Corporate Tax Rates and Legislation: Q3 2024 Accounting status

October 02, 2024

Issue 3 – Q3 2024 Accounting status

Legislative changes—July 1 to September 30, 2024
Accounting updates—July 1 to September 30, 2024
Federal and provincial/territorial bills—tabled or received royal assent in 2024
Corporate income tax rates—accounting status (January 1, 2021 to September 30, 2024)

Legislative changes — July 1 to September 30, 2024

Legislative developments from July 1 to September 30, 2024, that affect income taxes, are outlined below.

Federal draft legislative proposals (2024 federal budget and other measures)

On August 12, 2024, the Department of Finance released draft legislative proposals to implement several 2024 federal budget and other measures, and technical amendments. It also announced public consultations on these proposals. Key 2024 federal budget and other tax measures contained in the draft legislative proposals include:

increasing the capital gains inclusion rate from ½ to ⅔, for capital gains realized after June 24, 2024 (on September 23, 2024, the Department of Finance also tabled a Notice of Ways and Means Motion (NWMM), with some differences from the draft legislative proposals, to introduce a bill that would implement this measure)
implementing the clean electricity investment tax credit (ITC) as well as making various amendments to the other clean economy ITCs (clean technology, clean hydrogen and clean technology manufacturing)
introducing an accelerated capital cost allowance (CCA) deduction of 10% for new eligible purpose-built rental projects that begin construction after April 15, 2024 and before 2031, and are available for use before 2036
allowing immediate expensing (i.e. a 100% first-year CCA deduction) for CCA class 44, 46 and 50 properties acquired after April 15, 2024 and that become available for use before 2027
providing elective exemptions from the excessive interest and financing expenses limitation (EIFEL) regime for (i) certain interest and financing expenses relating to arm’s length financing used to build or acquire certain purpose-built rental housing located in Canada, and (ii) regulated energy utility businesses in Canada
allowing the Canada Revenue Agency (CRA) to grant single advance waivers (from the withholding obligation on payments to non-resident service providers) that cover multiple transactions occurring over a specific time period and giving the CRA additional information gathering powers

For more information, see our Tax Insights:

“Finance releases draft legislation to increase the capital gains inclusion rate” (August 28, 2024 update)
“Clean economy investment tax credits (August 2024 update)”
“Bill C-59: Excessive interest and financing expenses limitation (EIFEL) regime” (August 28, 2024 update)

Status: As at September 30, 2024, neither the NWMM on the capital gains inclusion rate, nor the remainder of the draft legislative proposals, have been tabled as a bill in the House of Commons and, therefore, are not considered substantively enacted for Canadian GAAP or enacted for US GAAP.

Federal draft legislative proposals (Global Minimum Tax Act)

On August 12, 2024, the Department of Finance released draft legislative proposals relating to the “Pillar Two” implementation of a global minimum tax in Canada. The draft legislative proposals include:

adding the Undertaxed Profits Rule (UTPR), which is a residual rule for collecting top-up tax that is not otherwise collected under other rules in the Global Minimum Tax Act (GMTA); the UTPR will generally come into effect for fiscal years of multinational enterprises that begin after December 30, 2024
making minor technical amendments to address certain concepts introduced by the Organisation for Economic Co-operation and Development in its June 2024 administrative guidance

For more information, see our Tax Insights “Finance releases draft legislation to implement the undertaxed profits rule.”

Status: As at September 30, 2024, the draft legislative proposals have not yet been tabled as a bill in the House of Commons and, therefore, are not considered substantively enacted for Canadian GAAP or enacted for US GAAP.

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Accounting updates — July 1 to September 30, 2024

There were no significant updates relating to the accounting for income tax.

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Federal and provincial/territorial bills

Table 1 lists key bills that include corporate income tax rate changes or other income tax changes (e.g. for research and development) that were:

tabled or received royal assent during 2024, or
tabled before 2024, but did not receive royal assent before 2024

Table 1: Federal and provincial/territorial bills
There were no changes in status from July 1 to September 30, 2024.

	Legislation		Recognized for accounting purposes
	Bill #	Bill name	Canada		US GAAP
Federal	C-59	An Act to implement certain provisions of the fall economic statement tabled in Parliament on November 21, 2023 and certain provisions of the budget tabled in Parliament on March 28, 2023	May 28/24¹	June 20/24
Federal	C-69	An Act to implement certain provisions of the budget tabled in Parliament on April 16, 2024	June 19/24¹		June 20/24
Alberta	10	Financial Statutes Amendment Act, 2024	March 12/24		May 16/24
British Columbia	3	Budget Measures Implementation Act, 2024	February 22/24		April 25/24
Manitoba	37	The Budget Implementation and Tax Statutes Amendment Act, 2024	May 6, 2024		Not as at September 30/24
Nova Scotia	419	Financial Measures (2024) Act	March 5/24		April 5/24
Ontario	180	An Act to implement Budget measures and to enact and amend various statutes	March 26/24		May 16/24
Québec	49	An Act to give effect to fiscal measures announced in the Budget Speech delivered on 21 March 2023 and to certain other measures	February 8/24		May 7/24
Saskatchewan	158	The Saskatchewan Commercial Innovation Incentive (Patent Box) Amendment Act, 2024	March 27/24		May 8/24
Because Canada has a minority government, a federal bill is only considered substantively enacted for Canadian GAAP once it passes third reading in the House of Commons.

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Corporate income tax rates—accounting status (January 1, 2021 to September 30, 2024)

The following information excludes Canadian-controlled private corporation small business rates and thresholds.

Table 2: Corporate income tax rates—accounting status
There were no changes in status from July 1 to September 30, 2024.

		Effective date	Rate	Recognized for accounting purposes		Bill #
				Canada	US GAAP
Federal	General and manufacturing and processing (M&P)	Before January 1/21	15%¹	Before January 1/21		N/A
	Provincial SIFT tax factor/rate²	Before January 1/21	Varies²	Before January 1/21		N/A
	Additional tax on banks and life insurers	For taxation years ending after April 7, 2022³	1.5%	December 8/22⁴	December 15/22	C-32
Alberta	General and M&P	Before January 1/21	8%	Before January 1/21		N/A
British Columbia	General and M&P	Before January 1/21	12%	Before January 1/21		N/A
Manitoba	General and M&P	Before January 1/21	12%	Before January 1/21		N/A
New Brunswick	General and M&P	Before January 1/21	14%	Before January 1/21		N/A
Newfoundland and Labrador	General and M&P	Before January 1/21	15%	Before January 1/21		N/A
Northwest Territories	General and M&P	Before January 1/21	11.5%	Before January 1/21		N/A
Nova Scotia	General and M&P	Before January 1/21	14%	Before January 1/21		N/A
Nunavut	General and M&P	Before January 1/21	12%	Before January 1/21		N/A
Ontario	General	Before January 1/21	11.5%	Before January 1/21		N/A
	M&P		10%
	Corporate Minimum Tax (CMT)		2.7%
Prince Edward Island	General and M&P	Before January 1/21	16%	Before January 1/21		N/A
Québec	General and M&P	Before January 1/21	11.5%	Before January 1/21		N/A
Québec	SIFT Distribution Tax	Before January 1/21	Varies⁵	Before January 1/21		N/A
Saskatchewan	General	Before January 1/21	12%	Before January 1/21		N/A
Saskatchewan	M&P	Before January 1/21	10%	Before January 1/21		N/A
Yukon	General	Before January 1/21	12%	Before January 1/21		N/A
Yukon	M&P	Before January 1/21	2.5%	Before January 1/21		N/A
Starting taxation years beginning after 2021, federal Bill C-19 (royal assent: June 23, 2022) temporarily reduces corporate income tax rates for qualified zero‑emission technology manufacturing income by 50% until 2028, with the rate reduction gradually phased out until it is eliminated for taxation years beginning after 2031; these rate reductions are substantively enacted for Canadian GAAP and enacted for US GAAP as at June 23, 2022. Federal Bill C-59 (see Table 1 above): (i) extends the availability of these reduced rates by three years, to 2031, with the rate reduction gradually phased out until it is eliminated for taxation years beginning after 2034; and (ii) expands these reduced rates to income from certain nuclear manufacturing and processing activities, for taxation years beginning after 2023; these measures are considered substantively enacted for Canadian GAAP as at May 28, 2024, and enacted for US GAAP as at June 20, 2024. Except for Québec, the “provincial Specified Investment Flow-Through (SIFT) tax rate” is: ● based on the general provincial corporate income tax rate for each province in which the SIFT has a permanent establishment ● 10% for SIFTs that do not have a permanent establishment in a province The additional tax on banks and life insurers applies on taxable income over $100 million; the exemption is shared by related corporations. For a taxation year that includes April 7, 2022, the additional tax is prorated based on the number of days in the taxation year after April 7, 2022. Because Canada has a minority government, a federal bill is only considered substantively enacted for Canadian GAAP once it passes third reading in the House of Commons. Québec’s SIFT Distribution Tax equals the Québec corporate income tax rate that would apply if the SIFT were a corporation.