Subsection (1) applies to any supply made
(a) after February 26, 2008; or
(b) on or before February 26, 2008 if no amount was charged, collected or remitted on or before that day as or on account of tax under Part IX of the Act in respect of the supply.
10. (1) Part II of Schedule VI to the Act is amended by adding the following after section 1:
1.1 For the purposes of this Part, other than section 33, a supply of property that is not designed for human use or for assisting an individual with a disability or impairment is deemed not to be included in this Part.
(2) Subsection (1) applies to any supply made after February 26, 2008.
11. (1) Section 6 of Part II of Schedule VI to the Act is replaced by the following:
6. A supply of a mechanical percussor for postural drainage treatment or a chest wall oscillation system for airway clearance therapy.
(2) Subsection (1) applies to any supply made after February 26, 2008.
12. (1) Section 14 of Part II of Schedule VI to the Act is replaced by the following:
14. A supply of a chair, walker, wheelchair lift or similar aid to locomotion, with or without wheels, including motive power and wheel assemblies therefor, that is specially designed to be operated by an individual with a disability for locomotion of the individual.
14.1 A supply of a chair that is specially designed for use by an individual with a disability if the chair is supplied on the written order of a medical practitioner for use by a consumer named in the order.
(2) Subsection (1) applies to any supply made after February 26, 2008.
13. (1) Section 20 of Part II of Schedule VI to the Act is replaced by the following:
20. A supply of a toilet seat, bath seat, shower seat or commode chair that is specially designed for use by an individual with a disability.
(2) Subsection (1) applies to any supply made after February 26, 2008.
14. (1) Sections 33 to 34 of Part II of Schedule VI to the Act are replaced by the following:
33. A supply of an animal that is or is to be specially trained to assist an individual with a disability or impairment with a problem arising from the disability or impairment, or a supply of a service of training an individual to use the animal, if the supply is made to or by an organization that is operated for the purpose of supplying such specially trained animals to individuals with the disability or impairment.
34. A supply of a service (other than a service the supply of which is included in any provision of Part II of Schedule V except section 9 of that Part and a service related to the provision of a surgical or dental service that is performed for cosmetic purposes and not for medical or reconstructive purposes) of installing, maintaining, restoring, repairing or modifying a property the supply of which is included in any of sections 2 to 32 and 37 to 41 of this Part, or any part for such a property if the part is supplied in conjunction with the service.
(2) Subsection (1) applies to any supply made after February 26, 2008.
15. (1) Part II of Schedule VI to the Act is amended by adding the following after section 40:
41. A supply of a device that is specially designed for neuromuscular stimulation therapy or standing therapy, if supplied on the written order of a medical practitioner for use by a consumer with paralysis or a severe mobility impairment who is named in the order.
(2) Subsection (1) applies to any supply made after February 26, 2008.
Treatment of Long-Term Residential Care Facilities
16. (1) Subparagraph 191(1)(b)(i) of the Act is replaced by the following:
(i) gives possession or use of the complex to a particular person under a lease, licence or similar arrangement (other than an arrangement, under or arising as a consequence of an agreement of purchase and sale of the complex, for the possession or occupancy of the complex until ownership of the complex is transferred to the purchaser under the agreement) entered into for the purpose of its occupancy by an individual as a place of residence,
(2) The portion of subparagraph 191(1)(b)(ii) of the Act before clause (A) is replaced by the following:
(ii) gives possession or use of the complex to a particular person under an agreement for
(3) Paragraph 191(1)(c) of the Act is replaced by the following:
(c) the builder, the particular person, or an individual who has entered into a lease, licence or similar arrangement in respect of the complex with the particular person, is the first individual to occupy the complex as a place of residence after substantial completion of the construction or renovation,
(4) Paragraph 191(1)(d) of the Act is replaced by the following:
(d) to have made and received, at the later of the time the construction or substantial renovation is substantially completed and the time possession or use of the complex is so given to the particular person or the complex is so occupied by the builder, a taxable supply by way of sale of the complex, and
(5) Subparagraph 191(3)(b)(i) of the Act is replaced by the following:
(i) gives, to a particular person who is not a purchaser under an agreement of purchase and sale of the complex, possession or use of any residential unit in the complex under a lease, licence or similar arrangement entered into for the purpose of the occupancy of the unit by an individual as a place of residence,
(6) The portion of subparagraph 191(3)(b)(i.1) of the Act before clause (A) is replaced by the following:
(i.1) gives possession or use of any residential unit in the complex to a particular person under an agreement for
(7) Paragraph 191(3)(c) of the Act is replaced by the following:
(c) the builder, the particular person, or an individual who has entered into a lease, licence or similar arrangement in respect of a residential unit in the complex with the particular person, is the first individual to occupy a residential unit in the complex as a place of residence after substantial completion of the construction or renovation,
(8) Paragraph 191(3)(d) of the Act is replaced by the following:
(d) to have made and received, at the later of the time the construction or substantial renovation is substantially completed and the time possession or use of the unit is so given to the particular person or the unit is so occupied by the builder, a taxable supply by way of sale of the complex, and
(9) Subparagraph 191(4)(b)(i) of the Act is replaced by the following:
(i) gives, to a particular person who is not a purchaser under an agreement of purchase and sale of the complex, possession or use of any residential unit in the addition under a lease, licence or similar arrangement entered into for the purpose of the occupancy of the unit by an individual as a place of residence,
(10) The portion of subparagraph 191(4)(b)(i.1) of the Act before clause (A) is replaced by the following:
(i.1) gives possession or use of any residential unit in the addition to a particular person under an agreement for
(11) Paragraph 191(4)(c) of the Act is replaced by the following:
(c) the builder, the particular person, or an individual who has entered into a lease, licence or similar arrangement in respect of a residential unit in the addition with the particular person, is the first individual to occupy a residential unit in the addition as a place of residence after substantial completion of the construction of the addition,
(12) Paragraph 191(4)(d) of the Act is replaced by the following:
(d) to have made and received, at the later of the time the construction of the addition is substantially completed and the time possession or use of the unit is so given to the particular person or the unit is so occupied by the builder, a taxable supply by way of sale of the addition, and
(13) The portion of subsection 191(10) of the Act before paragraph (c) is replaced by the following:
Transfer of possession attributed to builder
(10) For the purposes of this section, if
(a) a builder of a residential complex or an addition to a multiple unit residential complex makes a supply of the complex or a residential unit in the complex or addition by way of lease, licence or similar arrangement and the supply is an exempt supply described by section 6.1 or 6.11 of Part I of Schedule V,
(b) the recipient of the supply is acquiring the complex or unit for use or supply in the course of making exempt supplies and, as part of an exempt supply, possession or use of the complex, unit or residential units in the complex is given under a lease, licence or similar arrangement entered into for the purpose of the occupancy of the complex or unit by an individual as a place of residence or lodging, and
(14) For the purposes of subsection (15), the particular time in respect of a residential complex or an addition to a residential complex is the later of
(a) the time the construction or substantial renovation of the residential complex or addition is substantially completed; and
(b) the earlier of the time the builder of the complex or addition first gives possession or use of the complex, or of a residential unit in the complex or addition, to a person for the purpose of the occupancy of the complex or unit by an individual as a place of residence and the time the complex or a residential unit in the complex or addition is occupied by the builder as a place of residence.
(15) Subsections (1) to (12) apply in respect of a residential complex or an addition to a residential complex if the particular time is
(a) after February 26, 2008; or
(b) on or before February 26, 2008 and the builder of the complex or addition, as the case may be,
(i) would have been deemed under section 191 of the Act to have made, at the particular time, a taxable supply by way of sale of the complex or addition if that section, as amended by subsections (1) to (13), had applied at that time, and
(ii) has reported an amount as or on account of tax, as a result of the builder applying section 191 of the Act in respect of the complex or addition, in the builder’s return under Division V of Part IX of the Act for any reporting period the return for which is filed, or is required under that Division to be filed on or before a day that is, on or before February 26, 2008.
(16) For the purposes of subsection (17), the particular time in respect of a residential complex or an addition to a residential complex is the later of the time
(a) the construction or substantial renovation of the residential complex or addition is substantially completed; and
(b) possession of the complex, or of a residential unit in the complex or addition, is given to a person for use or supply in the course of making exempt supplies.
(17) Subsection (13) applies in respect of a residential complex or an addition to a residential complex if the particular time is
(a) after February 26, 2008; or
(b) on or before February 26, 2008 and the builder of the complex or addition, as the case may be,
(i) would have been deemed under section 191 of the Act to have made, at the particular time, a taxable supply by way of sale of the complex or addition if that section, as amended by subsections (1) to (13), had applied at that time, and
(ii) has reported an amount as or on account of tax, as a result of the builder applying section 191 of the Act in respect of the complex or addition, in the builder’s return under Division V of Part IX of the Act for any reporting period the return for which is filed, or is required under that Division to be filed on or before a day that is, on or before February 26, 2008.
(18) For the purposes of the Act, if a person
(a) is the builder of a residential complex or of an addition to a multiple unit residential complex,
(b) is deemed under subsection 191(1), (3) or (4) of the Act to have made and received, at a particular time that is on or after February 26, 2008, a taxable supply by way of sale of the residential complex or addition and to have paid as a recipient and to have collected as a supplier a particular amount of tax in respect of the taxable supply, and
(c) has not claimed or deducted an amount (in this subsection referred to as an "unclaimed credit") in respect of property or a service in determining the net tax for any reporting period of the person the return for which is filed, or is required under Division V of Part IX of the Act to be filed on or before a day that is, on or before February 26, 2008 and
(i) the property or service, in a particular reporting period that ends before February 26, 2008,
(A) was acquired, imported or brought into a participating province for consumption or use in making the taxable supply, or
(B) was, in relation to the complex or addition, acquired, imported or brought into a participating province and would have been acquired, imported or brought into the participating province for consumption or use in making the taxable supply if section 191 of the Act were read as amended by this Act, and
(ii) the unclaimed credit is, or would be if section 191 of the Act were read as amended by this Act, an input tax credit of the person,
the unclaimed credit of the person is deemed to be an input tax credit of the person for the reporting period of the person that includes February 26, 2008 and not to be an input tax credit of the person for any other reporting period.
(19) For the purposes of this section,
(a) subsection 191(9) of the Act applies in determining the time the construction or substantial renovation of a residential complex or an addition to a residential complex is substantially completed; and
(b) subsection 191(10) of the Act, as amended by subsection (13), applies in determining the time possession of a residential complex or a residential unit in a residential complex or addition to a residential complex is given to a person.
17. (1) The portion of paragraph 191.1(2)(b) of the Act before subparagraph (i) is replaced by the following:
(b) possession or use of at least 10% of the residential units in the complex is intended to be given for the purpose of their occupancy as a place of residence or lodging by
(2) Subparagraphs 191.1(2)(b)(vi) and (vii) of the Act are replaced by the following:
(vi) individuals whose eligibility for occupancy of the units as a place of residence or lodging, or for reduced payments in respect of their occupancy as a place of residence or lodging, is dependent on a means or income test,
(vii) individuals for whose benefit no other persons (other than public sector bodies) pay consideration for supplies that include giving possession or use of the units for occupancy by the individuals as a place of residence or lodging and who either pay no consideration for the supplies or pay consideration that is significantly less than the consideration that could reasonably be expected to be paid for comparable supplies made by a person in the business of making such supplies for the purpose of earning a profit, or
(3) For the purposes of subsection (4), the particular time in respect of a residential complex or an addition to a residential complex is the later of
(a) the time the construction or substantial renovation of the residential complex or addition is substantially completed; and
(b) the earlier of the time the builder of the complex or addition first gives possession or use of the complex or of a residential unit in the complex or addition to a person for the purpose of the occupancy of the complex or unit by an individual as a place of residence and the time the complex or a residential unit in the complex or addition is occupied by the builder as a place of residence.
(4) Subsections (1) and (2) apply in respect of a residential complex or an addition to a residential complex if the particular time is
(a) after February 26, 2008; or
(b) on or before February 26, 2008 and the builder of the complex or addition, as the case may be,
(i) would have been deemed under section 191 of the Act to have made, at the particular time, a taxable supply by way of sale of the complex or addition if that section, as amended by subsections 16(1) to (13), had applied at that time, and
(ii) has reported an amount as or on account of tax, as a result of the builder applying section 191 of the Act in respect of the complex or addition, in the builder’s return under Division V of Part IX of the Act for any reporting period the return for which is filed, or is required under that Division to be filed on or before a day that is, on or before February 26, 2008.
(5) For the purposes of this section,
(a) subsection 191(9) of the Act applies in determining the time the construction or substantial renovation of a residential complex or an addition to a residential complex is substantially completed; and
(b) subsection 191(10) of the Act, as amended by subsection 16(13), applies in determining the time possession of a residential complex or a residential unit in a residential complex or addition to a residential complex is given to a person.
18. (1) The Act is amended by adding the following after section 236.3:
Election for a residential complex
236.4 (1) A person may make an election in respect of a residential complex, or in respect of an addition to a multiple unit residential complex, for a particular reporting period of the person if
(a) the person is the builder of the residential complex or addition;
(b) the person is deemed under subsection 191(1), (3) or (4) to have made and received, at a particular time that is on or before February 26, 2008, a taxable supply by way of sale of the residential complex or addition and to have paid as a recipient and to have collected as a supplier a particular amount of tax in respect of that supply;
(c) the person has not reported an amount as or on account of tax in respect of the taxable supply in the person’s return under Division V for any reporting period the return for which is filed, or is required under that Division to be filed on or before a day that is, on or before February 26, 2008;
(d) the person would be entitled to claim a rebate under subsection 256.2(3) in respect of the residential complex or addition that is determined based on the particular amount of tax if
(i) section 256.2 were read without reference to subsection (7), and
(ii) the amount determined for B in the first formula in subsection 256.2(3) for a qualifying residential unit, as defined in subsection 256.2(1), that forms part of the residential complex or addition were less than $450,000;
(e) the person did not supply to another person by way of sale the residential complex or addition on or before February 26, 2008;
(f) the particular reporting period ends on or before February 26, 2010;
(g) the election is filed in prescribed form containing prescribed information not later than the day on or before which the return under Division V is required to be filed for the particular reporting period; and
(h) the person has not made another election under this subsection in respect of the residential complex or addition.
Adjustment to net tax
(2) If a person makes an election under subsection (1) in respect of a residential complex, or in respect of an addition to a multiple unit residential complex, for a reporting period of the person, the person shall, in determining the net tax for the reporting period, add the positive amount or deduct the negative amount determined by the formula
(A - B) - C
where
A is the particular amount of tax referred to in paragraph (1)(b);
B is the amount of the rebate that the person would be entitled, if section 256.2 were read without reference to subsection (7), to claim under subsection 256.2(3) in respect of the residential complex or addition that is determined based on the particular amount of tax; and
C is the amount determined by the formula
C1 - C2
where
C1 is the total of all amounts each of which is an input tax credit of the person
(i) that is in respect of property or a service acquired, imported or brought into a participating province before the particular time referred to in paragraph (1)(b) for consumption or use for the purpose of making the supply referred to in that paragraph, and
(ii) in respect of which the person satisfies the requirements of subsection 169(4) at the time the election under subsection (1) is filed, and
C2 is the total of all amounts each of which is an amount included in the determination of C1, but only to the extent that the amount can reasonably be regarded as an amount that
(i) was claimed or included as an input tax credit or deduction in determining the net tax for the reporting period or a preceding reporting period of the person,
(ii) has previously been rebated, refunded or remitted to the person, or that the person is entitled to obtain as a rebate, refund or remission, under this or any other Act of Parliament, or
(iii) is included in an adjustment, refund or credit for which a credit note referred to in subsection 232(3) has been received by the person or a debit note referred to in that subsection has been issued by the person.
Consequences of election
(3) For the purposes of this Part, if a person makes an election under subsection (1) in respect of a residential complex, or in respect of an addition to a multiple unit residential complex, for a reporting period of the person, the person is deemed
(a) to have been deemed to have made and received, at the particular time referred to in paragraph (1)(b), a taxable supply of the residential complex or addition by way of sale and to have paid as a recipient and to have collected as a supplier tax in respect of the supply equal to the particular amount of tax referred to in that paragraph under
(i) in the case of a single unit residential complex or a residential condominium unit, subsection 191(1),
(ii) in the case of a multiple unit residential complex, subsection 191(3), and
(iii) in the case of an addition, subsection 191(4);
(b) to have claimed each amount that is included in the determination of C1 in the second formula in subsection (2) as an input tax credit in determining the net tax for the reporting period, but only to the extent that the amount is not included in the determination of C2 in the same formula;
(c) to have claimed and received a rebate under subsection 256.2(3), in respect of the complex or addition, equal to the amount determined for B in the first formula in subsection (2); and
(d) not to be required to include the particular amount of tax deemed to have been collected under paragraph (a) for the purpose of determining the net tax of the person for the reporting period that includes the particular time, other than for the purpose of including the particular amount in the determination of A in the first formula in subsection (2).
Input tax credit
(4) For the purposes of subsection 225(4), if a person makes an election under subsection (1), any input tax credit of the person in respect of the complex or addition that the person is deemed to have received under paragraph (3)(a) is deemed to be an input tax credit of the person for the reporting period of the person that includes February 26, 2008 and not an input tax credit of the person for any other period.
Limitation period where election
(5) If a person makes an election under subsection (1) in respect of a residential complex, or in respect of an addition to a multiple unit residential complex, section 298 applies to any assessment, reassessment or additional assessment of an amount added to, or deducted from, net tax by the person in respect of the residential complex or addition, but the Minister has until the day that is four years after the day on which the election under subsection (1) is filed with the Minister to make any assessment, reassessment or additional assessment for the purpose of taking into account any amount that is, or is required to be, added or subtracted in determining the amount determined under the first formula in subsection (2).
Residential complex separate from addition
(6) For the purposes of this section, if a person is the builder of an addition to a residential complex and is eligible to make an election under subsection (1) in respect of the addition or the remainder of the residential complex, the addition and the remainder of the residential complex are each deemed to be a separate property.
(2) Subsection (1) applies to any reporting period that ends on or after February 26, 2008.
(3) Despite any other provision of this Act, sections 191, 191.1 and 256.2 of the Act shall be read as amended by this Act in applying section 236.4 of the Act, as enacted by subsection (1).
19. (1) The portion of subsection 256.1(1) of the Act before the formula is replaced by the following:
Rebate to owner of land leased for residential purposes
256.1 (1) If an exempt supply of land described by section 6.1 or 6.11 of Part I of Schedule V is made to a particular lessee who is acquiring the land for the purpose of making a particular supply of property or a service that includes the land or a particular supply of a lease, licence or similar arrangement in respect of property that includes the land, and the particular supply
(a) is an exempt supply of property or a service, other than a supply that is exempt only by virtue of paragraph 6(b) of Part I of Schedule V, that
(i) includes giving possession or use of a residential complex, or of a residential unit forming part of a residential complex, to another person under a lease, licence or similar arrangement entered into for the purpose of its occupancy by an individual as a place of residence or lodging, or
(ii) is described by section 7 of Part I of Schedule V, other than an exempt supply described by paragraph 7(a) of that Part made to a person described in subparagraph 7(a)(ii) of that Part, and
(b) will result in the particular lessee being deemed under any of subsections 190(3) to (5) and section 191 to have made a supply of property that includes the land at a particular time,
the Minister shall, subject to subsection (2), pay a rebate, to each person (in this subsection referred to as the "landlord") who is an owner or lessee of the land and who is not the particular lessee, equal to the amount determined by the formula
(2) Subsection (1) applies in respect of
(a) a supply of land made to a particular lessee that is deemed under any of subsections 190(3) to (5) and section 191 of the Act to have made, after February 26, 2008, another supply of property that includes the land; and
(b) a supply of land made by a person to a particular lessee if
(i) the particular lessee was deemed under any of subsections 190(3) to (5) and section 191 of the Act to have made, on or before February 26, 2008, another supply of property that includes the land,
(ii) the supply would be included in section 6.11 of Part I of Schedule V to the Act if that section were read as enacted by this Act, and
(iii) the person did not, on or before February 26, 2008, charge, collect or remit any amount as or on account of tax under Part IX of the Act in respect of the supply or any other supply of the land made by the person that would be included in section 6.1 or 6.11 of Part I of Schedule V to the Act if those sections were read as amended by this Act.
(3) If paragraph 2(b) applies,
(a) each person (in this subsection referred to as the "landlord") who is an owner or lessee of the land and who is not the particular lessee may, despite subsection 256.1(2) of the Act, file an application for a rebate under subsection 256.1(1) of the Act on or before February 26, 2010;
(b) the application may, despite subsection 262(2) of the Act, be the second application of the landlord for the rebate if the landlord has filed, on or before February 26, 2008, another application for the rebate and the other application has been assessed before the landlord files the application;
(c) for the purposes of Part IX of the Act in respect of the application, sections 6.1 and 6.11 of Part I of Schedule V to the Act shall be read as amended by this Act; and
(d) a rebate is not payable under subsection 256.1(1) of the Act, as amended by subsection (1), to a person who is not a landlord of the land at the time the application for the rebate is filed.
20. (1) Clause (a)(ii)(A) of the definition "qualifying residential unit" in subsection 256.2(1) of the Act is replaced by the following:
(A) for the purpose of making exempt supplies of the unit that are included in section 5.1, 6.1, 6.11 or 7 of Part I of Schedule V,
(A.1) for the purpose of making exempt supplies of property or a service that includes giving possession or use of the unit to a person under a lease to be entered into for the purpose of its occupancy by an individual as a place of residence, or
(2) Subparagraph 256.2(3)(a)(ii) of the Act is replaced by the following:
(ii) is a builder of a residential complex, or of an addition to a multiple unit residential complex, that gives possession or use of a residential unit in the complex or addition to another person under a lease entered into for the purpose of its occupancy by an individual as a place of residence that results in the particular person being deemed under section 191 to have made and received a taxable supply by way of sale (in this subsection referred to as the "deemed purchase") of the complex or addition,
(3) Section 256.2 of the Act is amended by adding the following after subsection (6):
Adjustment for transitional rebate
(6.1) For the purposes of determining the amount of a particular rebate in respect of a residential complex, an interest in a residential complex or an addition to a multiple unit residential complex payable to a person under any of subsections (3) to (5), the amount of the total tax under subsection 165(1) included in the calculation made under the formulae in subsections (3) to (5) shall be reduced by the total of all rebates payable to the person under any of sections 256.3 to 256.77 in respect of the residential complex, interest or addition, as the case may be, if the person
(a) was not entitled to the particular rebate under this section as it read immediately after it was last amended by an Act of Parliament that received Royal Assent before February 26, 2008; and
(b) is entitled to the particular rebate under this section as it reads immediately after the Act of Parliament implementing this Notice of Ways and Means Motion has been assented to.
(4) Subsections (1) and (2) apply in respect of
(a) a taxable supply by way of sale
(i) of a residential complex, or of an addition to a multiple unit residential complex, that is deemed to have been made under section 191 of the Act, if tax in respect of the supply is deemed under that section to have been paid after February 26, 2008, or
(ii) of a residential complex, or of an interest in a residential complex, to a person from another person, if tax under Part IX of the Act in respect of the supply first becomes payable after February 26, 2008; and
(b) a taxable supply by way of sale
(i) of a residential complex, or of an addition to a multiple unit residential complex, that is deemed to have been made under section 191 of the Act, if
(A) tax in respect of the supply is deemed under that section to have been paid by a person on a particular day that is on or before February 26, 2008,
(B) the person has reported the tax in the person’s return under Division V of Part IX of the Act for the reporting period of the person that includes the particular day, and
(C) the person has remitted all net tax remittable, if any, as reported in that return, or
(ii) of a residential complex, or of an interest in a residential complex, to a person that is not a builder of the complex from another person, if tax under Part IX of the Act in respect of the supply first becomes payable on or before February 26, 2008 and the person has paid all of the tax.
(5) Subsection (3) is deemed to have come into force on July 1, 2006.
(6) If paragraph (4)(b) applies,
(a) the person referred to in that paragraph may, despite paragraph 256.2(7)(a) of the Act, file a particular application for a rebate in respect of the tax under subsection 256.2(3) of the Act (in this subsection referred to as the "rental property rebate") on or before February 26, 2010; and
(b) the particular application may, despite subsection 262(2) of the Act, be the second application of the person for the rental property rebate if the person has filed, on or before February 26, 2008, another application for the rental property rebate and the other application has been assessed before the person files the particular application.
21. (1) The portion of section 6.1 of Part I of Schedule V to the Act before paragraph (d) is replaced by the following:
6.1 A supply of property that is
(a) land, or
(b) a building, or that part of a building, that consists solely of residential units
made by way of lease, licence or similar arrangement to a recipient (in this section referred to as a "lessee") for a lease interval (within the meaning assigned by subsection 136.1(1) of the Act) throughout which the lessee or any sub-lessee makes, or holds the property for the purpose of making, one or more supplies of the property, parts of the property or leases, licences or similar arrangements in respect of the property or parts of it and all or substantially all of those supplies
(2) Subsection (1) applies to any supply for which consideration becomes due after February 26, 2008, without having been paid on or before that day, or is paid after that day without having become due.
22. (1) Part I of Schedule V to the Act is amended by adding the following after section 6.1:
6.11 A supply made by way of lease, licence or similar arrangement of property that is a residential complex or that is land, a building or that part of a building, that forms or is reasonably expected to form part of a residential complex if the supply is made to a recipient (in this section referred to as the "lessee") for a lease interval (within the meaning assigned by subsection 136.1(1) of the Act) throughout which all or substantially all of the property is
(a) supplied, or is held for the purpose of being supplied, in one or more supplies, by the lessee or any sub-lessee for the purpose of the occupancy of the property or parts of the property by individuals as a place of residence or lodging and all or substantially all of the supplies of the property or parts of the property are exempt supplies described by section 6, or
(b) used, or held for the purpose of being used, by the lessee or any sub-lessee in the course of making exempt supplies and, as part of one or more exempt supplies, possession or use of all or substantially all of the residential units situated in the property is given under a lease, licence or similar arrangement for the purpose of their occupancy by an individual as a place of residence.
(2) Subsection (1) applies to any supply of property made by a supplier for which
(a) consideration becomes due after February 26, 2008 without having been paid on or before that day, or is paid after that day without having become due; or
(b) all of the consideration became due or was paid on or before February 26, 2008 if the supplier did not, on or before that day, charge, collect or remit any amount as or on account of tax under Part IX of the Act in respect of the supply or any other supply of the property made by the supplier that would be included in section 6.1 or 6.11 of Part I of Schedule V to the Act, if those sections were read as amended by this Act.
(3) If, as a result of the enactment of section 6.11 of Part I of Schedule V to the Act by subsection (1),
(a) a person ceases to use land of the person, or reduces the extent to which land is used, in commercial activities of the person,
(b) the person is deemed under subsection 206(4) or (5) or 207(1) or (2) of the Act to have made a supply of the land, or a portion of it,
(c) the person would have become entitled, at a particular time on or before February 26, 2008, to a rebate under subsection 256.1(1) of the Act in respect of the land equal to an amount, if that subsection, as amended by this Act, had applied at the particular time, and
(d) in determining the basic tax content (as defined in subsection 123(1) of the Act) of the land of the person on or after the particular time, the amount would have been included in determining the total for B in that definition if the person had been entitled to the rebate at the particular time,
for the purpose of determining, on or after the particular time, the basic tax content of the land of the person, the amount shall be included in determining the total for B in that definition.
(4) If, as a result of the enactment of section 6.11 of Part I of Schedule V to the Act by subsection (1),
(a) a person ceases to use a residential complex of the person, or reduces the extent to which the residential complex is used, in commercial activities of the person,
(b) the person is deemed under subsection 206(4) or (5) or 207(1) or (2) of the Act to have made a supply of the residential complex, or a portion of it,
(c) the person would have become entitled, at a particular time on or before February 26, 2008, to a rebate under subsection 256.2(3) of the Act in respect of the residential complex equal to an amount, if section 256.2 as amended by this Act had applied at the particular time, and
(d) in determining the basic tax content (as defined in subsection 123(1) of the Act) of the residential complex of the person on or after the particular time, the amount would have been included in determining the total for B in that definition if the person had been entitled to the rebate at the particular time,
for the purpose of determining, on or after the particular time, the basic tax content of the residential complex of the person, the amount shall be included in determining the total for B in that definition.
Treatment of Property Leases for Wind and Solar Power Equipment
23. (1) Subsection 162(2) of the Act is amended by striking out the word "or" at the end of paragraph (b), by adding the word "or’’ at the end of paragraph (c) and by adding the following after that paragraph:
(d) a right to enter or use land to generate, or evaluate the feasibility of generating, electricity from the sun or wind,
(2) Subsection 162(3) of the Act is replaced by the following:
Exception
(3) Subsection (2) does not apply to a supply of a right to take or remove forestry products, products that grow in water, fishery products, minerals or peat, a right of entry or user relating thereto or a right referred to in paragraph (2)(d), if the supply is made to
(a) a consumer; or
(b) a person who is not a registrant and who acquires the right in the course of a business of the person of making supplies of the products, minerals, peat or electricity to consumers.
(3) Subsections (1) and (2) apply to
(a) any supply made on or after February 26, 2008; and
(b) any supply made before February 26, 2008 but only in respect of the portion of the consideration for the supply that becomes payable, or is paid without having become payable, on or after February 26, 2008.
Notice of Ways and Means Motion to Amend the Excise Act, 2001, the Excise Act and the Customs Tariff
That it is expedient to amend the Excise Act, 2001, the Excise Act and the Customs Tariff as follows:
Tobacco
Excise Act, 2001
1. (1) Section 2 of the Excise Act, 2001 is amended by adding the following in alphabetical order:
"tobacco manufacturing equipment"
� matériel de fabrication du tabac �
"tobacco manufacturing equipment" means any machinery or equipment designed or modified specifically for the manufacture of a tobacco product.
(2) Subsection (1) comes into force on the day on which that subsection is assented to.
2. (1) Section 5 of the Act is replaced by the following:
Constructive possession
5. (1) For the purposes of subsections 30(1), 32(1) and 32.1(1), section 61, subsections 70(1) and 88(1) and sections 230 and 231, if one of two or more persons, with the knowledge and consent of the rest of them, has anything in the person’s possession, it is deemed to be in the custody and possession of each and all of them.
Meaning of "possession"
(2) In this section and in subsections 30(1), 32(1) and 32.1(1), section 61 and subsections 70(1) and 88(1), "possession" means not only having in one’s own personal possession but also knowingly
(a) having in the actual possession or custody of another person; or
(b) having in any place, whether belonging to or occupied by one’s self or not, for one’s own use or benefit or that of another person.
(2) Subsection (1) comes into force on the day on which that subsection is assented to.
3. (1) Subsection 23(1) of the Act is replaced by the following:
Refusal to issue licence or registration
23. (1) The Minister may refuse to issue a licence or registration to a person if the Minister has reason to believe
(a) that access to the premises of the person will be denied or impeded by any person; or
(b) that the refusal is otherwise in the public interest.
(2) Section 23 of the Act is amended by adding the following after subsection (2):
Cancellation, etc. — access to premises
(2.1) The Minister may amend, suspend or cancel any licence or registration of a person if
(a) access to the premises of the licensee or registrant is denied or impeded by any person; or
(b) it is otherwise in the public interest.
(3) Subsections (1) and (2) come into force on the day on which those subsections are assented to.
4. (1) The Act is amended by adding the following after section 32:
Prohibition — possession of tobacco manufacturing equipment
32.1 (1) No person shall possess tobacco manufacturing equipment with the intent of manufacturing a tobacco product unless
(a) the person is a tobacco licensee; or
(b) the person is an individual manufacturing manufactured tobacco or cigars for their personal use as permitted under subsection 25(3).
Prohibition — importation of tobacco manufacturing equipment
(2) No person shall import tobacco manufacturing equipment unless
(a) the person is a tobacco licensee;
(b) the equipment is designed for use by an individual manufacturing manufactured tobacco or cigars for their personal use as permitted under subsection 25(3) and is not designed for commercial manufacturing;
(c) the person provides evidence satisfactory to the Minister of Public Safety and Emergency Preparedness that the equipment is imported
(i) on behalf of a tobacco licensee,
(ii) for the sole purpose of maintenance, alteration or repair in Canada, if the equipment is intended to be exported as soon after the maintenance, alteration or repair is completed,
(iii) by or on behalf of a person that carries on a business of supplying that equipment, or
(iv) for in-transit movement through Canada; or
(d) it is imported in prescribed circumstances or under prescribed terms and conditions.
(2) Subsection (1) comes into force on the day on which that subsection is assented to.
5. (1) The portion of subsection 38(2) of the Act before paragraph (a) is replaced by the following:
No delivery of imported tobacco without markings
(2) Subject to subsections (2.1) and (3), no person shall deliver a container of imported manufactured tobacco or cigars that does not have printed on it or affixed to it tobacco markings and other prescribed information to
(2) Section 38 of the Act is amended by adding the following after subsection (2):
Delivery of imported stamped tobacco
(2.1) A container of imported manufactured tobacco that was manufactured outside of Canada and is stamped may be delivered to
(a) a duty free shop for sale or offer for sale in accordance with the Customs Act; or
(b) a customs bonded warehouse.
(3) Subsections (1) and (2) are deemed to have come into force on February 27, 2008.
6. (1) Section 47 of the Act is renumbered as subsection 47(1) and the following is added after that subsection:
Duty relieved — re-importation of stamped tobacco by individual
(2) The duty imposed under section 42 is relieved on manufactured tobacco imported by an individual for their personal use if it was manufactured outside of Canada, was previously imported into Canada and is stamped.
(2) Subsection (1) is deemed to have come into force on February 27, 2008.
7. (1) Subsection 53(1) of the Act is replaced by the following:
Special duty on imported manufactured tobacco delivered to duty free shop
53. (1) A special duty is imposed, at the rates set out in section 1 of Schedule 3, on imported manufactured tobacco that is delivered to a duty free shop and that is not stamped.
(2) Subsection (1) applies to imported manufactured tobacco that is delivered after February 26, 2008.
8. (1) Subsection 54(4) of the Act is replaced by the following:
Exception
(4) The special duty is not imposed on traveller’s tobacco imported by an individual for their personal use if duty under section 42 was previously imposed on the tobacco and the tobacco is stamped.
(2) Subsection (1) is deemed to have come into force on February 27, 2008.
9. (1) The Act is amended by adding the following after section 180:
Refund — imported black stock tobacco
180.1 (1) The Minister may refund to a person who has imported manufactured tobacco an amount determined in accordance with subsection (2) in respect of the tobacco if
(a) the person provides evidence satisfactory to the Minister that
(i) duty was imposed on the tobacco under section 42 at a rate set out in paragraph 1(b), 2(b) or 3(b) of Schedule 1 and paid, and
(ii) the tobacco is black stock
(A) delivered to a duty free shop or customs bonded warehouse or to a person for use as ships’ stores in accordance with the Ships’ Stores Regulations; or
(B) exported for delivery to a foreign duty free shop or as foreign ships’ stores, and
(b) the person applies to the Minister for the refund within two years after the tobacco was imported.
Determination of refund
(2) The amount of the refund under subsection (1) is equal to the amount by which
(a) the duty referred to in paragraph (1)(a)(i)
exceeds
(b) the duty that would have been imposed under section 42 on the tobacco if the applicable rate of duty had been the rate set out in paragraph 1(a), 2(a) or 3(a) of Schedule 1.
(2) Subsection (1) applies to imported manufactured tobacco that is black stock and that is, after February 26, 2008,
(a) delivered to a duty free shop or customs bonded warehouse or to a person for use as ships’ stores in accordance with the Ships’ Stores Regulations; or
(b) exported for delivery to a foreign duty free shop or as foreign ships’ stores.
10. (1) Section 206 of the Act is amended by adding the following after subsection (2):
Keeping records — tobacco manufacturing equipment
(2.1) Every person who possesses tobacco manufacturing equipment (other than equipment that is designed for use by an individual manufacturing manufactured tobacco or cigars for their personal use as permitted under subsection 25(3) and that is not designed for commercial manufacturing) shall keep records that will enable the determination of the source, the type and the disposition of that equipment.
(2) Subsection (1) comes into force on the day on which that subsection is assented to.
11. (1) The portion of section 214 before paragraph (a) is replaced by the following:
Unlawful production, sale, etc., of tobacco or alcohol
214. Every person who contravenes section 25, 27 or 29, subsection 32.1(1) or section 60 or 62 is guilty of an offence and liable
(2) Subsection (1) comes into force on the day on which that subsection is assented to.
12. (1) Subparagraph 216(2)(a)(ii) of the Act is replaced by the following:
(ii) $0.17 multiplied by the number of tobacco sticks to which the offence relates,
(2) Subparagraph 216(3)(a)(ii) of the Act is replaced by the following:
(ii) $0.255 multiplied by the number of tobacco sticks to which the offence relates,
(3) Subsections (1) and (2) come into force on the day on which those subsections are assented to.
13. (1) Paragraph 240(b) of the Act is replaced by the following:
(b) $0.361448 per tobacco stick that was removed in contravention of that subsection, and
(2) Subsection (1) comes into force on the day on which that subsection is assented to.
14. (1) The portion of paragraph 2(a) of Schedule 1 to the Act before subparagraph (i) is replaced by the following:
(a) $0.074975 per stick, if the tobacco sticks are black stock
(2) Paragraph 2(b) of Schedule 1 to the Act is replaced by the following:
(b) $0.085 per stick, in any other case.
(3) Subsections (1) and (2) are deemed to have come into force on February 27, 2008.
15. (1) The portion of paragraph 3(a) of Schedule 1 to the Act before subparagraph (i) is replaced by the following:
(a) $2.49915 per 50 grams or fraction of 50 grams contained in any package, if the manufactured tobacco is black stock
(2) Paragraph 3(b) of Schedule 1 to the Act is replaced by the following:
(b) $2.8925 per 50 grams or fraction of 50 grams contained in any package, in any other case.
(3) Subsections (1) and (2) come into force, or are deemed to have come into force, on July 1, 2008.
16. (1) Paragraphs 1(b) and (c) of Schedule 3 to the Act are replaced by the following:
(b) $0.075 per stick, in the case of tobacco sticks; and
(c) $2.50 per 50 grams or fraction of 50 grams contained in any package, in the case of manufactured tobacco other than cigarettes or tobacco sticks.
(2) Paragraph 1(b) of Schedule 3 to the Act, as amended by subsection (1), is deemed to have come into force on February 27, 2008.
(3) Paragraph 1(c) of Schedule 3 to the Act, as amended by subsection (1), comes into force, or is deemed to have come into force, on July 1, 2008.
17. (1) Paragraphs 2(b) and (c) of Schedule 3 to the Act are replaced by the following:
(b) $0.075 per stick, in the case of tobacco sticks; and
(c) $2.50 per 50 grams or fraction of 50 grams contained in any package, in the case of manufactured tobacco other than cigarettes or tobacco sticks.
(2) Paragraph 2(b) of Schedule 3 to the Act, as amended by subsection (1), is deemed to have come into force on February 27, 2008.
(3) Paragraph 2(c) of Schedule 3 to the Act, as amended by subsection (1), comes into force, or is deemed to have come into force, on July 1, 2008.
18. (1) Paragraph 3(b) of Schedule 3 to the Act is replaced by the following:
(b) $0.075 per stick, in the case of tobacco sticks; and
(2) Subsection (1) is deemed to have come into force on February 27, 2008.
19. (1) Paragraphs 4(b) and (c) of Schedule 3 to the Act are replaced by the following:
(b) $0.095724 per stick, in the case of tobacco sticks; and
(c) $2.3001 per 50 grams or fraction of 50 grams contained in any package, in the case of tobacco products other than cigarettes or tobacco sticks.
(2) Paragraph 4(b) of Schedule 3 to the Act, as amended by subsection (1), is deemed to have come into force on February 27, 2008.
(3) Paragraph 4(c) of Schedule 3 to the Act, as amended by subsection (1), comes into force, or is deemed to have come into force, on July 1, 2008.
Application
20. For the purposes of applying the provisions of the Customs Act that provide for the payment of, or the liability to pay, interest in respect of any amount, the amount shall be determined and interest shall be computed on it as though
(a) sections 14 and 18, paragraph 1(b) of Schedule 3 to the Act, as amended by subsection 16(1), paragraph 2(b) of Schedule 3 to the Act, as amended by subsection 17(1), and paragraph 4(b) of Schedule 3 to the Act, as amended by subsection 19(1), had come into force on February 27, 2008; and
(b) section 15, paragraph 1(c) of Schedule 3 to the Act, as amended by subsection 16(1), paragraph 2(c) of Schedule 3 to the Act, as amended by subsection 17(1), and paragraph 4(c) of Schedule 3 to the Act, as amended by subsection 19(1), had come into force on July 1, 2008.
Customs Tariff
21. (1) Subsection 92(3) of the Customs Tariff is replaced by the following:
Non-application to manufactured tobacco
(3) This section does not apply to any duty imposed under the Excise Act, 2001 in respect of manufactured tobacco that is manufactured in Canada and imported manufactured tobacco that is stamped in accordance with that Act.
(2) Subsection (1) is deemed to have come into force on February 27, 2008.
Alcohol
Excise Act
22. (1) The definition "beer" or "malt liquor" in section 4 of the Excise Act is replaced by the following:
"beer" or "malt liquor"
� bière � ou � liqueur de malt �
"beer" or "malt liquor"means all fermented liquor that is brewed in whole or in part from malt, grain or any saccharine matter without any process of distillation and that has an alcoholic strength not in excess of 11.9% absolute ethyl alcohol by volume, but does not include wine as defined in section 2 of the Excise Act, 2001;
(2) With respect to fermented liquor that is brewed by a brewer in whole or in part from malt, grain or any saccharine matter without any process of distillation and that has an alcoholic strength in excess of 11.9% absolute ethyl alcohol by volume, a valid licence held by the brewer under the Excise Act is deemed to be a valid spirits licence issued under section 14 of the Excise Act, 2001 until the day that is 30 days after the day on which subsection (1) is assented to.
(3) For the purposes of applying the provisions of the Excise Act, 2001 and of the Customs Act that provide for the payment of, or the liability to pay, interest in respect of any amount, the amount shall be determined and interest shall be computed on it as though this section had come into force on February 27, 2008.
(4) Subsections (1) and (2) are deemed to have come into force on February 27, 2008.
Customs Tariff
23. (1) The definition "spirits" in section 21 of the Customs Tariff is amended by striking out the word "or" at the end of paragraph (a) and by adding the following after that paragraph:
(a.1) of an alcoholic strength by volume exceeding 11.9%, of heading No. 22.03, that are classified under that heading or with the container in which they are imported; or
(2) For the purposes of applying the provisions of the Excise Act, 2001 and of the Customs Act that provide for the payment of, or the liability to pay, interest in respect of any amount, the amount shall be determined and interest shall be computed on it as though this section had come into force on February 27, 2008.
(3) Subsection (1) is deemed to have come into force on February 27, 2008.
Draft Amendments
and Explanatory Notes to the Income Tax Regulations
Draft Amendments to the Income Tax Regulations
A. Measures arising from Budget 2008[1]
Regulations Amending the Income Tax Regulations
(Medical Devices and Equipment)
1. (1) Section 5700 of the Regulations is amended by striking out the word "and" at the end of paragraph (y), by adding the word "and" at the end of paragraph (z) and by adding the following after paragraph (z):
(z.1) altered auditory feedback device designed to be used by an individual who has a speech impairment;
(z.2) electrotherapy device designed to be used by an individual with a medical condition or by an individual who has a severe mobility impairment;
(z.3) standing device designed to be used by an individual who has a severe mobility impairment to undertake standing therapy; and
(z.4) pressure pulse therapy device designed to be used by an individual who has a balance disorder.
(2) Subsection (1) applies to the 2008 and subsequent taxation years.
Regulations Amending the Income Tax Regulations
(Capital Cost Allowance – 2008 Budget Measures)
1. Subsection 1100(1) of the Regulations is amended by striking out the word "and" at the end of paragraph (zg), by adding the word "and" at the end of subparagraph (zh) and by adding the following after subparagraph (zh):
Additional Allowance – Class 43
(zi) such additional amount as the taxpayer claims in respect of property for which a separate class is prescribed by subsection 1101(5s.1) or (5s.3), not exceeding
(i) if subsection 1101(5s.1) or (5s.2) applies to the property, for the first taxation year of the taxpayer in which the property is available for use for the purposes of subsection 13(26) of the Act 20 per cent, and for the next taxation year 10 per cent, of the undepreciated capital cost to the taxpayer of the property of that class as of the end of that taxation year (before making any deduction under this subsection for that taxation year), and
(ii) if subsection 1101(5s. 3) or (5s.4) applies to the property, for the first taxation year of the taxpayer in which the property is available for use for the purposes of subsection 13(26) of the Act, 10 per cent of the undepreciated capital cost to the taxpayer of the property of that class as of the end of that taxation year (before making any deduction under this subsection for that taxation year);
2. Section 1101 of the Regulations is amended by adding the following after subsection (5s):
(5s.1) Subject to subsection (5s.2), for the purposes of this Part and Schedule II, a separate Class 43 is prescribed for all of the property of a taxpayer
(a) that is acquired by the taxpayer in 2010 and in a particular taxation year of the taxpayer;
(b) that is included in Class 43 for the particular taxation year because of paragraph (a) of that class; and
(c) to which neither subsection (5p) nor (5s) applies.
(5s.2) For the purposes of this Part and Schedule II, if a taxpayer elects (by letter attached to the return of income of the taxpayer filed with the Minister in accordance with section 150 of the Act for the particular taxation year) to apply this subsection to one or more properties of the taxpayer to which subsection (5s.1) would otherwise apply, a separate Class 43 is prescribed for the property or properties included in that election.
(5s.3) Subject to subsection (5s.4), for the purposes of this Part and Schedule II, a separate Class 43 is prescribed for all of the property of a taxpayer
(a) that is acquired by the taxpayer in 2011 and in a particular taxation year of the taxpayer;
(b) that is included in Class 43 for the particular taxation year because of paragraph (a) of that class; and
(c) to which neither subsection (5p) nor (5s) applies.
(5s.4) For the purposes of this Part and Schedule II, if a taxpayer elects (by letter attached to the return of income of the taxpayer filed with the Minister in accordance with section 150 of the Act for the particular taxation year) to apply this subsection to one or more properties of the taxpayer to which subsection (5s.3) would otherwise apply, a separate Class 43 is prescribed for the property or properties included in that election.
(5s.5) For the purposes of this Part and Schedule II, if a taxpayer elects (by letter attached to the return of income of the taxpayer filed with the Minister in accordance with section 150 of the Act for the particular taxation year) to apply this subsection to one or more properties of the taxpayer to which subsection (5s.1) or (5s.3) would otherwise apply, those subsections and subsections (5s.2) and (5s.4) do not apply to those properties.
3. (1) Subsection 1102(16.1) of the Regulations is replaced by the following:
(16.1) A taxpayer that acquires a property that is manufacturing or processing machinery or equipment to which Class 43.1 or 43.2 in Schedule II would otherwise apply may (by letter attached to the return of income of the taxpayer filed with the Minister in accordance with section 150 of the Act for the taxation year in which the property is acquired) elect to include the property in
(a) Class 29 in Schedule II if the property was acquired after March 18, 2007 and before 2010 and that class would apply to the property if Schedule II were read without reference to Classes 43.1 and 43.2; or
(b) Class 43 in Schedule II if the property was acquired after 2009 and before 2012 and that class would apply to the property if Schedule II were read without reference to Classes 43.1 and 43.2.
(2) Section 1102 of the Regulations is amended by adding the following after subsection (19):
(19.1) For the purposes of this Part and Schedule II, if subsection (19.2) applies to the refurbishment or reconditioning of a railway locomotive of a taxpayer, any property acquired by the taxpayer after February 25, 2008 that is incorporated into the locomotive in the course of the refurbishment or reconditioning is, except as otherwise provided in this Part or in Schedule II, deemed to be included in paragraph (y) of Class 10.
(19.2) This subsection applies to the refurbishment or reconditioning of a railway locomotive, of a taxpayer, that
(a) is included in a class in Schedule II other than Class 10; and
(b) would be included in Class 10 in Schedule II if it had not been used or acquired for use for any purpose by any taxpayer before February 26, 2008.
4. Section 1103 of the Regulations is amended by adding the following after subsection (2g):
(2g.1) Subject to subsection (2g.2), for the purposes of this Part and Schedule II,
(a) all of the properties that are, pursuant to subsection 1101(5s.1), included in a separate class at the time that is immediately after the end of the taxpayer’s second taxation year referred to in subparagraph 1100(1)(zi)(i) shall be transferred at that time from the separate class to the class in which the property would, but for subsection (5s.1), have been included; and
(b) all of the properties that are, pursuant to subsection 1101(5s.3), included in a separate class at the time that is immediately after the end of the taxpayer’s taxation year referred to in subparagraph 1100(1)(zi)(ii) shall be transferred at that time from the separate class to the class in which the property would, but for subsection (5s.3), have been included.
(2g.2) For the purposes of this Part and Schedule II, where one or more properties of a taxpayer are included in a separate Class 43 pursuant to an election filed by the taxpayer in accordance with subsection 1101(5s.2) or (5s.4), all of the properties that are in that separate class at the particular time that is immediately after the beginning of the taxpayer’s fifth taxation year that begins after the end of the first taxation year in which an additional allowance is deductible by the taxpayer under paragraph 1100(1)(zi) shall be transferred at the particular time from the separate Class 43 to the class in which the property would, but for the election, have been included.
5. (1) The definition "food waste" in subsection 1104(13) of the Regulations is repealed.
(2) The definitions "biogas" and "eligible fuel waste" in subsection 1104(13) of the Regulations are replaced by the following:
"biogas" means the gas produced by the anaerobic digestion of organic waste that is sludge from an eligible sewage treatment facility, food and animal waste, manure, plant residue, or wood waste. (biogaz)
"eligible waste fuel" means biogas, bio-oil, digester gas, landfill gas, municipal waste, pulp and paper waste and wood waste. (combustible résiduaire admissible)
(3) Subsection 1104(13) of the Regulations is amended by adding the following in alphabetical order:
"food and animal waste" means organic waste that is disposed of in accordance with the applicable laws of Canada or a province and that is
(a) generated during the preparation or processing of food for human or animal consumption;
(b) food that is no longer fit for human or animal consumption; or
(c) animal remains. (déchets alimentaires et animaux)
6. Paragraph (j) of Class 6 in Schedule II to the Regulations is replaced by the following:
(j) a railway locomotive acquired after May 25, 1976 and before February 26, 2008, but not including an automotive railway car;
7. (1) Paragraph (i) of Class 7 in Schedule II to the Regulations is replaced by the following:
(i) property acquired after February 27, 2000 (other than property included in paragraph (y) of Class 10) that is a railway locomotive, but not including an automotive railway car;
(2) Class 7 in Schedule II to the Regulations is amended by adding the word "or" at the end of paragraph (j) and by adding the following after paragraph (j):
(k) pumping or compression equipment acquired after February 25, 2008, including equipment ancillary to pumping and compression equipment, that is on a pipeline and that pumps or compresses carbon dioxide for the purpose of moving it through the pipeline.
8. Class 10 in Schedule II to the Regulations is amended by striking out the word "or" at the end of paragraph (w), by adding the word "or" at the end of paragraph (x) and by adding the following after paragraph (x):
(y) a railway locomotive (other than, for greater certainty, an automotive railway car) that was not used or acquired for use for any purpose by any taxpayer before February 26, 2008.
9. The portion of subparagraph (c)(iii) of Class 29 in Schedule II to the Regulations that is before clause (A) is replaced by the following:
(iii) after March 18, 2007 and before 2010 if the property is machinery, or equipment,
10. (1) The portion of subparagraph (d)(i) of Class 43.1 in Schedule II to the Regulations that is after subclause (A)(i) is replaced by the following:
(II) equipment that is part of a ground source heat pump system that meets the standards set by the Canadian Standards Association for the design and installation of earth energy systems, including such equipment that consists of underground piping, energy conversion equipment, energy storage equipment, control equipment and equipment designed to interface the system with other heating equipment, and
(B) it is not a building, part of a building (other than a solar collector that is not a window and that is integrated into a building), equipment used to heat water for use in a swimming pool, energy equipment that backs up equipment described in subclause (A)(I) or (II) nor equipment that distributes heated air or water in a building,
(2) Subparagraph (d)(ix) of Class 43.1 in Schedule II to the Regulations is replaced by the following:
(ix) equipment used by the taxpayer, or by a lessee of the taxpayer, primarily for the purpose of generating heat energy from the consumption of eligible waste fuel, and using only fuel that is eligible waste fuel, fossil fuel or a combination of both, if the heat energy is used directly in an industrial process, or in a greenhouse, including such equipment that consists of fuel handling equipment used to upgrade the combustible portion of the fuel and control, feedwater and condensate systems, and other ancillary equipment, but not including buildings or other structures, heat rejection equipment (such as condensers and cooling water systems), fuel storage facilities, other fuel handling equipment and electrical generating equipment, and property otherwise included in Class 10 or 17,
(3) Subparagraph (d)(xi) of Class 43.1 in Schedule II to the Regulations is replaced by the following:
(xi) equipment used by the taxpayer, or a lessee of the taxpayer, in a system that converts wood waste or plant residue into bio-oil, if that bio-oil is used primarily for the purpose of generating heat that is used directly in an industrial process or a greenhouse, electricity or electricity and heat, other than equipment used for the collection, storage or transportation of wood waste or plant residue, buildings or other structures and property otherwise included in Class 10 or 17,
(4) Subparagraph (d)(xiii) of Class 43.1 in Schedule II to the Regulations is replaced by the following:
(xiii) property that is part of a system that is used by the taxpayer, or by a lessee of the taxpayer, primarily to produce and store biogas, which property includes equipment that is an anaerobic digester reactor, a buffer tank, a pre-treatment tank, biogas piping, a biogas storage tank, and biogas scrubbing equipment but not including
(A) property (other than a buffer tank) that is used to collect, move or store organic waste,
(B) equipment used to process the residue after digestion or to treat recovered liquids,
(C) buildings or other structures, and
(D) property otherwise included in Class 10 or 17, or
11. Class 49 in Schedule II to the Regulations is replaced by the following:
Class 49
Property that is a pipeline, including control and monitoring devices, valves and other equipment ancillary to the pipeline, that
(a) is acquired after February 22, 2005, is used for the transmission (but not the distribution) of petroleum, natural gas or related hydrocarbons, and is not
(i) a pipeline described in subparagraph (l)(ii) of Class 1,
(ii) property that has been used or acquired for use for any purpose by any taxpayer before February 23, 2005,
(iii) equipment included in Class 7 because of paragraph (j) of that Class, nor
(iv) a building or other structure; or
(b) is acquired after February 25, 2008, is used for the transmission of carbon dioxide, and is not
(i) equipment included in Class 7 because of paragraph (k) of that Class, nor
(ii) a building or other structure.
12. (1) Sections 1 to 4, 6 to 9 and 11 are deemed to have come into force on February 26, 2008.
(2) Sections 5 and 10 apply to property acquired after February 25, 2008.
Explanatory Notes – Regulations Amending the Income Tax Regulations (Capital Cost Allowance – 2008 Budget Measures)
The following explanatory notes accompany proposed amendments to the Income Tax Regulations announced in the February 26, 2008 Budget.
Section 1
CCA Rates
ITR
1100(1)
Subsection 1100(1) of the Income Tax Regulations (the "Regulations") sets out the capital cost allowance (CCA) rates that taxpayers may claim with respect to specified classes of depreciable property.
Additional Allowances
ITR
1100(1)(zi)
New paragraph 1100(1)(zi) of the Regulations provides for additional allowances in respect of certain machinery and equipment used in qualifying Canadian manufacturing or processing activity.
Subparagraph 1100(1)(zi)(i) applies to manufacturing or processing equipment
- that is described in paragraph (a) of Class 43 in Schedule II to the Regulations,
- that is acquired by a taxpayer in the calendar year 2010, and
- that is included in a separate prescribed Class 43 pursuant to new subsection 1101(5s.1) or an election filed under new subsection (5s.2) of the Regulations.
In such cases, and subject to the half-year rule in subsection 1100(2), a taxpayer may deduct an additional CCA amount of 20 per cent and 10 per cent, respectively, of the undepreciated capital cost of the class at the end of the first and second taxation years of the taxpayer in which the equipment included in the separate Class 43 is available for use for the purposes of subsection 13(26) of the Income Tax Act.
Subparagraph 1100(zi)(ii) applies to manufacturing or processing equipment
- that is described in paragraph (a) of Class 43 in Schedule II to the Regulations,
- that is acquired by a taxpayer in the calendar year 2011, and
- that is included in a separate prescribed Class 43 pursuant to new subsection 1101(5s.3) or an election filed under new subsection (5s.4) of the Regulations.
In such cases, and subject to the half-year rule in subsection 1100(2), a taxpayer may deduct an additional CCA amount of 10 per cent of the undepreciated capital cost of the class in the first taxation year of the taxpayer in which the equipment included in the separate Class 43 is available for use for the purposes of subsection 13(26) of the Income Tax Act.
Equipment that is eligible for one of these two additional allowance mechanisms is to be transferred back into the general Class 43 after the expiry of the period provided for in new subsection 1103(2g.1) or (2g.2). For further details, see the explanatory note accompanying new subsections 1103(2g.1) and (2g.2).
These amendments apply to property acquired after February 25, 2008.
Section 2
Separate Class Election
ITR
1101
Section 1101 of the Regulations provides separate classes in respect of certain property described in Schedule II to the Regulations.
Election – Manufacturing and Processing Equipment
ITR
1101(5s.1) to (5s.5)
New subsection 1101(5s.1) of the Regulations provides that a separate Class 43 is prescribed for all of the manufacturing or processing equipment acquired by a taxpayer in 2010; that would be included in the taxpayer’s Class 43 because of paragraph (a) of that class and to which neither subsection 1101(5p) nor (5s) applies. However, if the taxpayer elects to apply new subsection 1101(5s.2), a separate Class 43 is prescribed for the property or properties included in that election. A taxpayer is to file this election by letter attached to the taxpayer’s return of income for the taxation year in which the property is acquired.
New subsection 1101(5s.3) of the Regulations provides that a separate Class 43 is prescribed for all of the manufacturing or processing equipment acquired by a taxpayer in 2011, that is included in the taxpayer’s Class 43 because of paragraph (a) of that class and to which neither subsection 1101(5p) nor (5s) applies. However, if the taxpayer elects to apply new subsection 1101(5s.4), a separate Class 43 is prescribed for the property or properties included in that election. A taxpayer is to file this election by letter attached to the taxpayer’s return of income for the taxation year in which the property is acquired.
If subsections 1101(5s.1) to (5s.4) apply to manufacturing or processing equipment of a taxpayer, the taxpayer is eligible to claim additional CCA amounts in respect of the equipment as allowed under new paragraph 1100(1)(zi).
New subsection 1101(5s.5) of the Regulations provides that a taxpayer may elect not to have a separate prescribed class that would otherwise arise under subsection 1101(5s.1) or (5s.3). If this election is made, subsections 1101(5s.1) to (5s.4) do not apply to the taxpayer’s property.
These amendments apply to property acquired after February 25, 2008.
Section 3
Special Rules
Election for Certain M&P Equipment
ITR
1102(16.1)
Subsection 1102(16.1) of the Regulations provides that a taxpayer, who acquires manufacturing or processing machinery and equipment that otherwise would be included in Class 43.1 or 43.2 in Schedule II to the Regulations, may elect to include the property in Class 29 if the property is acquired after March 18, 2007 and before 2009 and Class 29 applies to the property. The election is to be made by letter attached to the taxpayer’s return of income for the taxation year in which the property is acquired.
Subsection 1102(16.1) is amended in two respects. The first amendment extends the subsection’s application to manufacturing or processing equipment acquired before 2010, instead of before 2009. The second amendment provides an analogous election in respect of manufacturing or processing machinery and equipment that is acquired in 2010 and 2011 to allow a taxpayer to claim Class 43 treatment.
Railway Locomotives
ITR
1102(19.1) and (19.2)
In general, new subsections 1102(19.1) and (19.2) provide that any property acquired by a taxpayer after February 25, 2008 that is incorporated into a railway locomotive (other than a locomotive included in Class 10) of the taxpayer, is included in Class 10.
Section 4
Inclusions and Transfers between Classes
Transfers
ITR
1103(2g.1) and (2g.2)
New subsection 1103(2g.1) of the Regulations provides a special transfer rule where new subsection 1101(5s.1) or (5s.3) applies to include property in a separate prescribed Class 43. The property is to be transferred to the general Class 43 immediately after the end of the period during which the additional allowances may be claimed.
New subsection 1103(2g.2) of the Regulations provides a special transfer rule where new subsection 1101(5s.2) or (5s.4) applies to include one or more properties of a taxpayer in a separate prescribed Class 43. The property is to be transferred to the general Class 43 immediately after the end of the period during which the additional allowance may be claimed. In general, such a transfer occurs immediately after the beginning of the taxpayer’s fifth taxation year of being eligible to deduct an additional allowance if subsection 1101(5s.2) or (5s.4) applies.
Subsection 13(5) of the Income Tax Act provides special rules that apply to depreciable property that is included in one prescribed class of a taxpayer and becomes included in another prescribed class of the taxpayer.
Section 5
Classes 43.1 and 43.2 – Energy Conservation Property
ITR
1104(13)
Subsection 1104(13) of the Regulations sets out various definitions that apply for the purpose of determining whether property is depreciable property to which Class 43.1 or 43.2 applies.
Consequential to the extension of Classes 43.1 and 43.2 to certain property as announced in the 2008 Budget, subsection 1104(13) is amended in four respects.
First, the definition "food waste" is repealed. Second, the definition "food and animal waste" is added. Third, the definition "biogas" is amended to replace the reference to "food waste" with "food and animal waste" and to add a reference to "sludge from an eligible sewage treatment facility". Fourth, the definition "eligible waste fuel" is amended to add a reference to "biogas".
These amendments apply to property acquired after February 25, 2008.
Sections 6-11
Schedule II to the Regulations – Classes of Property
Schedule II to the Regulations provides a list of classes of depreciable properties for the purposes of claiming CCA, and the descriptions of properties that are to be included in each Class.
Section 6
Class 6 (10% rate)
Paragraph (j) of Class 6 is amended consequential to the inclusion of railway locomotives in Class 10 (30% rate) applicable to acquisition made after February 25, 2008.
Section 7
Class 7 (15% rate)
Class 7 is amended in two respects.
First, paragraph (i) of Class 7 is amended consequential to the inclusion of certain railway locomotives in Class 10 (30% rate) applicable to acquisitions after February 25, 2008.
Second, new paragraph (k) includes in Class 7 pumping or compression equipment acquired after February 25, 2008 that is on a pipeline and that pumps or compresses carbon dioxide for the purpose of moving it through the pipeline.
Section 8
Class 10 (30%)
New paragraph (y) of Class 10 includes in that class railway locomotives that were not used or acquired for use for any purpose by any taxpayer before February 26, 2008.
Section 9
Class 29 (3-year write-off)
Class 29 in Schedule II to the Regulations provides accelerated CCA for certain manufacturing or processing machinery and equipment acquired after March 18, 2007 and before 2009. Class 29 is extended to also apply to such equipment acquired in 2009.
Section 10
Class 43.1 (30% rate) and Class 43.2 (50% rate)
Class 43.1 provides a 30% accelerated CCA rate for certain energy conservation equipment. Class 43.2 provides a 50% accelerated CCA rate. In general terms, Class 43.2 applies to property described in Class 43.1 if the property is acquired on or after February 23, 2005 and before 2020. Unlike Class 43.1, however, Class 43.2 applies to co-generation property described in paragraphs (a) to (c) of Class 43.1 only if the heat efficiency of fuels used in an eligible co-generation system does not exceed a 4,750 BTU requirement instead of the 6,000 BTU requirement.
Class 43.1 (and indirectly Class 43.2) is amended in the following respects.
1. Ground Source Heat Pump System
Subparagraph (d)(i) of Class 43.1 applies to certain active solar heating equipment and ground source heat pump system equipment.
Subclause (d)(i)(A)(II) is amended to remove the requirement that the liquid or gas heated by equipment that is part of a ground source heat pump system be used directly in an industrial process or in a greenhouse. Under the revised provision, the equipment must be part of a ground source heat pump system that meets the standards set by the Canadian Standards Association for the design and installation of earth energy systems.
Subclause (d)(i)(B) is amended to exclude energy equipment that backs up equipment described in subclause (A)(I) or (II).
2. Waste-Fuelled Thermal Energy Systems
Subparagraph (d)(ix) of Class 43.1 is amended to remove the requirement that the heat energy generated by equipment of a taxpayer, or a lessee of the taxpayer, be used in the taxpayer’s (or lessee’s) industrial process or greenhouse. Under the revised test, the heat must be used directly in an industrial process or in a greenhouse regardless of who owns it.
3. Bio-oil Equipment
Subparagraph (d)(xi) of Class 43.1 applies to certain equipment that is part of a system that is used to convert wood waste or plant residue into bio-oil. Currently, the bio-oil must be used by the taxpayer, or a lessee of the taxpayer, primarily for the purpose of generating electricity, or electricity and heat. The reference to "taxpayer, or lessee of the taxpayer" is removed and generation of "heat that is used directly in an industrial process or in a greenhouse" is added as an eligible use. Consequently, bio-oil may be used for the specified purposes regardless of who owns the generating equipment.
4. Biogas Equipment
Subparagraph (d)(xiii) of Class 43.1 currently applies to property of a taxpayer that is part of a system that is used by the taxpayer, or a lessee of the taxpayer, primarily to produce, store and use biogas in a certain manner. The following two requirements are removed: the biogas no longer need be used by the taxpayer; and the biogas no longer need be used to produce electricity or to produce heat that is used directly in an industrial process. This will allow the biogas to be sold.
Two additional changes are made consequential to the removal of the production of electricity in subparagraph (d)(xiii). The first change is to remove reference to electrical generating equipment in clause (d)(xiii)(A). The second change is to remove references in clause (d)(xiii)(B) to auxiliary electrical generating equipment, transmission equipment, distribution equipment and equipment used to store electrical energy and to subparagraph (a.1)(i) of Class 17 (which applies to electrical generating equipment). As a result of the inclusion of the definitions "biogas" and "eligible waste fuel" in subsection 1104(13), the equipment that generates the electricity or heat using the biogas may be included in paragraph (a) or subparagraph (d)(ix) of Class 43.1.
These amendments apply to property acquired after February 25, 2008.
Section 11
Class 49 (8% rate)
Class 49 currently applies, in general, to pipelines used for the transmission of petroleum, natural gas or related hydrocarbons. Class 49 is amended to apply to pipelines used for the transmission of carbon dioxide. This amendment applies to a pipeline acquired after February 25, 2008.
B. Other measures
Regulations Amending the Income Tax Regulations
(Capital Cost Allowance — 2007 Budget Measures)
1. (1) The portion of paragraph 1100(1)(a) of the English version of the Income Tax Regulations before subparagraph (i) is replaced by the following:
(a) subject to subsection (2), such amount as the taxpayer may claim in respect of property of each of the following classes in Schedule II not exceeding in respect of property
(2) Paragraph 1100(1)(a) of the Regulations is amended by striking out "and" at the end of subparagraph (xxxiv) and by adding the following after subparagraph (xxxv):
(xxxvi) of Class 50, 55 per cent, and
(xxxvii) of Class 51, 6 per cent,
(3) The portion of paragraph 1100(1)(a) of the English version of the Regulations after subparagraph (xxxvii) is replaced by the following:
of the undepreciated capital cost to the taxpayer as of the end of the taxation year (before making any deduction under this subsection for the taxation year) of property of the class;
(4) Subsection 1100(1) of the Regulations is amended by adding the following after paragraph (a):
Class 1
(a.1) where a separate class is prescribed by subsection 1101(5b.1) for a property of a taxpayer that is a building and at least 90 per cent of the floor space of the building is used at the end of the taxation year for the manufacturing or processing in Canada of goods for sale or lease, such amount as the taxpayer may claim not exceeding six per cent of the undepreciated capital cost to the taxpayer of the property of that class as of the end of the taxation year (before making any deduction under this subsection for the taxation year);
(a.2) where a separate class is prescribed by subsection 1101(5b.1) for a property of a taxpayer that is a building, at least 90 per cent of the floor space of the building is used at the end of the taxation year for a non-residential use in Canada and an additional allowance is not allowed for the year under paragraph (a.1) in respect of the property, such amount as the taxpayer may claim not exceeding two per cent of the undepreciated capital cost to the taxpayer of the property of that class as of the end of the taxation year (before making any deduction under this subsection for the taxation year);
(5) Subparagraph 1100(1.13)(a)(i.1) of the Regulations is replaced by the following:
(i.1) general-purpose electronic data processing equipment and ancillary data processing equipment, included in Class 45 or 50 in Schedule II, other than any individual item of that type of equipment having a capital cost to the taxpayer in excess of $1,000,000,
(6) Paragraph 1100(17)(b) of the Regulations is replaced by the following:
(b) computer tax shelter property, or
(7) Subsection 1100(20.1) of the Regulations and the heading before it are replaced by the following:
Computer Tax Shelter Property
(20.1) The total of all amounts each of which is a deduction in respect of computer tax shelter property allowed to the taxpayer under subsection (1) in computing a taxpayer’s income for a taxation year shall not exceed the amount, if any, by which
(a) the total of all amounts each of which is
(i) the taxpayer’s income for the year from a business in which computer tax shelter property owned by the taxpayer is used, computed without reference to any deduction under subsection (1) in respect of such property, or
(ii) the income of a partnership from a business in which computer tax shelter property of the partnership is used, to the extent of the share of such income that is included in computing the taxpayer’s income for the year,
exceeds
(b) the total of all amounts each of which is
(i) a loss of the taxpayer from a business in which computer tax shelter property owned by the taxpayer is used, computed without reference to any deduction under subsection (1) in respect of such property, or
(ii) a loss of a partnership from a business in which computer tax shelter property of the partnership is used, to the extent of the share of such loss that is included in computing the taxpayer’s income for the year.
(8) The portion of subsection 1100(20.2) of the Regulations before paragraph (a) is replaced by the following:
(20.2) For the purpose of this Part, computer tax shelter property is computer software, and property described in Class 50 in Schedule II, that is depreciable property of a prescribed class of a person or partnership where
2. (1) Section 1101 of the Regulations is amended by adding the following after subsection (5b):
Eligible Non-Residential Building
(5b.1) For the purposes of this Part, a separate class is prescribed for each eligible non-residential building of a taxpayer in respect of which the taxpayer has (by letter attached to the return of income of the taxpayer filed with the Minister in accordance with section 150 of the Act for the taxation year in which the building is acquired) elected that this subsection apply.
(2) The heading before subsection 1101(5r) of the Regulations is replaced by the following:
Computer Tax Shelter Property
(3) The portion of subsection 1101(5r) of the French version of the Regulations before paragraph (a) is replaced by the following:
(5r) Pour l’application de la présente partie, sont compris dans une catégorie distincte les produits informatiques déterminés qui seraient compris par ailleurs dans une catégorie de l’annexe II qui présente les caractéristiques suivantes:
(4) Paragraphs 1101(5r)(b) and (c) of the Regulations are replaced by the following:
(b) one of the properties is a computer tax shelter property, and
(c) one of the properties is not a computer tax shelter property,
3. (1) Section 1102 of the Regulations is amended by adding the following after subsection (16):
Election for Certain Manufacturing or Processing Equipments
(16.1) A taxpayer that acquires a property after March 18, 2007 and before 2009 that is manufacturing or processing machinery or equipment may (by letter attached to the return of income for the taxation year in which the property is acquired) elect to include the property in Class 29 in Schedule II if
(a) Class 43.1 or 43.2 in Schedule II would otherwise apply to the property; and
(b) Class 29 would apply to the property if Schedule II were read without reference to Classes 43.1 and 43.2.
(2) Section 1102 of the Regulations is amended by adding the following after subsection (22):
Rules for Additions to and Alterations of Certain Buildings
(23) For the purposes of applying paragraphs 1100(1)(a.1) and (a.2) and subsection 1101(5b.1), the capital cost of an addition to or an alteration of a taxpayer’s building is deemed to be the capital cost to the taxpayer of a separate building if the building to which the addition or alteration was made is not included in a separate class under subsection 1101(5b.1).
(24) If an addition or an alteration is deemed to be a separate building under subsection (23), the references in paragraphs 1100(1)(a.1) and (a.2) to "the floor space of the building" shall be read as references to "the total floor space of the separate building and the building to which the addition or alteration was made".
Acquisition Costs of Certain Buildings
(25) For the purposes of this Part and Schedule II, if an eligible non-residential building of a taxpayer was under construction on March 19, 2007, the portion, if any, of the capital cost of the building that was incurred by the taxpayer before March 19, 2007 is deemed to have been incurred by the taxpayer on March 19, 2007 unless the taxpayer elects (by letter attached to the taxpayer’s return of income filed with the Minister in accordance with section 150 of the Act for the taxation year in which the building was acquired) that this subsection not apply to that cost.
4. (1) Subsection 1104(2) of the Regulations is amended by adding the following in alphabetical order:
"eligible non-residential building" means a taxpayer’s building (other than a building that was used, or acquired for use, by any person or partnership before March 19, 2007) that is located in Canada, that is included in Class 1 in Schedule II and that is acquired by the taxpayer on or after March 19, 2007 to be used by the taxpayer, or a lessee of the taxpayer, for a non-residential use; (bâtiment non résidentiel admissible)
(2) The portion of subsection 1104(9) of the Regulations before paragraph (a) is replaced by the following:
(9) For the purposes of paragraph 1100(1)(a.1), subsection 1100(26) and Class 29 in Schedule II, "manufacturing or processing" does not include
(3) The definition "plant residue" in subsection 1104(13) of the Regulations is replaced by the following:
"plant residue" means the residue of plants that would, but for its use in a system that converts biomass into bio-oil or biogas, be waste material, but does not include wood waste or waste that no longer has the chemical properties of the plants of which it is a residue. (résidus végétaux)
(4) Subsection 1104(13) of the Regulations is amended by adding the following in alphabetical order:
"biogas" means the gas produced by the anaerobic digestion of organic waste that is manure, food waste, plant residue or wood waste. (biogaz)
"eligible waste fuel" means bio-oil, digester gas, landfill gas, municipal waste, pulp and paper waste, and wood waste. (combustible résiduaire admissible)
"food waste" means organic waste that is
(a) generated during the preparation or processing of food for human animal consumption; or
(b) food that is no longer fit for human or animal consumption. (déchets alimentaires)
"pulp and paper waste" means
(a) tall oil soaps, crude tall oil and turpentine that are produced as by-products of the processing of wood into pulp or paper; and
(b) the by-product of a pulp or paper plant’s effluent treatment, or its de-inking processes, if that by-product has a solid content of at least 40 per cent before combustion. (déchets d’usines de pâtes ou papiers)
5. (1) The portion of Class 29 in Schedule II to the Regulations before paragraph (a) is replaced by the following:
Property (other than property included in Class 41 solely because of paragraph (c) or (d) of that Class or property included in Class 47 because of paragraph (b) of that Class) that would otherwise be included in another class in this Schedule
(2) Paragraph (c) in Class 29 in Schedule II to the Regulations is amended by striking out "or" at the end of subparagraph (i), by adding "or" at the end of subparagraph (ii) and by adding the following after subparagraph (ii):
(iii) after March 18, 2007 and before 2009 if the property is machinery, or equipment,
(A) that would be described in paragraph (a) if subparagraph (a)(ii) were read without reference to "in Canadian field processing carried on by the lessee or", or
(B) that is described in subparagraph (b)(i) or (ii).
6. (1) Subparagraph (c)(i) of Class 41 in Schedule II to the Regulations is replaced by the following:
(i) Class 29 were read without reference to
(A) the words "property included in Class 41 solely because of paragraph (c) or (d) of that Class or",
(B) its subparagraphs (b)(iii) and (v), and
(C) its paragraph (c),
(2) Subparagraph (d)(i) of Class 41 in Schedule II to the Regulations is replaced by the following:
(i) Class 29 were read without reference to
(A) the words "property included in Class 41 solely because of paragraph (c) or (d) of that Class or",
(B) its subparagraphs (b)(iii) and (v), and
(C) its paragraph (c), and
7. (1) Subparagraph (a)(ii.1) of Class 43.1 in Schedule II to the Regulations is replaced by the following:
(ii.1) fixed location fuel cell equipment that uses hydrogen generated only from internal, or ancillary, fuel reformation equipment,
(2) The portion of paragraph (a) of Class 43.1 in Schedule II to the Regulations after subparagraph (v) is replaced by the following:
other than buildings or other structures, heat rejection equipment (such as condensers and cooling water systems), transmission equipment, distribution equipment, fuel handling equipment that is not used to upgrade the combustible portion of the fuel and fuel storage facilities,
(3) Clause (c)(i)(A) of Class 43.1 in Schedule II to the Regulations is replaced by the following:
(A) is used by the taxpayer, or by a lessee of the taxpayer, to generate electrical energy, or both electrical and heat energy, using only fuel that is fossil fuel, eligible waste fuel, spent pulping liquor, or any combination of those fuels, and
(4) Subparagraph (d)(i) of Class 43.1 in Schedule II to the Regulations is replaced by the following:
(i) property that meets the following conditions:
(A) it is used by the taxpayer, or by a lessee of the taxpayer, primarily for the purpose of heating an actively circulated liquid or gas and is
(I) active solar heating equipment, including such equipment that consists of above ground solar collectors, solar energy conversion equipment, solar water heaters, energy storage equipment, control equipment and equipment designed to interface solar heating equipment with other heating equipment, or
(II) equipment that is a part of a ground source heat pump system that is used primarily for the purpose of heating a liquid or gas used directly in an industrial process or in a greenhouse, including such equipment that consists of underground piping, energy conversion equipment, energy storage equipment, control equipment and equipment designed to interface the system with other heating equipment, and
(B) it is not a building, part of a building (other than a solar collector that is not a window and that is integrated into a building), equipment used to heat water for use in a swimming pool, nor equipment that distributes heated air or water in a building,
(5) Subparagraph (d)(vi) of Class 43.1 in Schedule II to the Regulations is replaced by the following:
(vi) fixed location photovoltaic equipment that is used by the taxpayer, or a lessee of the taxpayer, primarily for the purpose of generating electrical energy from solar energy if the equipment consists of solar cells or modules and related equipment including inverters, control, conditioning and battery storage equipment, support structures and transmission equipment, but not including
(A) a building or a part of a building (other than a solar cell or module that is integrated into a building),
(B) auxiliary electrical generating equipment, property otherwise included in Class 10 and property that would be included in Class 17 if that Class were read without reference to its subparagraph (a.1)(i), and
(C) distribution equipment,
(6) Subparagraph (d)(ix) of Class 43.1 in Schedule II to the Regulations is replaced by the following:
(ix) equipment used by the taxpayer, or by a lessee of the taxpayer, primarily for the purpose of generating heat energy from the consumption of eligible waste fuel, and using only fuel that is eligible waste fuel, fossil fuel or a combination of both, if the heat energy is used directly in an industrial process, or in a greenhouse, of the taxpayer or lessee, including such equipment that consists of fuel handling equipment used to upgrade the combustible portion of the fuel and control, feedwater and condensate systems, and other ancillary equipment, but not including buildings or other structures, heat rejection equipment (such as condensers and cooling water systems), fuel storage facilities, other fuel handling equipment and electrical generating equipment, and property otherwise included in Class 10 or 17,
(7) Subparagraph (d)(xii) of Class 43.1 in Schedule II to the Regulations is replaced by the following:
(xii) fixed location fuel cell equipment used by the taxpayer, or by a lessee of the taxpayer, that uses hydrogen generated only from ancillary electrolysis equipment (or, if the fuel cell is reversible, the fuel cell itself) using electricity all or substantially all of which is generated by photovoltaic, wind energy conversion or hydro-electric equipment, of the taxpayer or the lessee, and equipment ancillary to the fuel cell equipment other than buildings or other structures, transmission equipment, distribution equipment, auxiliary electrical generating equipment and property otherwise included in Class 10 or 17,
(8) The portion of subparagraph (d)(xiii) of Class 43.1 in Schedule II to the Regulations before clause (A) is replaced by the following:
(xiii) property that is part of a system that is used by the taxpayer, or by a lessee of the taxpayer, primarily to produce, store and use biogas if that biogas is used by the taxpayer or the lessee primarily to produce electricity, heat that is used directly in an industrial process or in a greenhouse, or electricity and such heat, which property
(9) Clause (d)(xiii)(B) of Class 43.1 in Schedule II to the Regulations is replaced by the following:
(B) does not include property (other than a buffer tank) that is used to collect, move or store organic waste, equipment used to process the residue after digestion or to treat recovered liquids, auxiliary electrical generating equipment, buildings or other structures, transmission equipment, distribution equipment, equipment designed to store electrical energy, property otherwise included in Class 10 and property that would be included in Class 17 if that class were read without reference to its subparagraph (a.1)(i), or
(10) Paragraph (d) of Class 43.1 in Schedule II to the Regulations is amended by adding the following after subparagraph (xiii):
(xiv) property that is used by the taxpayer, or by a lessee of the taxpayer, primarily for the purpose of generating electricity using wave or tidal energy (otherwise than by using physical barriers or dam-like structures), including support structures, control, conditioning and battery storage equipment, submerged cables and transmission equipment, but not including buildings, distribution equipment, auxiliary electricity generating equipment, property otherwise included in Class 10 and property that would be included in Class 17 if that class were read without reference to its subparagraph (a.1)(i), and
8. The portion of Class 43.2 in Schedule II to the Regulations before paragraph (a) is replaced by the following:
Property that is acquired after February 22, 2005 and before 2020 (other than property that was included, before it was acquired, in another class in this Schedule by any taxpayer) and that is property that would otherwise be included in Class 43.1
9. The portion of Class 45 in Schedule II to the Regulations before paragraph (a) is replaced by the following:
Property acquired after March 22, 2004 and before March 19, 2007 (other than property acquired before 2005 in respect of which an election is made under subsection 1101(5q)) that is general-purpose electronic data processing equipment and systems software for that equipment, including ancillary data processing equipment, but not including property that is principally or is used principally as
10. Class 47 in Schedule II to the Regulations is replaced by the following:
Property that is
(a) transmission or distribution equipment (which may include for this purpose a structure) acquired after February 22, 2005 and that is used for the transmission or distribution of electrical energy, other than
(i) property that is a building, and
(ii) property that has been used or acquired for use for any purpose by any taxpayer before February 23, 2005; or
(b) equipment acquired after March 18, 2007 that is part of a liquefied natural gas facility that liquefies or regasifies natural gas, including controls, cooling equipment, compressors, pumps, storage tanks, vaporizers and ancillary equipment, loading and unloading pipelines on the facility site used to transport liquefied natural gas between a ship and the facility, and related structures, other than property that is
(i) acquired for the purpose of producing oxygen or nitrogen,
(ii) a breakwater, a dock, a jetty, a wharf, or a similar structure, or
(iii) a building.
11. Schedule II to the Regulations is amended by adding the following after Class 49:
Class 50
Property acquired after March 18, 2007 that is general-purpose electronic data processing equipment and systems software for that equipment, including ancillary data processing equipment, but not including property that is principally or is used principally as
(a) electronic process control or monitor equipment;
(b) electronic communications control equipment;
(c) systems software for equipment referred to in paragraph (a) or (b); or
(d) data handling equipment (other than data handling equipment that is ancillary to general-purpose electronic data processing equipment).
Class 51
Property acquired after March 18, 2007 that is a pipeline, including control and monitoring devices, valves and other equipment ancillary to the pipeline, used for the distribution (but not the transmission) of natural gas, other than
(a) a pipeline described in subparagraph (l)(ii) of Class 1 or in Class 49;
(b) property that has been used or acquired for use for any purpose by a taxpayer before March 19, 2007; and
(c) a building or other structure.
12. (1) Subsections 1(1) to (3), 3(1), 4(1) and (2) and 5(2) and sections 8 to 11 are deemed to have come into force on March 19, 2007.
(2) Subsections 1(4) to (8), section 2, subsections 4(3) and (4) and 5(1) and sections 6 and 7 apply to property acquired on or after March 19, 2007, except that subparagraph (d)(xii) of Class 43.1 in Schedule II to the Regulations, as enacted by subsection 7(7), is to be read as follows with respect to property acquired before February 26, 2008:
(xii) fixed location fuel cell equipment used by the taxpayer, or by a lessee of the taxpayer, that uses hydrogen generated only from ancillary electrolysis equipment (or, if the fuel cell is reversible, the fuel cell itself) using electricity generated by photovoltaic, wind energy conversion or hydro-electric equipment, of the taxpayer or the lessee, and equipment ancillary to the fuel cell equipment other than buildings or other structures, transmission equipment, distribution equipment, auxiliary electrical generating equipment and property otherwise included in Class 10 or 17,
(3) Subsection 3(2) applies to additions and alterations made after March 18, 2007.
13. If a taxpayer files in writing an election referred to in subsection 1101(5b.1) of the Regulations, as enacted by subsection 2(1), or in subsection 1102(16.1) of the Regulations, as enacted by subsection 3(1), the election is deemed to have been filed in the manner and by the time required if the election is received by the Minister of National Revenue no later than 90 days after the day on which these Regulations are published in the Canada Gazette, Part II.
Explanatory Notes – Regulations Amending the Income Tax Regulations (Capital Cost Allowance – 2007 Budget Measures)
The following explanatory notes accompany proposed amendments to the Income Tax Regulations that were announced in the March 19, 2007 Budget, other than amendments concerning the phase-out of the accelerated capital cost allowance for oil sands projects. Details of the proposals are also discussed at pages 404 to 407 and 412 to 417 of Annex 5 to The Budget Plan 2007.
Section 1
CCA Rates
ITR
1100(1)
Subsection 1100(1) of the Income Tax Regulations (the "Regulations") sets out the capital cost allowance (CCA) rates that taxpayers may claim with respect to specified classes of depreciable property.
ITR
1100(1)(a)
Paragraph 1100(1)(a) is amended in two respects. First, the words "he" and "him" in the English version of the paragraph’s pre-amble and post-amble, respectively, are replaced with "the taxpayer". Second, new subparagraphs 1100(1)(a) (xxxvi) and (xxxvii) are introduced.
ITR
1100(1)(a)(xxxvi) and (xxxvii)
New subparagraph 1100(1)(a)(xxxvi) provides for a 55 per cent CCA rate for property included in new Class 50, which generally applies to computer equipment.
New subparagraph 1100(1)(a)(xxxvii) provides for a six per cent CCA rate for property included in new Class 51, which generally applies to a natural gas distribution pipeline.
These amendments apply after March 18, 2007.
Additional Allowances
ITR
1100(1)(a.1) and (a.2)
New paragraphs 1100(1)(a.1) and (a.2) of the Regulations provide for two new additional allowances in respect of certain buildings included in Class 1 in Schedule II to the Regulations.
New paragraph 1100(1)(a.1) provides a six per cent additional allowance in respect of an "eligible non-residential building" at least 90 per cent of the floor space of which is used at the end of a taxation year for the purpose of manufacturing or processing in Canada goods for sale or lease.
New paragraph 1100(1)(a.2) provides for a two per cent additional allowance in respect of an "eligible non-residential building" at least 90 per cent of which is used at the end of a taxation year for a non-residential use in Canada.
The note accompanying amended subsection 1104(2) provides commentary in respect of the new definition "eligible non-residential building." The additional allowance applies only if the taxpayer who acquired the building elects under new subsection 1101(5b.1) to include the building in a separate prescribed class.
If the taxpayer has elected under subsection 1101(5b.1) to include a Class 1 building that meets the definition of "eligible non-residential building" in a separate prescribed class and the building meets one of the two use requirements mentioned in paragraphs 1100(1)(a.1) or (a.2) at the end of the taxpayer’s taxation year, the taxpayer is eligible to claim an additional allowance of either six per cent (where the non-residential building use is manufacturing or processing) or two per cent (where the non-residential use is not manufacturing or processing) in respect of the Class 1 building.
These amendments apply to property acquired after March 18, 2007.
Specified Leasing Property Rules – Exempt Property
ITR
1100(1.13)(a)
Paragraph 1100(1.13)(a) of the Regulations defines property that is "exempt property" for the purposes of the specified leasing property rules, which may apply to restrict a taxpayer’s deduction of CCA in respect of specified leasing property.
Subparagraph 1100(1.13)(a)(i.1) currently provides that certain computer equipment included in Class 45 (other than an individual piece of such property that has a capital cost in excess of $1 million) is exempt property for the purposes of the specified leasing property rules. This treatment is extended to apply to computer equipment included in new Class 50.
This amendment applies to property acquired after March 18, 2007.
Specified Leasing Property Rules – Leasing Property
ITR
1100(17)
Subsection 1100(17) of the Regulations defines property that is "leasing property" for the purposes of the specified leasing property rules, which may apply to restrict a taxpayer’s deduction of capital cost allowance in respect of specified leasing property.
ITR
1100(17)(b)
A reference to "computer software tax shelter property" in paragraph 1100(17)(b) is replaced, consequential to the changes to the computer software tax shelter property rules in subsection 1100(20.1) of the Regulations, with a reference to "computer tax shelter property".
This amendment applies to property acquired after March 18, 2007.
Computer Tax Shelter Property
ITR
1100(20.1)
Subsection 1100(20.1) of the Regulations precludes the deduction of capital cost allowance in respect of computer software tax shelter property to the extent the deductions otherwise would result in a loss.
The references to "computer software tax shelter property" in the heading before subsection 1100(20.1) and in the subsection itself are replaced with a reference to "computer tax shelter property." This change is consequential to the extension of the tax shelter property rules to "general-purpose electronic data processing equipment", including ancillary equipment, which terminology is defined in subsection 1104(2) – although colloquially it is called computer hardware.
This amendment applies to property acquired after March 18, 2007.
ITR
1100(20.2)
Subsection 1100(20.2) of the Regulations describes the computer tax shelter property for the purposes of the application of the specified leasing property rules.
The preamble in the subsection is amended in two respects. First, a reference to "computer software tax shelter property" is changed to a reference to "computer tax shelter property". Second, a reference to the property described in Class 50 in Schedule II is added, consequential to the introduction of Class 50 for certain computer equipment.
This amendment applies to property acquired after March 18, 2007.
Section 2
Separate Class Election
ITR
1101
Section 1101 of the Regulations provides separate classes in respect of certain property described in Schedule II to the Regulations.
Election – Eligible non-residential building
ITR
1101(5b.1)
New subsection 1101(5b.1) of the Regulations provides that taxpayers may elect to include a building in a separate prescribed class if the building satisfies the definition "eligible non-residential building", as defined in subsection 1104(2). A taxpayer who acquires such a building may be eligible to claim an additional capital cost allowance under new paragraphs 1100(1)(a.1) or (a.2) in respect of the building if a separate class election has been filed with the Minister of National Revenue in the taxation year in which the building is acquired.
This amendment applies to property acquired after March 18, 2007.
Computer Tax Shelter Property
ITR
1101(5r)
Subsection 1101(5r) of the Regulations provides that a separate class is prescribed for computer software tax shelter property. Subsection 1101(5r) is amended to replace references to "software" in the heading before the subsection and in its paragraphs (b) and (c) with "computer tax shelter property". These changes are consequential to the extension of the computer software tax shelter property rules to "general-purpose electronic data processing equipment", including ancillary equipment, which is defined in subsection 1104(2).
These amendments apply to property acquired after March 18, 2007.
Section 3
Special Rules
Election for Certain M&P Equipment
ITR
1102(16.1)
New subsection 1102(16.1) of the Regulations provides that a taxpayer, who acquires manufacturing or processing machinery or equipment that otherwise would be included in Class 43.1 or 43.2 in Schedule II to the Regulations, may elect to include the property in Class 29 if the property is acquired after March 18, 2007 and before 2009 and Class 29 applies to the property. The election is to be made by letter attached to the taxpayer’s return of income for the taxation year in which the property is acquired.
Rules for Additions and Alterations of Certain Buildings
ITR
1102(23)
New subsection 1102(23) of the Regulations provides a special rule that applies to additions to, or alterations of, a taxpayer’s building that is not an "eligible non-residential building" (as that term is defined in subsection 1104(2)) and that is not included in a separate class under subsection 1101(5b.1).
The rule provides that the capital cost of an addition to, or alternation of, a building is deemed to be a separate building for the purpose of applying the additional allowances available under paragraph 1100(1)(a.1) or (a.2), including the separate class election found in subsection 1101(5b.1). Consequently, a taxpayer who acquires an addition to, or alteration of, a building that itself is not an eligible non-residential building (e.g., the building was acquired before March 19, 2007) may qualify for an additional allowance in respect of the capital cost of the addition or alteration to that building if other conditions relating to claiming an additional allowance under those provisions are met.
This amendment applies to additions and alterations made after March 18, 2007.
Use Requirements – Additions and Alterations to Certain Buildings
ITR
1102(24)
New subsection 1102(24) of the Regulations provides a special rule for determining whether an addition to, or alteration of, a building to which the deemed building rule in subsection 1102(23) applies is used in the manner required by the additional allowance provisions in paragraphs 1100(1)(a.1) and (a.2). In general terms, the use of an addition or alteration that is included as a building in a separate prescribed class (because of an election under subsection 1101(5b.1)) is deemed to be determined on the basis of the use of the total floor space of the building after taking the addition or alteration into account.
This amendment applies to additions and alterations made after March 18, 2007.
Cost of Certain Buildings
ITR
1102(25)
New subsection 1102(25) of the Regulations ensures that the capital cost of the "eligible non-residential building" that was under construction on March 19, 2007, and that is eligible for a separate class election under subsection 1101(5b.1), includes the capital cost of the building that was incurred before March 19, 2007. If the election under subsection 1101(5b.1) applies in respect of such capital costs of a taxpayer, the taxpayer may be eligible for an additional allowance in respect of those costs under paragraph 1100(1)(a.1) or (a.2).
In addition, the new subsection provides for an election that allows a taxpayer to not include capital costs incurred before March 19, 2007 for the construction of an eligible non-residential building in the cost of the building.
This amendment applies to additions and alterations made after March 18, 2007.
Section 4
Definitions
ITR
1104(2)
Subsection 1104(2) sets out definitions that apply for the purposes of Part XI of the Regulations and in Schedule II to the Regulations. The subsection is amended to add the definition of an "eligible non-residential building." This definition is relevant for the purpose of applying the additional allowances that may apply to such buildings under subsection 1100(1).
An "eligible non-residential building" means a taxpayer’s building
- that is located in Canada;
- that is included in Class 1 in Schedule II of the Regulations;
- that has not been used, or acquired for use, by any person (including a partnership) before March 19, 2007; and
- that has been acquired by the taxpayer on or after March 19, 2007 to be used by the taxpayer, or a lessee of the taxpayer, for a non-residential use.
This amendment applies after March 18, 2007.
Exclusions from the meaning of "manufacturing or processing"
ITR
1104(9)
Subsection 1104(9) of the Regulations lists various exclusions from the meaning of the phrase "manufacturing or processing" for the purposes of the specified energy property rules in subsection 1100(26) and for the purposes of manufacturing and processing property described in Class 29 in Schedule II to the Regulations.
Subsection 1104(9) is amended to also apply for the purpose of the new paragraph 1100(1)(a.1). New paragraph 1100(1)(a.1) provides a six per cent additional allowance in respect of an eligible non-residential building at least 90 per cent of the floor area of which building is used at the end of a taxation year for the purpose of manufacturing or processing in Canada goods for sale or lease.
This amendment applies after March 18, 2007.
Classes 43.1 and 43.2 – Energy Conservation Property
ITR
1104(13)
Subsection 1104(13) of the Regulations sets out various definitions that apply for the purpose of determining whether property is depreciable property to which Class 43.1 or 43.2 applies.
Consequential to the extension of Classes 43.1 and 43.2 to certain property as announced in the 2007 Budget, subsection 1104(13) is amended in two respects.
First, the existing definition of plant residue is amended to add a reference to biogas, consequential to the introduction of the new definition of biogas in subsection 1104(13).
Second the following four new definitions are added:
1. "Biogas" means the gas produced by the anaerobic digestion of organic waste that is manure, food waste, plant residue or wood waste.
2. "Eligible waste fuel" means bio-oil, digester gas, landfill gas, municipal waste, pulp and paper waste, and wood waste.
3. "Food waste " means organic waste that is
- generated during the preparation or processing of food for human or animal consumption; or
- food that is no longer fit for human or animal consumption.
4. "Pulp and paper waste" means,
- tall oil soaps, crude tall oil and turpentine that are produced as by-products of the processing of wood into pulp or paper; and
- the by-product of a pulp or paper plant’s effluent treatment, or its de-inking processes, if that by-product has a solid content of at least 40 per cent before combustion.
These amendments apply to property acquired after March 18, 2007.
Sections 5-11
Schedule II to the Regulations – Classes of Property
Schedule II to the Regulations provides a list of classes of depreciable properties for the purposes of claiming CCA, and the descriptions of properties that are to be included in each Class.
Section 5
Class 29 (3-year write-off)
Class 29 in Schedule II to the Regulations provides accelerated CCA for certain property acquired before 1990 that is used directly or indirectly for the purpose of manufacturing or processing in Canada goods for sale or lease. Class 29 is amended in two respects.
First, the preamble of Class 29 is rewritten to clarify that Class 29 does not apply to certain property referred to in paragraphs (c) and (d) of Class 41. Second, new subparagraph (c)(iii) is added to apply to property acquired after March 18, 2007 and before 2009 that is machinery or equipment and
- that would be described in paragraph (a) of Class 29 if subparagraph (ii) of that paragraph were read without reference to the phrase "in Canadian field processing carried on by the lessee of"; or
- that is described in subparagraph (b)(i) or (ii) of Class 29.
In general, these amendments apply to property acquired after March 18, 2007.
Section 6
Class 41 (25% rate)
Class 41 in Schedule II to the Regulations is amended consequential to the amendments to Class 29. The amendments to Class 29 clarify that property described in paragraphs (c) or (d) of Class 41 is not to be included in Class 29.
These amendments apply to property acquired after March 18, 2007.
Section 7
Class 43.1 (30% rate) and Class 43.2 (50% rate)
Class 43.1 in Schedule II to the Regulations provides a 30% accelerated CCA rate for certain energy conservation equipment. Class 43.2 in Schedule II provides a 50% accelerated CCA rate. In general terms, Class 43.2 applies to property described in Class 43.1 if the property is acquired on or after February 23, 2005 and before 2012. Unlike Class 43.1, however, Class 43.2 applies to co-generation property described in paragraphs (a) to (c) of Class 43.1 only if the heat efficiency of fuels used in an eligible co-generation system does not exceed a 4,750 BTU requirement instead of the 6,000 BTU requirement.
Class 43.1 (and indirectly Class 43.2) is amended in a number of respects more fully described below.
1. Small Photovoltaic and Fixed-Location Fuel Cell Systems
Subparagraph (d)(vi) of Class 43.1 applies to certain fixed location photovoltaic equipment that converts solar energy into electrical energy. Subparagraphs (a)(ii.1) and (d)(xii) of Class 43.1 apply to certain fixed location fuel cell equipment that uses hydrogen to produce electricity, or electricity and heat. Currently, photovoltaic equipment and fuel cell equipment is eligible only if they have a peak capacity of at least three kilowatts.
Subparagraph (a)(ii.1) is amended to remove the minimum three kilowatt capacity requirement.
Subparagraph (d)(vi) is amended in three respects. First, the subparagraph is reworded for clarity and simplicity. Second, reworded clause (vi)(A) ensures that a solar cell or module that is integrated into a building as part of fixed location photovoltaic system is not excluded from either of Class 43.1 and 43.2 merely because they may be considered to be part of a building. Third, the minimum three kilowatt capacity requirement in present clause (vi)(B) is removed.
Subparagraph (d)(xii) of Class 43.1 is amended in two respects. First, the minimum three kilowatt capacity requirement mentioned above in the subparagraph is removed. Second, the subparagraph is reworded to clarify that a fixed location fuel cell that uses hydrogen generated only from ancillary electrolysis equipment (or, if the fuel cell is reversible, the fuel cell itself) is eligible for inclusion in Class 43.1 or 43.2 only if it uses electricity all or substantially all of which is generated by photovoltaic equipment, wind energy conversion equipment or hydro-electric equipment.
2. Fuel Upgrading Equipment
Generally fuel handling equipment is not included in either Class 43.1 or 43.2. However, this restriction does not apply to certain fuel handling equipment that is used for the purpose of upgrading an eligible waste fuel that is used to generate heat energy as described in subparagraph (d)(ix) of Class 43.1. This exception to the general rule is further extended to apply to fuel handling equipment that in general terms is used to upgrade waste fuel for combustion in an eligible co-generation system described in paragraphs (a) to (c) of Class 43.1, or in paragraph (a) of Class 43.2.
3. List of Eligible Waste Fuels
Clause (c)(i)(A) and subparagraph (d)(ix) of Class 43.1 have been reworded for simplicity, consequential to the introduction of the definition "eligible waste fuel" in subsection 1104(13) of the Regulations.
4. Conventional Active Solar Equipment and Ground Source Heat Pump Systems
Subparagraph (d)(i) of Class 43.1 applies to active solar heating equipment used to heat a liquid or gas for use in an industrial process or a greenhouse. Solar heating equipment included in subparagraph (d)(i) includes equipment used in an above ground active solar heating system and in a ground source heat pump system.
Subparagraph (d)(i) is amended in four respects:
First subparagraph (d)(i) is reworded for clarity by introducing new clauses (A) and (B). Clause (i)(A) describes property that is to be included in the subparagraph and clause (B) describes property that is to be excluded, even if it otherwise meets the criteria in clause (A).
Second, the use restriction for the use of heated liquid or gas in an industrial process or greenhouse is removed in the case of above ground active solar heating equipment, by introducing new subclause (d)(i)(A)(I).
Third, new subclause (d)(i)(A)(II) clarifies that certain ground source heat assets are eligible assets if used primarily for purpose of heating a liquid or gas used directly in an industrial process or in a greenhouse. This change reflects current administrative practice and applies to property acquired after March 18, 2007.
Fourth, new clause (B) ensures that any of the following property is not included in either of Class 43.1 and Class 43.2 as part of the active solar heating equipment:
- a building or a part of a building (other than a solar collector that is not a window and that is integrated into a building);
- equipment used to heat water for use in a swimming pool; or
- equipment that distributes heated air or water in a building.
5. Waste-Fuelled Thermal Energy Systems
Class 43.1 applies to systems that generate heat for use in an industrial process or a greenhouse that are fuelled by particular waste fuels (e.g., wood waste and landfill gas). There currently is no restriction on the other fuels that may be combined with these particular fuels to fuel these systems. Subparagraph (d)(ix) of Class 43.1 is amended to apply only if the heat is generated primarily from the consumption of an eligible waste fuel and to ensure that no fuel other than a fossil fuel, eligible waste fuel or a combination of an eligible waste fuel and fossil fuel is used to generate heat for use in an industrial process or a greenhouse.
6. Biogas Production Equipment
Subparagraph (d)(xiii) of Class 43.1 applies to certain equipment that is part of a system that is used primarily to produce, store and use biogas if that biogas is used primarily to produce electricity, heat that is used directly in an industrial process or in a greenhouse, or electricity and such heat. This subparagraph is amended consequential to the introduction of the definition "biogas" in subsection 1104(13), which expands the variety of feedstocks that can be used in a biogas production system.
7. Pulp and Paper Waste
Class 43.1 currently applies to co-generation systems if they use one or a combination of certain listed fuels. These listed fuels currently do not include certain waste fuels that are a by-product of a pulp and paper plant’s processing activity. The types of waste fuels that are eligible fuels for the purpose of an eligible co-generation system under paragraphs (a) to (c) of Class 43.1, and systems that produce heat for use in an industrial process or a greenhouse in subparagraph (d)(ix), are extended to include pulp and paper waste. This change is enacted by defining "eligible waste fuel" in subsection 1104(13) to include pulp and paper waste, and by making consequential amendments to Class 43.1. Reference may be made to the note accompanying amendments to subsection 1104(13) for further details.
8. Wave and Tidal Energy Equipment
Eligibility for Class 43.1 and 43.2 is extended to equipment that is primarily used to generate electricity using wave and tidal energy, if the system is not a physical barrier or dam-like structure. Eligible equipment will include support structures, control, conditioning and battery storage equipment, submerged cables, and transmission equipment. Excluded property includes buildings, distribution equipment, auxiliary electricity generating equipment and property otherwise included in Class 10 or in Class 17 if that class were read without reference to its subparagraph (a.1)(i).
In general, these amendments to Class 43.1 apply to property acquired after March 18, 2007.
Section 8
Class 43.2 (50% rate)
Class 43.2 is amended to extend its application to eligible equipment acquired before 2020, instead of before 2012.
This amendment applies after March 18, 2007.
Section 9
Class 45 (50% rate)
Class 45 is amended consequential to the introduction of new Class 50 for certain computer equipment. Class 45 will no longer apply to property that is general-purpose electronic data processing equipment and systems software for that equipment if the property is acquired after March 18, 2007, because the new class 50 will apply to such property.
This amendment applies after March 18, 2007.
Section 10
Class 47 (8% rate)
Class 47 in Schedule II to the Regulation currently applies to certain transmission and distribution equipment that is used for the transmission or distribution of electrical energy.
Paragraph (b) of that class extends that class to property that is equipment that is part of a liquefication or regasification plant for liquified natural gas acquired after March 18, 2007. The newly eligible property includes the following:
- control equipment, cooling equipment, compressors, pumps, storage tanks, vaporizers and ancillary equipment;
- loading and unloading pipelines on the facility site used to transport liquefied natural gas between a ship and the facility; and
- related structures.
However, paragraph (b) of Class 47 does not apply to property acquired for the purpose of producing oxygen or nitrogen. Further, paragraph (b) of Class 47 excludes a breakwater, a dock, a jetty, a wharf, or a similar structure, or a building that may be part of a liquefication or regasification plant.
This amendment applies after March 18, 2007.
Section 11
Class 50 (55% rate)
New Class 50 in Schedule II to the Regulations provides a 55% capital cost allowance rate (computed on a declining balance basis) for general-purpose electronic data processing equipment and system software for that equipment, including ancillary data processing equipment. Such property must be acquired on or after March 19, 2007 and Class 50 treatment does not apply to property that is principally or is used principally as
- electronic process control or monitor equipment;
- electronic communications control equipment;
- systems software for electronic control or monitor equipment, or electronic communications control equipment; or
- data handling equipment (other than such equipment that is ancillary to general-purpose electronic data processing equipment).
This amendment applies after March 18, 2007.
Class 51 (6% rate)
Schedule II to the Regulations is amended by adding new CCA Class 51 to apply to property that is a natural gas distribution line acquired on or after March 19, 2007 (other than property used before that date). Such property includes control and monitoring devices, valves and other equipment ancillary to a distribution pipeline. This treatment does not apply to the following properties:
- a pipeline described in subparagraph (l)(ii) of Class 1, or in Class 49;
- property that has been used or acquired for use for any purpose by a taxpayer before March 19, 2007; and
- a building or other structure.
This amendment applies after March 18, 2007.
1 In some cases these Regulations modify measures proposed in the 2007 Budget. Readers may refer to Part B "Other Measures". [Return]
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