2022 Federal Budget Summary

Adrian Tong
Charles Wilson, Devon Huber, Garrett Louie, Kaiden McIntyre, Lawrence Tam, Stephen Zhang, Quyen Do
| 4/7/2022

On April 7, 2022, Deputy Prime Minister and Minister of Finance, Chrystia Freeland, released Budget 2022: A Plan to Grow Our Economy and Make Life More Affordable. As anticipated, the Budget proposes new and revised measures on housing tax,  business and personal income tax , clean energy tax, and more as a response to the Liberal  Government’s economic roadmap.

Crowe MacKay’s tax experts provide tax highlights of key areas within the budget that may affect you and your business.


Personal Tax Measures

Minimum Tax for High Earners
The Budget announced the Government’s intention to consider a new minimum tax regime to help ensure that high-income Canadians pay their fair share of tax. Some high-income Canadians pay relatively little in personal income tax on their income, often 15% or less which is less than many middle class Canadians pay. These high-income Canadians make significant use of deductions and tax credits, often finding ways to have large amounts of their income taxed at lower rates.
Labour Mobility Deduction for Tradespeople

The Budget proposes to address labour shortages for skilled trades workers, especially in rural and remote communities, by facilitating labour mobility for workers.

Previously, workers were generally unable to claim moving and travel expenses for temporary relocations to obtain employment. The Budget proposes to introduce a Labour Mobility Deduction for Tradespeople to allow Eligible Workers (EW) to deduct up to $4,000 per year of Eligible Expenses (EE) for the 2022 and subsequent taxation years.

An EW would be a tradesperson or an apprentice who:

  • makes an Eligible Temporary Relocation (ETR) to obtain or maintain employment to provide temporary construction services at a work location; and
  • stays at a temporary lodging in Canada near that work location and away from their ordinary residence in Canada during the relocation period.

To qualify as an ETR:

  • the temporary lodging must be at least 150 kilometres closer than the ordinary residence to that work location;
  • that work location must be located in Canada; and
  • the temporary relocation must be for a minimum duration of 36 hours.

EE in respect of an ETR would be reasonable amounts associated with expenses incurred for:

  • temporary lodging for the EW near that work location; and
  • transportation and meals for one round trip for the EW from the ordinary residence to the temporary lodging.

The maximum expense claim for a particular ETR will be capped at 50% of the EW’s employment income from construction activities at that work location and may not include expenses for which an employer provided financial assistance that was not included in the EW’s income.

Medical Expense Tax Credit for Surrogacy and Other Expenses

The Medical Expense Tax Credit (METC) is a 15% non-refundable tax credit available for qualifying medical expenses paid in excess of the lesser of a threshold and 3% of an individual’s net income. The threshold is indexed for inflation and is $2,479 for 2022.

Previously, eligible expenses for the METC must generally be products and services received by the patient, their spouse or common-law partner, or certain dependants. To help more Canadians become parents, the Budget proposes to broaden the definition of “patient” to allow medical expenses related to a surrogate mother or sperm, ova, or embryo donor that are incurred in Canada for 2022 and subsequent taxation years to be considered eligible expenses for the METC.

Under the Budget, expenses including costs reimbursed to a surrogate for in vitro fertilization and fees paid to fertility clinics and donor banks to obtain donor sperm and ova would now be considered eligible for the METC. However, only expenses incurred in Canada would be eligible and the expenses must be in accordance with the Assisted Human Reproduction Act, which regulates surrogacy and gamete and embryo donation in Canada, and associated regulations.


Annual Disbursement Quota Changes for Registered Charities

Registered charities are generally required to expend a minimum amount each year, referred to as the disbursement quota (DQ). Currently, the DQ is equal to 3.5% of the registered charity’s property not used directly in charitable activities or administration.

The Budget proposes to make a number of changes to increase expenditures by larger charities and improve the enforcement and operation of the DQ rules.

Modifying the Rate of the DQ

Proposed in the Budget is the increase of the DQ rate from 3.5% to 5% for the portion of property not used in charitable activities or administration exceeding $1 million. Additionally, the Budget proposes to amend the Income Tax Act to clarify that expenditures for administration and management are not considered qualifying expenditures for the purposes of satisfying a charity’s DQ.

Relief for Certain Circumstances

Charities unable to meet their DQ may apply to the CRA and request relief from the DQ requirement. If charities are granted relief they are deemed to have a charitable expenditure for the tax year.

The Budget proposes to amend the existing rules such that the CRA will have the discretion to grant a reduction in a charity’s DQ obligation for any particular year. For transparency purposes, the Budget proposes to allow CRA to publicly disclose information related to the decision of granting a charity’s DQ reduction.

In the Income Tax Act, a charity may also apply to CRA for permission to accumulate property for a specific purpose, and any property accumulated by a charity under such approval, including any income earned, is not included in a charity’s DQ calculation. Given the simplification of the DQ, which provides relief to charities, the accumulation of property rule is no longer necessary and the Budget proposes to remove the accumulation of property rule.

Applying New Measures

New DQ measures would apply to charities in respect of their fiscal periods beginning on or after January 1, 2023, and would not apply to approved property accumulations resulting from applications submitted by a charity prior to January 1, 2023.

Charitable Partnerships

The Budget proposes changes to allow charities to make qualified disbursements to organizations that are not qualified donees, provided they meet certain accountability requirements. With these new rules, additional measures designed to ensure compliance by charities are forthcoming.

Accountability Requirements

The Budget proposes to allow charities to make qualifying disbursements to organizations that are not qualified donees, provided that disbursements are in furtherance of the charity’s charitable purposes and the charity ensures that the funds are applied to charitable activities by the grantee.

To be considered a qualifying disbursement, charities would also be required to meet certain mandatory accountability requirements defined in the Income Tax Act. These requirements are designed to ensure that their resources will be used for charitable purposes.

Books and Records

The Budget proposes that charities are required to, upon the request of CRA, take all reasonable steps to obtain receipts, invoices, or other documentary evidence from the grantee to demonstrate amounts were spent appropriately. These new measures are to ensure that the CRA can verify that charitable resources have been applied for the purposes which they were granted.

Direct Donations

To avoid the risk of a charity acting as a conduit for donations to other organization, the Budget proposes to extend an existing provision in the Income Tax Act, which currently applies to registered Canadian amateur athletic associations and registered journalism organizations, to registered charities. The rule would prohibit registered charities from accepting gifts, the granting of which was expressly or implicitly conditional on making a gift to a person other than a qualified donee.

Applying New Measures

These changes would apply as of royal assent of the enacting legislation.

Amendments to the Children’s Special Allowances Act and the Income Tax Act

Children’s Special Allowance

The Children’s Special Allowance is paid by the Government of Canada in respect of children who are in the care of, and maintained by, a federal, provincial, territorial, or First Nations agency or institution (e.g., a child protection agency).

To be eligible for the special allowance entities are required to be an agency or institution to be licensed, or authorized to operate, under a federal, provincial, or territorial law in order.

Legislative amendments are proposed in the Budget to allow the payment of a special allowance in respect of a child who is maintained under Indigenous laws where an Indigenous governing body has provided notice of intent to exercise its legislative authority in relation to child and family services to the Government of Canada (or has done so implicitly by requesting to enter into a coordination agreement for such services), under An Act respecting First Nations, Inuit and Métis children, youth and families (referred to hereafter as an “Indigenous governing body”).

Tax Measures for Kinship Care Providers and Foster Parents of Indigenous Children

The Budget  proposes to amend the Income Tax Act to ensure consistent treatment between kinship care providers and foster parents receiving financial assistance from an Indigenous governing body and those receiving such assistance from a provincial/territorial government by:

  • Clarifying that a kinship care provider may be considered to be the parent of a child in their care for the purposes of the Canada Workers Benefit amount for families and the Canada Child Benefit, regardless of whether they receive financial assistance from an Indigenous governing body, provided they meet all other eligibility requirements.
  • Ensuring that financial assistance payments for the care of a child received by kinship care providers or foster parents from an Indigenous governing body are neither taxable, nor included in income for the purposes of determining entitlement to income-tested benefits and credits.

Applying New Measures

These measures would apply for the 2020 and subsequent taxation years.

Housing Measures

The Budget announced measures intended to address the housing affordability crisis in Canada and has proposed various new rules to quell what the government has recognized as underlying issues exacerbating housing prices across Canada. Certain proposed rules would target foreign buyers and those who speculate on real estate, while others would facilitate home ownership by Canadians.
Tax-Free First Home Savings Account ("FHSA")

The FHSA is a proposed registered savings account that will allow individuals to make deductible contributions of up to $8,000 annually to a maximum of $40,000 for the purpose of purchasing their first home.

Here are the details of the FHSA:

  • Intended to help individuals save for their first home.
  • Available starting in 2023.
  • Annual contribution limit of $8,000.
  • Lifetime contribution limit of $40,000.
  • Contributions to the FHSA would be deductible from income.
  • Qualifying withdrawals for a first home purchase would not be taxable.
  • Income earned in the account would not be taxable.
  • Account is closed if an Individual has not used the funds for the purchase of a first home after 15 years.


  • Individuals must at least 18 years of age and a resident of Canada.
  • Individuals must not have lived in a home that they owned either at any time in the year the account is opened or during the preceding four calendar years.
  • Individuals can only make non-taxable withdrawals on one property in their lifetime.
  • The account must be closed within a year of the qualifying withdrawal.
  • Individuals would not be permitted to make a FHSA withdrawal and a Home Buyers’ Plan (HBP) withdrawal for the same home purchase.


  • Transfers can be made from a FHSA to a RRSP or RRIF tax free, however,  subsequent withdrawals from the RRSP or RRIF would still be subject to tax. 
  • Transfers can be made from an RRSP to a FHSA on a tax free basis (subject to the contribution limits). 
Home Buyers' Tax Credit

The first time home buyers credit provides qualifying first time home buyers with a $750 tax credit ($5,000 x 15%). The Budget has proposed to double the Home Buyer Tax Credit amount to $10,000 providing eligible home buyers with $1,500 of tax relief. This would come into effect on January 1, 2022. 

Multigenerational Home Renovation Tax Credit 

The Multigenerational Home Renovation tax credit is a proposed refundable tax credit on qualifying renovation expenditures for creating secondary dwelling units. The credit would be 15% on eligible expenses up to $50,000. It would apply to work performed and paid for and goods purchased on or after January 1, 2023. Details of the credit are summarized below:

  • The credit is for the purpose of creating a secondary dwelling unit for an “eligible” person to live with a qualifying relation. 
  • An eligible person is a Senior (65 years of age or older) and adults with disabilities who are 18 years of age or older and are eligible for the Disability Tax Credit.
  • The eligible person must live with an individual who is 18 years of age or older and is defined as a “qualifying relation.” This would include a parent, grandparent, child, sibling, aunt, uncle, niece, or nephew of the eligible person (including the spouse or common-law partner of the listed individuals).
  • The tax credit can be claimed by the eligible person, spouse or common law partner of the eligible person, or by the qualifying relation of the eligible person who owns or ordinarily resides in the eligible dwelling within 12 months after the end of the renovation.
  • The renovation period would commence when a building permit is applied for and would end when the renovation passes a final inspection or obtains proof of completion.
  • The credit may be claimed in the taxation year in which the renovation is completed
  • Eligible expenses would include:
  • Cost of labour and professional services
  • Building materials and fixtures
  • Equipment rentals
  • Permits
  • Non-eligible expense examples include:
  • Furniture
  • Construction equipment and tools
  • Routine repair or maintenance costs
  • Household appliances and devices
  • Payment for landscaping, gardening, housekeeping or security services
  • Finance costs for the renovation
  • Goods or services providing by a non-arm’s length person of the claimant, unless they are registered for GST under the Excise Tax Act
  • Expenses must be supported by receipts 
Home Accessibility Tax Credit
The Home Accessibility Tax Credit provides a non-refundable tax credit of 15% on eligible home renovation and alteration expenses up to $10,000 for individuals with disabilities or who are 65 years or older. The Budget has proposed to double The Home Accessibility Tax Credit expense limit from $10,000 to $20,000. This measure would apply to expenses incurred in the 2022 and subsequent taxation years. 
Residential Property Flipping Rule

The Budget proposes to treat any profit from the short-term resale of real estate as business income. Where the proposed rules apply, any capital gain on the sale would be fully taxable, and is not eligible for the capital gains inclusion rate (50% taxable) or the Principal Residence Exemption (no taxable income).

These rules would apply where a residential property (including a rental property) is owned for less than 12 months, with certain exceptions for individuals who sell their property due to extraordinary life circumstances, such as:

  • The death of either the owner or a related person
  • A related person joining the owners’ household or the owner joining a related person’s household (e.g. birth or adoption of a child, elderly parent moving in)
  • Spousal separation or breakdown of a marriage or common-law partnership
  • A threat to the personal safety of the owner or a related person (e.g. threat of domestic violence)
  • A serious disability or illness suffered by the owner or a related person
  • A change in employment (voluntary or involuntary) of the owner or a related person
  • Insolvency of the owner
  • Expropriation or destruction due to natural or man-made disaster

If neither the 12 month ownership period or any of the above-mentioned exceptions apply, it would remain a question of fact whether the Residential Property Flipping rule would apply. These rules would apply to properties sold on or after January 1, 2023.

GST/HST on Assignment Sales

Assignment sales involve a person buying and subsequently selling their interest in a property before it is fully constructed or ready to live in. There is a perceived abuse in situations where speculators are partaking in assignment sales and have the opportunity to disguise their intention to live in the home, thereby potentially avoiding paying GST/HST on the initial purchase.

The Budget proposes to make all assignment sales of newly constructed or substantially renovated residential housing subject to GST/HST. The proposal would result in GST/HST applying to the full amount paid for a new home by its first occupant. The assignor would be responsible for collecting the GST/HST and remitting the tax to CRA.

These rules would apply to assignment agreements entered into on or after the day that is one month after Budget Day.

Ban on Foreign Investment in Canadian Housing

The Budget announced the Government’s intention to restrict foreign commercial enterprises and people who are not Canadian citizens or permanent residents from acquiring certain real estate in Canada for a period of two years. The restrictions would apply to non-recreational, residential property.

Certain individuals would be exempt from the restrictions, including:

  • Refugees
  • People who have been authorized to come to Canada under emergency travel while fleeing international crises
  • International students on the path to permanent residency (in certain circumstances)
  • Individuals on work permits who are residing in Canada (in certain circumstances)

The Budget did not elaborate on the circumstances in which the last two exemptions would apply, nor the effective date of the two-year period during which the restrictions would be in place.

Business Tax Measures

Small Business Deduction

Currently, Canadian-controlled private corporations (“CCPC”) may be able to claim the small business deduction (“SBD”), which reduces Part I tax on their first $500,000 of active business income. The SBD is reduced on a straight-line basis for CCPCs (and their associated groups, if applicable) that have taxable capital employed in Canada of between $10 million and $15 million in the previous taxation year. Large CCPCs and their associated corporations that have a combined taxable capital employed in Canada of $15 million or more do not qualify for the SBD.

The Budget proposes to increase the range over which the SBD is reduced based on taxable capital employed in Canada to between $10 million to $50 million. This measure would apply to taxation years that begin on or after April 7, 2022.

Substantive CCPCs

Deferral of investment income using a non-CCPC

Under the existing legislation, CCPCs are subject to anti-deferral and integration mechanisms targeting their investment income. Currently, investment income earned by a CCPC is subject to a federal tax rate of 38 ⅔ % , 30 ⅔ % of which is refundable to the corporation upon distribution of this income to shareholders. To avoid being subject to these anti-deferral and integration mechanisms, some corporations have tried to shed their “CCPC status” through various means, such as by converting a to a non-CCPC. 

The Budget proposes to amend the Income Tax Act to ensure that investment income earned and distributed by private corporations that are, in substance, CCPCs would be subject to the same taxation as investment income earned and distributed by CCPCs. “Substantive CCPCs” would be private corporations resident in Canada (other than CCPCs) that are ultimately controlled (in law or in fact) by Canadian-resident shareholders. The proposed measures would also cause a corporation to be a substantive CCPC in circumstances where the corporation would have been a CCPC but for the fact that a non-resident or public corporation has a right to acquire its shares.

Substantive CCPCs earning and distributing investment income would be subject to the same anti-deferral and integration mechanism as CCPCs. Furthermore, their investment income would be added to their “low rate income pool” such that distributions of such income would not entitle the shareholders to the enhanced dividend tax credit associated with eligible dividends. 

These new rules also include:

  • A targeted anti-avoidance rule to address particular arrangements or transactions where it is reasonable to consider that the particular arrangement, transaction, or series of transactions was undertaken to avoid the anti-deferral rules applicable to investment income.
  • Targeted amendments to facilitate administration of the rules applicable to investment income earned and distributed by substantive CCPCs, including a one year extension of the normal reassessment period for any consequential assessment of Part IV tax that arises from a corporation being assessed or reassessed a dividend refund.

These measures would apply to taxation years that end on or after April 7, 2022.  An exception would be provided where the taxation year of the corporation ends because of an acquisition of control caused by the sale of all or substantially all (i.e. 90% or more) of the shares of a corporation to an arm’s length purchaser, and the purchase and sale agreement must have been entered into before April 7, 2022 and the share sale must occur before the end of 2022.

Strengthening the General Anti-Avoidance Rule

The general anti-avoidance rule (GAAR) is intended to prevent abusive tax avoidance transactions, while not interfering with legitimate commercial and family transactions. If abusive tax avoidance is established, the GAAR applies to deny the tax benefit that was unfairly created.

In order for the GAAR to apply, the following three standards must be present:

1.  Transaction resulted in a tax benefit

2.  Transaction was an avoidance transaction to obtain the tax benefit

3.  There is an abuse or misuse of the Income Tax Act or other relevant legislation

In a recent court case, the Federal Court of Appeal (FCA) concluded that the transaction had only created the potential for future tax benefit, therefore did not meet all three standards required for the GAAR to apply as no tax benefit  has been realized by the taxpayer.

In what appears to be a response to the FCA decisions noted above, the Budget announces amendments to the GAAR legislation. Specifically, the definition of “tax benefit” and “tax consequences” have been amended to include wording to allow the GAAR to apply to transactions that affect tax attributes that have not yet been utilized in the current tax computation. These changes will apply to transactions that occur on or after April 7, 2022.

The Budget also announces the intention of the Government to release a consultation paper on modernizing the GAAR, with a consultation period running through the summer of 2022, and proposals to be tabled by the end of calendar 2022. 

Bill C-208: Genuine Intergenerational Share Transfers

Private Members’ Bill C-208, which received Royal Assent on June 29, 2021, introduced new rules intended to facilitate intergenerational business transfers. Essentially, these rules would allow an individual to realize a capital gain on the sale of their business’ shares (possibly utilizing the lifetime capital gains exemption), without the application of an anti-surplus stripping rule that could convert the capital gain to a dividend. Since then, many in the tax community have noted several issues in the legislation, most notably the potential to unintentionally permit surplus stripping without requiring a genuine intergenerational transfer of the business. 

While Budget 2022 was an opportunity for the Government to rectify the noted issues in this legislation, no changes or additional legislation were provided in regards to intergenerational transfers. However, the Government did provide the following comments:

  • Budget 2022 announces a consultation process for Canadians to share their views on how existing rules could be modified to protect the integrity of the tax system while facilitating intergenerational business transfers. Consultations will remain open until June 17, 2022.
  • The Government is committed to bringing forward legislation to address these issues in the current legislation, which would be included in a bill to be tabled in the fall after the end of the consultation process.
  • The Government is especially interested in hearing from stakeholders in the agricultural industry.

For additional details and commentary on the impacts of Bill C-208 read Bill C-208: Tax Changes for Intergenerational Business Transfers.

Review of Tax Support to R&D and Intellectual Property 

The Scientific Research and Experimental Development (“SR&ED”) program provides tax incentives to encourage Canadian businesses to conduct research and development. As part of the Budget, the Government announced its intention to review the SR&ED program to:

i)  ensure that it is effective in encouraging research and development that benefits Canada; and

ii)  explore opportunities to modernize and simplify the program.

Among other things, the review will consider whether there should be changes to program eligibility criteria to ensure adequacy of support and to improve overall program efficiency. 

The Government will also consider whether the tax system can play a role in encouraging the development and retention of intellectual property stemming from research and development conducted in Canada. The Government will also consider and seek views on whether adopting a patent box regime would help to meet these objectives.

Clean Energy Measures

The Budget  announced that the Federal Government will engage with experts to establish an investment tax credit of up to 30%, focused on net-zero technologies, battery storage solutions, and clean hydrogen. The design details of the investment tax credit will be provided in the 2022 Fall Economic and Fiscal Update.
Clean Technology Tax Incentives: Air-Source Heat Pumps

Air-source heat pumps use electrical energy to provide interior space heating or cooling by exchanging heat with the outside air, and can help support Canada’s climate goals if widely adopted.

The Budget proposes to expand the accelerated tax deductions for business investments in clean energy equipment to include air-source heat pumps by including such equipment in classes 43.1 and 43.2 of the capital cost allowance (“CCA”) regime.

Property in these two classes (which have depreciation rates of 30% and 50%  respectively) that is acquired after November 20, 2018 and that becomes available for use before 2024 is eligible for immediate expensing, while property that becomes available for use after 2023 and before 2028 is subject to a phase-out from these immediate expensing rules. The expansion of classes 43.1 and 43.2 would apply in respect of property that is acquired and that becomes available for use on or after Budget Day, where it has not been used or acquired for use for any purpose before that day.

The Government proposes to extend the 50% reduction of the general corporate and small business income tax rates for zero-emission technology manufacturers to include manufacturers of air-source heat pumps. This measure was announced during last year’s Budget.  Specifically, taxpayers would be able to apply reduced tax rates on eligible zero-emission technology manufacturing and processing income of:

  • 7.5% where that income would otherwise be taxed at the 15-per-cent general corporate tax rate; and
  • 4.5% where that income would otherwise be taxed at the 9-per-cent small business tax rate.
Investment Tax Credit for Carbon Capture, Utilization, and Storage

Carbon capture, utilization, and storage (“CCUS”) is a suite of technologies that capture carbon dioxide (CO2) emissions to either store the CO2 (typically deep underground), or to use it in other industrial processes.

The Budget proposes a refundable investment tax credit for businesses that incur eligible CCUS expenses, starting in 2022. The investment tax credit would be available to CCUS projects to the extent that they permanently store captured CO2 through an eligible use, including dedicated geological storage and storage of CO2 in concrete, but not including enhanced oil recovery.

Eligible Expenses

The CCUS tax credit would be available in respect of the cost of purchasing and installing eligible equipment used in an eligible CCUS project, so long as the equipment was part of a project where the captured CO2 was used for an eligible use.

The project would be subject to the required validation and verification process, and need to meet the storage requirements. A climate-related financial disclosure report would need to be produced in order for the CCUS tax credit to be claimed.

Credit Rates

From 2022 through 2030, the investment tax credit rates would be set at:

  • 60% for investment in equipment to capture CO2 in direct air capture projects
  • 50% for investment in equipment to capture CO2 in all other CCUS projects
  • 37.5% for investment in equipment for transportation, storage and use

These rates will be reduced by 50% for the period from 2031 through 2040.

Eligible Equipment

Equipment that will be used solely to capture, transport, store, or use CO2 as part of an eligible CCUS project would be considered eligible equipment.

Investors in CCUS technologies would be able to claim the CCUS tax credit on eligible expenses in respect of the tax year in which the expenses are incurred, regardless of when the equipment becomes available for use. The CCUS tax credit would not be available for equipment in respect of which a previous owner has received the CCUS Tax Credit.

CCUS equipment would be included in two new CCA classes:

  • 8%  CCA rate on a declining-balance basis for capture equipment, transportation equipment and storage equipment
  • 20% CCA rate on a declining-balance basis for equipment required for using CO2 in an eligible use (i.e. “use equipment”)

Also included in the above CCA classes would be the cost of:

  • Converting existing equipment for use in a CCUS project or refurbishing eligible equipment
  • Equipment for monitoring and tracking CO2
  • Buildings or other structures that solely support a CCUS project

These CCA classes would be eligible for enhanced first year depreciation under the Accelerated Investment Incentive.

Furthermore, two new CCA classes would be established for intangible exploration expenses and development expenses associated with storing CO2. The depreciation rates for these two new classes would be 100% and 30% respectively, on a declining-balance basis.

Validation and Verification

Projects that expect to have eligible expenses of $100 million or greater over the life of the project based on project plans would generally be required to undergo an initial project tax assessment. The tax assessment would identify the expenses that are eligible for the CCUS tax credit, and the tax credit rate that is expected to apply, based on initial project design. Projects could also choose to undergo an initial project tax assessment on a voluntary basis.

Prior to claiming CCUS tax credit amounts, eligible expenses would need to be verified by Natural Resources Canada. Verification would occur as soon as possible after the end of the taxpayer’s tax year, and in advance of filing its tax return, in order for the refund to be processed upon filing. Administrative details of this process would be provided at a later date.

Critical Mineral Exploration Tax Credit

The existing Mineral Exploration Tax Credit (METC) provides an additional income tax benefit for individuals who invest in mining flow-through shares. The METC is equal to 15% of specified mineral exploration expenses incurred in Canada and renounced to flow-through share investors, and it facilitates the raising of equity to fund exploration by enabling companies to issue shares at a premium.

The Budget proposes to introduce a new 30% Critical Mineral Exploration Tax Credit (CMETC) for specified minerals. The specified minerals that would be eligible for the CMETC are: copper, nickel, lithium, cobalt, graphite, rare earth elements, scandium, titanium, gallium, vanadium, tellurium, magnesium, zinc, platinum group metals and uranium. These minerals are used in the production of batteries and permanent magnets, both of which are used in zero-emission vehicles, or are necessary in the production and processing of advanced materials, clean technology, or semi-conductors.

Eligible expenditures would not benefit from both the proposed CMETC and the METC. The administration of the CMETC would generally follow the rules in place for the METC. However, the CMETC would only apply in relation to exploration expenditures for the minerals listed above.

In order for exploration expenses to be eligible for the CMETC, a qualified person would need to certify that the expenditures that will be renounced will be incurred as part of an exploration project that targets the specified minerals.

The CMETC would apply to expenditures renounced under eligible flow-through share agreements entered into after April 7, 2022, and on or before March 31, 2027.

Phasing Out Flow-Through Shares for Oil, Gas, and Coal Activities
The Budget proposes to eliminate the flow-through share regime for fossil fuel sector activities. This will be done by no longer allowing expenditures related to oil, gas, and coal exploration and development to be renounced to flow-through share investors for flow-through share agreements entered into after March 31, 2023.

Sales and Excise Tax Measures

GST/HST Health Care Rebate

Amendments to the GST/HST Health Care Rebate rules have been proposed in the Budget to recognize the increasing role of nurse practitioners in delivering health care services, including in non-remote areas. To be eligible for the expanded rebate, a charity or non-profit organization must deliver health care services with the active involvement of, or on the recommendation of, either a physician or a nurse practitioner, irrespective of their geographical location. This would mean that the rebate would no longer distinguish between health care services rendered by physicians and nurse practitioners.

Applying New Measures

The proposed GST/HST health care rebate measures would generally apply to rebate claim periods ending after Budget Day in respect of tax paid or payable after that date.

World Trade Organization Settlement on the 100% Canadian Wine Exemption

Wine is subject to excise duties under the Excise Act, 2001 and as of April 1, 2022, the excise duty for a 750 mL bottle of wine is $0.688 per liter or about 52 cents per bottle. Wine that is produced in Canada and composed wholly of agricultural or plant products grown in Canada (i.e. 100% Canadian wine) is exempt from excise duties.

In 2018, the World Trade Organization challenged the 100% Canadian wine excise duty exemption. Canada reached a settlement on this dispute in July 2020, agreeing to repeal the excise duty exemption by June 30, 2022.

Applying New Measures

The 100% Canadian wine excise duty exemption repeal will come into force on June 30, 2022.


This article has been published for general information. You should always contact your trusted advisor for specific guidance pertaining to your individual tax needs. This publication is not a substitute for obtaining personalized advice.

If you are looking for Tax Services, Crowe MacKay provides personalized support. Our tax professionals will help you maximize tax-planning opportunities and ensure the minimum amount required by law is paid.

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