The 2022 Federal Fall Economic Statement did not include any personal or corporate tax rate changes, but information on EIFEL rules, Clean Tech Investment tax credits, and a future tax on share buybacks are notable.
The Federal Government delivered its 2022 Fall Economic Statement on November 3, 2022. This update expects deficits of $36.4 Billion for 2022-23, $30.6 Billion for 2023-24 and $25.4 Billion for 2024-2025. No personal or corporate tax rate changes were announced. In addition to these disclosures, there were some notable updates that may impact your business or personal taxes. These changes include:
Excessive Interest and Financing Expenses Limitation (EIFEL)
The EIFEL regime, originally announced in the 2021 Federal budget, is designed to limit the amount of net interest and financing expenses that certain corporations and trusts may deduct when computing their taxable income. While this regime was expected to apply for tax years beginning in 2023, it has been delayed and will apply to tax years beginning on or after October 1, 2023.
Clean Tech Investment Credit
A new refundable Clean Technology Investment Tax Credit was introduced, providing a credit of 30% of the capital cost of eligible clean technology equipment. This is only for the capital cost of property that is acquired and becomes available for use on or after the 2023 Federal Budget release day. Types of eligible equipment include Electricity Generation Systems, Stationary Electricity Storage Systems, Low-Carbon Heat Equipment and Industrial zero-emission vehicles and related equipment. This credit is gradually phased out from 2032 until 2035.
Share Buyback Tax
Beginning January 1, 2024, a 2% corporate tax on the net value of all types of share buybacks by public corporations in Canada will be implemented. Further details will be provided in the 2023 Federal Budget.
Minimum Tax Regime
First announced in the 2022 Federal Budget, this update reiterates a commitment to examine a new minimum tax regime for wealthy individuals. A detailed proposal and implementation plan are expected in the 2023 Federal Budget.
Bateman MacKay is Here to Advise
These are relevant highlights from the 2022 Federal Fall Economic and Fiscal Update. To see the full update, visit this Federal Government website. If you have questions about these or any other tax issues, reach out to a Bateman MacKay Business Advisor. Make sure to subscribe to our blog for other tax, accounting and business advisory updates, including the 2023 Federal Budget, expected to be tabled in the Spring of 2023.
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