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Koroll & Company Blog

Highlights From the Canadian 2022 Federal Budget

[fa icon="calendar"] Sep 23, 2022 9:31:00 AM / by Koroll & Company

Canada Budget Highlights

The Canadian 2022 Federal Budget was released back in the spring. No changes were made to the tax rates, however, tax changes were announced for corporations and businesses.

In this blog, we take a look at some of the Budget highlights:

Small Business Phase Out Threshold

Currently, CCPCs (Canadian-controlled private corporations) receive a lower tax rate on the first $500,000 of business income. The rate, however, slowly phases out when the business has taxable capital of $10 to $15 million. The Federal government is proposing to increase the top end of the threshold to $50 million so that more medium-sized businesses can take advantage of the small business rate.

New Investment Tax Credits

The Federal government will be introducing a refundable investment tax credit for eligible carbon capture, utilization and storage expenses. From its inception to 2030, the credit will range from 37.5% to 60%. Afterwards, lower rates will apply.  

The government is also planning to work with experts to design an investment tax credit for net-zero technologies, battery storage solutions and clean hydrogen. The credit will be up to 30% of expenses. More details are expected in the fall update.

Critical Mineral Exploration Tax Incentives

In 2000, the government introduced a Mineral Exploration Tax Credit. This credit was focused on increasing mineral exploration. This year, the government is proposing a new 30% tax credit for investments in mining explorations for specific minerals needed for producing clean energy technologies. This includes copper, nickel, lithium, cobalt, graphite, rare earth elements, scandium, titanium, gallium, vanadium, tellurium, magnesium, zinc, platinum group materials and uranium. The incentive will be an additional benefit that investors receive from flow through shares issued by companies with expenses related to mining these minerals.

Disincentivizing Oil, Gas And Coal Investment

With goals to achieve net-zero emissions by 2050, the government is proposing to no longer allow companies exploring oil, gas and coal to issue flow through shares.

New Rates For Financial Institutes

The Federal government has proposed an increase to tax rates for bank and life insurance groups. The increase will be 1.5% from 15% to 16.5% on taxable income over $100 million.

Canada Recovery Dividend

The government is proposing a temporary one-time Canada Recovery Dividend that banks and life insurance groups would have to pay. This 15% tax would apply to income over $1 billion in 2021 and would be paid over 5 years.

New Rules For Hedging and Short Selling

Legislation will be introduced to stop taxpayers from realizing artificial tax deductions related to hedging and short selling.

Amendments To Bill C-208

The government followed up on proposed amendments to Bill C-208 that allows for intergenerational transfers. The government will be consulting with stakeholders to determine how to allow for genuine intergenerational business transfers while ensuring the treatment of the tax system is fair and reasonable.

CCPC Status

The Federal government is proposing changes that will stop taxpayers from manipulating their CCPC status to benefit from tax deferrals on investment income earned.

Program Reviews

The federal government will be reviewing the Scientific Research and Experimental Development Program and Patent Boxes. The first review will ensure the Scientific Research and Experimental Development Program is effectively encouraging R&D. The review will also look at modernizing and simplifying the program.

The second review will consider the suitability of adopting a patent box regime in Canada. Also referred to as an intellectual property regime, this will tax income earned from IP at a rate lower than the corporate tax rate. The goal of these programs is to further encourage R&D.

Employee Ownership Trusts

The Federal government is proposing to create new rules for employee ownership trusts. These rules will help support employee ownership of business.

For more information on proposed and implemented changes and how they will affect your business, contact us today.


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The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.



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Topics: Small Business

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Written by Koroll & Company