On Monday, April 19, 2021, Canada’s Deputy Prime Minister and Minister of Finance, Chrystia Freeland, released the first official budget in the past two years, titled, Federal Budget 2021: A Recovery Plan for Jobs, Growth, and Resilience (the “Budget”).  The Budget proposed over $100 billion in spending, and, among the more significant measures, the Budget proposes extending the Canada Emergency Wage Subsidy (CEWS) and the Canada Emergency Rent Subsidy (CERS), and Lockdown Support through September 2021.  The Budget also introduces a new Canada Recovery Hiring Program.

Of note, and relief to many, the Budget did not introduce measures to increase the capital gains inclusion rate (currently 50%), eliminate or modify the principal residence exemption, restrict surplus stripping plans, or impose a wealth tax.

In brief, the Budget:

  • Puts limitations on interest deductibility by corporations, trusts, and partnerships to a percentage of tax-basis EBITDA;
  • Enhances Canada’s mandatory reportable transaction disclosure rules (subject to public consultation);
  • Proposes to consult on the transfer pricing rules;
  • Imposes new rules to target hybrid mismatch arrangements;
  • Reduces corporate tax rates on eligible zero-emission technology manufacturing and processing income;
  • Amends the capital cost allowance system by providing for temporary immediate expensing of up to $1.5M per taxation year of capital property acquisitions to Canadian-controlled private corporations (CCPCs);
  • Provides further details of a proposed digital services tax, to be effective January 2022;
  • Proposes a new tax on luxury items over a certain threshold: automobiles, planes, and boats; and
  • Proposes a new tax on the inefficient use of foreign-owned Canadian housing.

For more in-depth information about the budget, please read Release of the Federal Budget, 2021.


Related Services




Jennifer Leve (Partner, Toronto) is a member of Dickinson Wright’s Tax practice group, focusing her practice primarily on personal and corporate tax planning, corporate reorganizations, wealth management, and trust and estate planning matters. She can be reached at 416-777-4043 or jleve@dickinsonwright.com.