travel rate calculation

Your trip calculator

With rising flight prices, you may be wondering: is it worth booking the ticket, or should I just drive? We're here to help you figure out what you might save (or spend) if you decide to load up the car and hit the road - or if taking to the skies is really the more affordable option.

Where are you going?

Estimates are based on an analysis of current and historical minimum roundtrip flight prices for one traveler and average car rental prices in the past 31 days. Actual prices may vary. Always check current prices and routes before booking. See Methodology .

Get inspired by other travelers

Check out these road trip guides to see how other travelers have navigated the open road.

Best road trip cars

Road trip hacks, best family road trip, best couples road trip games, best road trip snacks, road trips with dogs, methodology.

   Quick Links

Who uses travelmath.

Companies like United Airlines, Southwest Airlines, and Ryanair use Travelmath to re-route passengers and plan new flight paths.

Celebrities love Travelmath!

"Travelmath is the one app I couldn't live without - it calculates all your journey timings and because I travel a lot, it's essential. Whoever invented Travelmath, I love you! " – Drew Barrymore

"There's a website called Travelmath, it's really good if you're into flight times. "  – Blake Griffin

Dirtiest Public Transit

See the research from our Travelmath study on public transportation hygiene. How does the New York subway rank against Chicago, DC, SF, and Boston?   Read the full study!

Germiest Hotel Rooms

See even more research from our Travelmath study on hotel hygiene. Spoiler alert: Don't turn on the TV...   Read the full study!

   Travel Tools

What is travelmath.

Travelmath is an online trip calculator that helps you find answers quickly. If you're planning a trip, you can measure things like travel distance and travel time . To keep your budget under control, use the travel cost tools.

You can also browse information on flights including the distance and flight time. Or use the section on driving to compare the distance by car, or the length of your road trip.

Type in any location to search for your exact destination .

Quick Calculator

How do i search.

To get started, enter your starting point and destination into the boxes above. If you want an airport , it's best to enter the 3-letter IATA code if you know it. For cities , include the state or country if possible.

You can also enter more general locations like a state or province , country, island , zip code, or even some landmarks by name.

Check Prices

Home  ·  About  ·  Terms  ·  Privacy

• Money Transfer
• Rate Alerts

Xe offers an assortment of Travel Tools for your next trip! Whether it’s a currency app on your mobile phone, or Travel Reviews to help you pick your destination, Xe Travel is the perfect resource for you.

Travel Tools

Currency email.

Subscribe to free daily email updates with currency rates for the top 170 currencies. The Xe Currency email also includes news headlines, and central bank interest rates.

Xe Currency Encyclopedia

Read currency profiles with live rates, breaking forex news, and other facts for every world currency. You can also learn about services available for each currency.

Free Currency Charts

Create a chart for any currency pair in the world to see their currency history. These currency charts use live mid-market rates, are easy to use, and are very reliable.

Download the App

Keep track of live mid-market rates for every world currency on your Smartphone. That’s 170+ currencies that you can convert on the go!

Travel Blog Posts

What’s the Best Way to Exchange Your Currency for a Trip Abroad?

Got an international trip coming up? Need to make a currency exchange? Let us talk you through your options.

How to save money on your next European trip

The currency you choose to use will impact the cost of your trip in several ways. By knowing the Euro to Dollar conversion exchange rate, you can save yourself a lot of money on your European getaway.

Your Checklist for International Travel During COVID-19

Do you need to travel overseas soon? Here’s what you’ll need to know before (and during) your time abroad.

Destination Wedding Planning: How to Plan, Execute, and Stay on Budget

It’s no surprise that couples increasingly choose to avoid the high costs of a UK wedding by heading overseas, where costs tend to be more affordable.

Mileage Calculator

Use the following mileage calculator to determine the travel distance, in terms of miles, and time taken by car to travel between two locations in the United States, disregarding traffic conditions.

Browser not supported

This probably isn't the experience you were expecting. Internet Explorer isn't supported on Uber.com. Try switching to a different browser to view our site.

How much does a ride with Uber cost?

Plan your next trip with the price estimator.

How prices are estimated

In most cities, your cost is calculated up front, before you confirm your ride. In others, you will see an estimated price range (see applicable price terms in your city). Here are some fees and factors that can affect your price:

The base rate is determined by the time and distance of a trip.

Operating fee

In your city, a flat fee might be added to each trip. It helps support operational, regulatory, and safety costs.

Busy times and areas

When there are more riders than available drivers, prices may temporarily increase until the marketplace is rebalanced.

Ways to ride in the area

Making money by driving with the uber app, behind the wheel.

Drive using Uber when you want and make money on your schedule.

Find out what resources and promotions are in the app that can help you maximize your earnings.

Frequently asked questions

After you arrive at your destination and exit the vehicle, your final cost will be automatically calculated and charged to the payment method you’ve set.

Yes, you can request a ride to and from most major airports around the world. Go to our airports page to see the locations where Uber is available.

In most cities, Uber is designed to be a cashless experience. In cities where cash payments are available, this option must be selected before you request your ride.

Open the app and input your destination in the “Where to?” box. The price estimate for each ride option will appear; scroll to see what’s available in your area.

Do more in the app

Download the uber app.

Scan to download

Sign up to ride

• Our offerings
• How Uber works
• Diversity, equity, and inclusion
• Sustainability
• Investor relations

Sign up to drive & deliver

Create a rider account, order delivery with uber eats, sign up for uber for business, sign in to drive & deliver, sign in to ride, sign in to order delivery with uber eats, sign in to your uber for business account, drive & deliver, ride with uber, uber for business, manage account.

• Salary & Income Tax Calculators
• Mortgage Calculators
• Retirement Calculators
• Depreciation Calculators
• Statistics and Analysis Calculators
• Date and Time Calculators
• Contractor Calculators
• Budget & Savings Calculators
• Loan Calculators
• Forex Calculators
• Real Function Calculators
• Engineering Calculators
• Tax Calculators
• Volume Calculators
• 2D Shape Calculators
• 3D Shape Calculators
• Logistics Calculators
• HRM Calculators
• Sales & Investments Calculators
• Grade & GPA Calculators
• Conversion Calculators
• Ratio Calculators
• Sports & Health Calculators
• Other Calculators

Mileage Reimbursement Calculator

You can use this mileage reimbursement calculator to determine the deductible costs associated with running a vehicle for medical, charitable, business, or moving.

You can calculate mileage reimbursement in three simple steps:

• Select your tax year.
• Input the number of miles driven for business, charitable, medical, and/or moving purposes.
• Click on the "Calculate" button to determine the reimbursement amount.

Tax Year   2024 2023 2022 2021 2020 2019 2018 2017 2016 2015

Business Rate (1/1 through 6/30/2022) $ per mile

Business Rate (7/1 through 12/31/2022) $ per mile

Medical / Moving Rate (1/1 through 6/30/2022) $ per mile

Medical / Moving Rate (7/1 through 12/31/2022) $ per mile

Charitable Rate $ per mile

Miles Driven in H1  2022 for Business Purposes  

Miles Driven in H1  2022 for Medical Purposes  

Miles Driven in H2  2022 for Business Purposes  

Miles Driven in H2  2022 for Medical Purposes  

Miles Driven in 2022 for Charitable Purposes  

Understanding Mileage Reimbursement

If you regularly use your personal vehicle for work purposes, you are permitted to deduct the vehicle expenses from your tax return. You have two options available to you when calculating mileage expenses:

• You can keep all your receipts when you pay for any services associated with using your car for work purposes. For example, gas, oil, parking, insurance, lease payments , maintenance, repairs, etc.
• You can simply multiply the number of miles you have driven for work purposes by the IRS standard mileage rate, changes on an annual basis. This approach is referred to as the standard mileage deduction. You can also use this approach to deduct any expenses that you incur while driving for charity, medical, or moving purposes.

The standard mileage rates for 2024 are as follows:

2024 Standard Mileage Rates: IRS Notice 2024-08

IRS Standard Mileage Rates

You may also be interested in our free Lease Mileage Calculator

• Currently 4.78/5

Rating: 4.8 /5 (567 votes)

An official website of the United States government

Here’s how you know

Official websites use .gov A .gov website belongs to an official government organization in the United States.

Secure .gov websites use HTTPS A lock ( ) or https:// means you’ve safely connected to the .gov website. Share sensitive information only on official, secure websites.

• Explore sell to government
• Ways you can sell to government
• How to access contract opportunities
• Conduct market research
• Register your business
• Certify as a small business
• Become a schedule holder
• Market your business
• Research active solicitations
• Respond to a solicitation
• What to expect during the award process
• Comply with contractual requirements
• Handle contract modifications
• Monitor past performance evaluations
• Explore real estate
• 3D-4D building information modeling
• Art in architecture | Fine arts
• Computer-aided design standards
• Commissioning
• Design excellence
• Engineering
• Project management information system
• Spatial data management
• Facilities operations
• Smart buildings
• Tenant services
• Utility services
• Water quality management
• Explore historic buildings
• Heritage tourism
• Historic preservation policy, tools and resources
• Historic building stewardship
• Videos, pictures, posters and more
• NEPA implementation
• Courthouse program
• Land ports of entry
• Prospectus library
• Regional buildings
• Renting property
• Visiting public buildings
• Real property disposal
• Reimbursable services (RWA)
• Rental policy and procedures
• Site selection and relocation
• For businesses seeking opportunities
• For federal customers
• For workers in federal buildings
• Explore policy and regulations
• Acquisition management policy
• Aviation management policy
• Information technology policy
• Real property management policy
• Relocation management policy
• Travel management policy
• Vehicle management policy
• Federal acquisition regulations
• Federal management regulations
• Federal travel regulations
• GSA acquisition manual
• Managing the federal rulemaking process
• Explore small business
• Explore business models
• Research the federal market
• Forecast of contracting opportunities
• Events and contacts
• Explore travel
• Per diem rates
• Transportation (airfare rates, POV rates, etc.)
• State tax exemption
• Travel charge card
• Conferences and meetings
• E-gov travel service (ETS)
• Travel category schedule
• Federal travel regulation

Travel policy

• Explore technology
• Cloud computing services
• Cybersecurity products and services
• Data center services
• Hardware products and services
• Professional IT services
• Software products and services
• Telecommunications and network services
• Work with small businesses
• Governmentwide acquisition contracts
• MAS information technology
• Software purchase agreements
• Cybersecurity
• Digital strategy
• Emerging citizen technology
• Federal identity, credentials, and access management
• Mobile government
• Technology modernization fund
• Explore about us
• Annual reports
• Mission and strategic goals
• Role in presidential transitions
• Get an internship
• Launch your career
• Elevate your professional career
• Discover special hiring paths
• Events and training
• Agency blog
• Congressional testimony
• GSA does that podcast
• News releases
• Leadership directory
• Staff directory
• Office of the administrator
• Federal Acquisition Service
• Public Buildings Service
• Staff offices
• Board of Contract Appeals
• Office of Inspector General
• Region 1 | New England
• Region 2 | Northeast and Caribbean
• Region 3 | Mid-Atlantic
• Region 4 | Southeast Sunbelt
• Region 5 | Great Lakes
• Region 6 | Heartland
• Region 7 | Greater Southwest
• Region 8 | Rocky Mountain
• Region 9 | Pacific Rim
• Region 10 | Northwest/Arctic
• Region 11 | National Capital Region
• Per Diem Lookup

Travel resources

Per diem look-up, 1 choose a location.

Error, The Per Diem API is not responding. Please try again later.

No results could be found for the location you've entered.

Rates for Alaska, Hawaii, U.S. Territories and Possessions are set by the Department of Defense .

Rates for foreign countries are set by the State Department .

2 Choose a date

Rates are available between 10/1/2021 and 09/30/2024.

The End Date of your trip can not occur before the Start Date.

Traveler reimbursement is based on the location of the work activities and not the accommodations, unless lodging is not available at the work activity, then the agency may authorize the rate where lodging is obtained.

Unless otherwise specified, the per diem locality is defined as "all locations within, or entirely surrounded by, the corporate limits of the key city, including independent entities located within those boundaries."

Per diem localities with county definitions shall include "all locations within, or entirely surrounded by, the corporate limits of the key city as well as the boundaries of the listed counties, including independent entities located within the boundaries of the key city and the listed counties (unless otherwise listed separately)."

When a military installation or Government - related facility(whether or not specifically named) is located partially within more than one city or county boundary, the applicable per diem rate for the entire installation or facility is the higher of the rates which apply to the cities and / or counties, even though part(s) of such activities may be located outside the defined per diem locality.

City Pair airfares

Visit City Pair Program to learn about its competitive, federally-negotiated airline rates for 7,500+ domestic and international cities, equating to over 13,000 city pairs.

• Search for contract fares

Note: All fares are listed one-way and are valid in either direction. Disclaimer - taxes and fees may apply to the final price

Taxes and fees may apply to the final price

Your agency’s authorized travel management system will show the final price, excluding baggage fees. Commercial baggage fees can be found on the Airline information page.

Domestic fares include all existing Federal, State, and local taxes, as well as airport maintenance fees and other administrative fees. Domestic fares do not include fees such as passenger facility charges, segment fees, and passenger security service fees.

International

International fares do not include taxes and fees, but include fuel surcharge fees.

Note for international fares: City codes, such as Washington (WAS), are used for international routes.

Federal travelers should use their authorized travel management system when booking airfare.

• E-Gov Travel Service for civilian agencies.
• Defense Travel System for the Department of Defense.

If these services are not fully implemented, travelers should use these links:

• Travel Management Center for civilian agencies.
• Defense Travel Management Office for the Department of Defense.

GSA lodging programs

Shop for lodging at competitive, often below-market hotel rates negotiated by the federal government.

FedRooms provides federal travelers on official business with FTR compliant hotel rooms for transient and extended stays (up to 29 days). The program uses FEMA and ADA-compliant rooms with flexible booking terms at or below per diem rates. Federal employees should make reservations, including FedRooms reservations, via their travel management service.

Visit GSALodging for more details on FedRooms and for additional programs offering meeting space, long term lodging, and emergency lodging.

Privately owned vehicle (POV) mileage reimbursement rates

GSA has adjusted all POV mileage reimbursement rates effective January 1, 2024.

* Airplane nautical miles (NMs) should be converted into statute miles (SMs) or regular miles when submitting a voucher using the formula (1 NM equals 1.15077945 SMs).

For calculating the mileage difference between airports, please visit the U.S. Department of Transportation's Inter-Airport Distance website.

Plan a trip

Research and prepare for government travel.

Per diem, meals & incidental expenses (M&IE) Passenger transportation (airfare rates, POV rates, etc.) Lodging Conferences/meetings Travel charge card State tax exemption

Services for government agencies

Programs providing commercial travel services.

Travel Category Schedule (Schedule L) E-Gov Travel Service (ETS) Emergency Lodging Services (ELS) Employee relocation

Travel reporting

Federal Travel Regulation Table of contents Chapter 300—General Chapter 301—Temporary Duty (TDY) Travel allowances Chapter 302 - Relocation allowances

Calculator   Soup ®

Online Calculators

Speed Distance Time Calculator

Calculator Use

Calculate speed, distance or time using the formula d = st, distance equals speed times time. The Speed Distance Time Calculator can solve for the unknown sdt value given two known values.

Time can be entered or solved for in units of secondes (s), minutes (min), hours (hr), or hours and minutes and seconds (hh:mm:ss). See shortcuts for time formats below.

To solve for distance use the formula for distance d = st, or distance equals speed times time.

distance = speed x time

Rate and speed are similar since they both represent some distance per unit time like miles per hour or kilometers per hour. If rate r is the same as speed s , r = s = d/t. You can use the equivalent formula d = rt which means distance equals rate times time.

distance = rate x time

To solve for speed or rate use the formula for speed, s = d/t which means speed equals distance divided by time.

speed = distance/time

To solve for time use the formula for time, t = d/s which means time equals distance divided by speed.

time = distance/speed

Time Entry Formats hh:mm:ss

You can use a dash (-), period (.) or colon (:) as separators and must always use 2 separators. For example, 15-06-22, 15.06.22 and 15:06:22 are all interpreted as 15 hours 6 minutes 22 seconds or 15:06:22.

Entry limits allowed:

• hours 0 to 999
• minutes 0 to 59
• seconds 0 to 59

Related Calculators

For physics calculations with speed, displacement and velocity use our Displacement Calculator to solve for displacement s , average velocity v or time t .

Cite this content, page or calculator as:

Furey, Edward " Speed Distance Time Calculator " at https://www.calculatorsoup.com/calculators/math/speed-distance-time-calculator.php from CalculatorSoup, https://www.calculatorsoup.com - Online Calculators

Last updated: October 21, 2023

• English (CA)
• Deutsch (DE)
• Deutsch (CH)

See how much you get back with our mileage reimbursement calculator

Having employees use their own vehicle for work can be expensive. Especially if they regularly drive long distances and spend money on fuel. Now you can quickly calculate how much your employees can get back with our easy-to-use mileage reimbursement calculator.

Give it a go

Select the tax year you want to calculate for and enter the miles driven to see how much money you can get back.

Mileage reimbursement rates in the US

Each country has its own standard mileage allowance. The rate is updated every year by the countries tax authority and is meant to cover all costs of owning and running your vehicle for the business-use part of your driving.

2022 (in H1)

2022 (in H2)

See mileage rates for these major states

Tap into our expert knowledge.

A guide to corporate mileage reimbursement policies

How to write a corporate mileage reimbursement policy

How does mileage allowance for electric cars work?

One platform. All things business travel.

Book, plan, and manage your business travel with our simple, easy-to-use travel management tool.

• All in one place: TravelPerk centralizes all your business travel details in one place. You get maximum visibility on expenses, invoices, travel plans, and travel policies.
• Self-booking engine: Our platform stores all traveler data, preferences, and loyalty points. Plus, you get access to a 7-star, 24/7 customer care team with a target 15-second response rate.
• Expense reports & dashboards: TravelPerk collects all your information to help you send one invoice for all business travel.
• Automated travel policies & in-app approvals: Including approval workflows, the ability to save trip details, and customize workflows.

Trusted by thousands of the world's most awesome companies

Frequently asked questions

How does mileage reimbursement work.

When an employee uses their personal car or van for day-to-day business activities, they can claim back the cost without paying income tax.

Mileage reimbursement isn’t designed to cover commuting to and from work. It only covers journeys that employees are requested to make during work, specifically those with a business purpose.

Is mileage reimbursement mandatory for companies?

In short, no. In most countries there is no requirement by law to reimburse an employee’s mileage or other travel expenses. However, many companies do, as a matter of good practice.

Who sets the mileage reimbursement rates?

Although each country has its own standard mileage allowance, the rates can differ depending on each company and how much they choose to pay back their colleagues. Companies can also set their own mileage reimbursement policies.

Can companies reimburse a higher amount than the standard mileage rates?

Yes, companies can choose to reimburse a higher amount than the standard. However, this does come with its own rules and regulations.

For example, in the U.S. and UK, if they exceed the standard mileage rate, the reimbursement will count as regular wages and lose its tax benefits (if they go below the rate, employees in many countries can deduct their difference when filing their tax return).

Munter Calculation

• Backcountry Trip Planning Tool
• Skiing, mountaineering, hiking, climbing
• Calculate distance, time per leg, overall time
• Export to PDF, GPX and KML
• Save to site, share with friends and clients

About the Tool

• Point & click interface to add, move and delete points.
• Points automatically generate latitude / longitude, elevation, distance and bearings between points.
• Specify travel type (ski, hike, bushwack).
• Leg times and cumulative times calculated automatically based on distance, travel style and elevation gain/loss.
• Custom rates for travel styles for whole route, accomodates faster or slower groups.
• Custom rates for specific legs, accomodates faster or slower legs.
• Terrain, road map or satellite background maps.
• Search for locations to start your tour.
• Location aware, designed for all sized devices.
• Set preferences for decimal degrees, degrees decimal minutes, degrees minutes seconds or UTM.
• Save routes to site.
• Sample shared route: View Sample Route
• No membership required to view route through shared link.
• Load your saved routes into the planning tool.
• Generate list of all routes you've saved to your account; no remembering route names.
• Access saved routes from any device.
• Export routes to GPS, Google Earth or spreadsheet.
• Import waypoints from existing GPX or KML files; if you prefer plotting points in Google Earth, then save your plotted line as a KML file and import for trip planning.
• Sample GPX file: Download GPX Sample
• Sample KML file: Download KML Sample
• Sample CSV file: Download CSV Sample
• Exported files include coordinates, elevation, bearings to next point, distances between points, transition times, times for legs and overall trip, custom notes for each points.
• Generate PDF file of entire route.
• Sample PDF w/maps: Download PDF Sample
• Sample minimalist PDF: Download PDF Sample
• Save PDF's to computers, mobile devices for offline reference.
• Share PDF's by email, Facebook, Dropbox etc.

How It Works

• For each leg, first you calculate a total number of "units"... each 1km of travel is 1 unit, and each 100m of elevation change (gain or loss) is 1 unit.
• The modifier varies depending on travel type and whether you are gaining or losing altitude.
• Modifiers in our system are adjustable either overall or leg by leg to accomodate different speed groups.
• Default modifiers in our system are: CLIMBING: Walking: 4, Skiing: 4, Bushwacking: 2 DESCENDING: Walking: 6, Skiing: 10, Bushwacking: 2
• A simple example: You travel 2km while descending 200m on skiis: 2km = 2 units, 200m = 2 units. Total is 4 units. Skiing downhill has modifier of 10, so numbers of hours to complete travel is 4/10 = 0.4 hours or 24 minutes.

Premium Benefits

• Build routes using point and click interface.
• View table depicting route, including latitude / longitude, elevation, distance between points, gain/loss between points, bearing between points.
• Customize trips by modifying either overall travel rate modifiers (for groups known to be faster or slower than normal), or leg by leg (for particularly easy or difficult legs)
• Add transitions and modify transition times, add notes for each leg.
• Advertising supported site.
• Save and load routes online; access your saved routes anytime from any device with just your login.
• All pertinent data (lat/long, elevation, distance between legs, gain/loss, bearing, leg travel time, transitions and notes) embedded in GPX files to be viewed on GPS device.
• All pertinent data noted in GPX files above is also embedded in KML files as well.
• PDF files contain overview map plus individual map for each point in route, as well as all pertinent route data noted above.
• NOTE: Non members cannot generate KML/GPX or PDF files, but users who view a route using a shared link will be able to generate those files for themselves as long as they have not modified the route from its original form.
• Ad free for premium members.

Import GPX/KML Route

"ridgeline" warning.

• My Packages
• Healthcare Careers
• Nursing Resume
• Travel Nursing

Sign in to access feature. Not a member? Join Now

Joining is free and easy apply and sign up with just a few clicks, join and create your free profile today bluepipes is the easiest way to manage your healthcare career. create resumes, skills checklists, manage documents, connect with employers and colleagues, already a member sign in, field of practice help.

Select this field of practice if you are, or training to be, a physician: M.D., D.O., D.P.M.,D.D.S, D.M.D., etc.

Select this field of practice if you are, or training to be, in the field of nursing: APRN,NP, CRNA, RN, LPN, CNA, etc.

Select this field of practice if your clinical health profession is, or will be, distinct from physician, dentistry, or nursing. This includes all Therapists, Technicians, Assistants, etc.

Employer/Other:

Select this field of practice if you are an employer, recruiter, sales representative, or other professional interested in connecting with healthcare professionals for professional purposes.

The Ultimate Pay Calculator for Travel Nurses, Therapists and Techs

Pay Calculator

Location information:.

• View the complete report including the "Total Contract Value" and the "Cost Adjusted Value".
• Make edits.
• Run side-by-side comparisons with other pay packages.
• Clone it to enter new pay packages faster.
• And much more!

We created this travel healthcare pay calculator to empower travel healthcare professionals with free access to the same powerful software agencies use to calculate their own pay. You can enter pay quotes from any source.

The calculator will help you recognize and record all the vital details you need to thoroughly evaluate pay packages. You can even run side by side comparisons.

The calculator will help ensure that you aren’t caught off guard by unforeseen expenses. It also allows you to factor in your own costs so you can conduct more accurate comparisons and obtain a better understanding of what you truly stand to gain.

Click the “More Info” buttons throughout the calculator to discover additional information. We’re confident you’ll become an expert!

As more travelers submit their pay packages, we’ll be able to provide the community with empowering insights!

Articles on this topic:

About the Ultimate Travel Nursing Pay Calculator

The pay calculator helps recruiters provide candidates with the most compelling offers in the industry. Recruiters can save standalone “Offers” or submit “Direct Offers” directly to a candidate.

Offers To create an “Offer”, simply complete the pay calculator form and publish the pay package. You can set your offers to be Public or Private.

Public Offers are visible to the entire BluePipes community. Private Offers are visible only to you and the candidates you offer them to.

Once you’ve created an offer, you can Clone it to make it easier and faster to create new offers. You can also submit your Offers directly to candidates on BluePipes. See below for details.

Direct Offers Select “Make Offer” on any candidate’s profile to make an offer to them. You can select from among your existing offers to simplify the offer process. Your Direct Offers are only visible to you and the candidate you offer them to.

Candidates receive a message and email notification when you make an offer. They can easily respond and connect their profile to grant you access to all their documents on BluePipes.

This is where you enter the time variables for the contract.

Regular Hours: Regular Hours are the hours that will pay you the regular hourly rate of pay. In most cases, all of your contracted-hours will be Regular Hours. For example, if the contract is for 3 12 hour shifts in Texas, then you will work 36 regular hours. However, if the contract is for 3 12 hour shifts in California, then you will most likely work 24 regular hours and 12 overtime hours because California requires employers to pay overtime after 8 hours in a day.

Overtime Hours: Overtime Hours are the hours that will pay you an overtime rate. Please note, in this section, you are dealing only with your contracted hours. You will have the opportunity to track your pay rate for "Extra Hours" below.

4 Ways That Time Impacts Travel Nursing Pay

This is where you enter the taxable rates for the contracted hours you will work.

Taxed regular hourly rate: This is the taxable rate you will receive for working the regular hours that you are contracted to work.

Taxed overtime hourly rate: If you enter "Weekly contracted overtime hours" above, then you will see the option to enter a Taxed Overtime Hourly Rate. This is the taxable rate that you will receive for working the overtime hours that you are contracted to work.

In nearly every case, this is 1.5X the "Taxed regular hourly rate". This is normal and to be expected. Again, these hours are part of your contracted hours. They are not Extra Hours.

Please note, in this section, you are dealing only with your contracted hours. You will have the opportunity to track your pay rate for "Extra Hours" below.

Is It OK to Take Really Low Taxable Rates as a Travel Nurse?

The Difference Between Contracted Overtime Hours and Extra Hours

This is where you enter the standard non-taxable reimbursements that are typically applied to each paycheck IF you qualify to receive non-taxable reimbursements.

Meal reimbursement: Some companies refer to this as the M&IE reimbursement/stipend or "the stipend". It's the amount that you may receive as a reimbursement for meals and incidental expenditures while traveling away from your tax home for work.

Lodging reimbursement: This is the amount that you may receive as a reimbursement for lodging expenses while traveling away from your tax home for work.

Meal and Lodging interval: Different companies quote reimbursements in different intervals. You should select the interval that best matches your quote.

% of GSA max meals and lodging: The General Services Administration of the federal government determines the maximum amounts that employers can reimburse without the exchange of receipts. The amounts vary by location. We calculate the percent of the GSA maximum based on the values you provide.

Please note that these are the maximum amounts. They are not the required amounts. Moreover, agencies are only able to pay based on what the bill rate supports. You should be concerned if the rates exceed 100%. The articles below provide further details on this topic if you're interested in discovering more.

6 Things Travel Nurses Should Know about GSA Rates

Everything You Need to Know About the Travel Nurse Housing Stipend

Travel Nursing Pay: The M&IE Stipend

How to Qualify for Non-Taxable Reimbursements

The 50 Mile Myth for Tax Free Stipends

This section helps you identify and record the financially relevant aspects of medical benefits. It's important from a healthcare perspective that you know this information. It's also required to conduct accurate pay comparisons.

For example, if one company is offering a higher level of coverage than another or their benefits activate sooner, then you may want to attribute a higher value when comparing offers.

Coverage level: Generally speaking, the healthcare insurance industry recognizes four coverage levels. It's a good idea to find out the coverage level so you know what to expect. You may also want to request a "schedule of benefits" to find out exactly what's covered.

Travel Nursing Pay – Medical Benefits: Part 1

Travel Nursing Pay – Medical Benefits: Part 2

This section provides a breakdown of your estimated weekly pay based on the values you provide. It includes only those values that employers commonly include on weekly paychecks.

Please note that the figures here may be slightly different than figures your agency quotes. Those differences are the result of rounding differences. The difference should not be more than $10 on any given figure.

Hourly reimbursements: We display the hourly value of reimbursements for illustrative purposes only. Hourly values are easier to compare. This is not necessarily how the employer pays them.

Blended rate: A blended rate is a rate that adds the hourly value of multiple different categories. It's the best way to compare pay packages. Please see the article below for detailed information.

Net Pay Estimates: This is not an exact figure. It is a very rough estimate. You can change the "Estimated tax rate" to modify the result. We recommend using PayCheckCity.com if you would like an exact calculation.

Travel Nursing Blended Rates Demystified

3 Pitfalls When Discussing Travel Nursing Pay and How to Avoid Them

How to Calculate Travel Nursing Net Pay

Extra-Time is any time that you work in addition to your contracted hours. It is regularly described as "overtime". However, the two are very different. Not all extra-time is overtime and not all overtime is extra-time.

Many companies pay a rate that is higher than 1.5X the taxable base rate for the extra hours you work. This is because all of the reimbursements and fixed costs are covered by your contracted hours. Therefore, there is money left over in the bill rate for the agency to provide higher pay for extra hours.

Do not assume that extra-time (aka "overtime") will be paid after you work 40 hours in a week. States that require overtime after 8 in a day also require overtime after 40 regular hours are worked in a week, not 40 total hours. Therefore, be very clear with your recruiter about when extra-time rates kick in.

Rate for hours 37-40: Some companies pay a special rate for these hours while others do not. It's best to ask specifically.

Rate for additional extra-hours: Record the rate that the company pays for all other extra-hours here.

Rate for extra-hours bonus: Some companies pay a bonus for working extra-hours instead of paying a higher rate. Companies rarely do both. If there is a bonus, then record it here.

Your target extra-hours rate: We provide a target rate to assist you. The target rate is the blended rate of most of the financial values you provide in the calculator. The idea is that the company could potentially pay you the blended rate for your extra-hours because they're billing the hospital the same rate that allows them to pay this much for your contracted hours.

How to Negotiate a Travel Nursing Extra-Time Rate

Extra-Time Explainer Video

This section helps you identify and record important details regarding time.

Paid Sick Leave: Most contracts do not include paid sick leave. However, certain states, like California, require employers to provide paid sick leave. You should always inquire about it.

Paid Time-Off: Paid Time-Off is very rare in travel healthcare. Some companies offer it nonetheless. Typically, companies who do offer paid time-off reduce the value of some other compensation variable by an equal value to account for the cost of this benefit.

Guaranteed Hours: "Guaranteed Hours" aren't as straightforward as they sound. First, the hospital has a contract with the agency that governs "guaranteed hours" between the two parties. The policies vary from hospital to hospital.

Sometimes, hospitals guarantee all the hours of the contract. This means that the hospital would still have to pay the agency if the hospital cancels shifts. In other cases, hospitals are able to cancel a specified number of shifts per contract. And sometimes, none of the hours are guaranteed.

The contract between the agency and the traveler governs guaranteed hours between the two parties. Most often, the agency's policy matches the hospital's policy. Sometimes, agencies guarantee all the hours no matter what. Here again, this may cause an equal reduction in some other compensation variable.

Contract Cancellation: In many cases, the traveler is subject to a cancellation fee if they cancel a contract early. Unfortunately, hospitals are rarely held to the same standard if they terminate a contract early. However, they may be required to provide advance notice.

Missed Shifts: Missed Shifts are shifts that the traveler cancels. The agency will not pay the taxable rate. Additionally, the contract may have a penalty designed to recoup the cost of reimbursements and other costs. We display a penalty estimate based on values you enter in the calculator.

California’s New Paid Sick Leave Law

Requesting Time Off as a Travel Nurse

Considerations for Guaranteed Hours

Choosing Between Guaranteed Hours or a Higher Rate

Travel Nursing Contract Cancelled?

Penalties for Missed Shifts and Cancelled Shifts

3 Considerations for Calling in Sick or Missing Shifts as a Travel Nurse

This section helps you identify and record important details regarding company provided housing. Housing options vary dramatically from agency to agency and from contract to contract.

Housing Type: All housing is not created equal. You should attribute higher value to better housing options if you take company housing.

Apartment Options: Don't assume that company housing automatically comes with all the bells and whistles. It's best to ask your recruiter about things like furnishings, cleaning supplies, housewares and anything else you expect housing to include.

Should You Take Travel Nurse Agency Housing or Find Your Own?

The Ultimate Guide to Travel Nurse Agency Housing

How to Find Travel Nurse Housing - The Ultimate Guide

This section helps you identify and record various reimbursements you might receive from a company.

You must account for all the financial aspects of pay packages in order to accurately compare them. For example, one company might have higher weekly pay than another. However, it's possible that the company with higher weekly pay is not covering the cost of a license while the lower paying company does.

4 Things to Know about Travel Nursing Pay Bonuses

License and Certification Reimbursements

Things to Know About Rental Cars

What You Ought to Know About Travel Stipends

This section helps you identify and record costs that you will incur. We'll calculate a "Cost Adjusted Value" so you can easily compare different offers. Let's look at a couple of examples to see why costs are so important.

Let's say you are currently located in Florida and you are considering one job in California and another in Georgia. The job in California will likely pay more. However, you will undoubtedly incur higher travel expenses and housing expenses for California than Georgia. Enter your costs here and the "Cost Adjusted Value" will help you compare the end result.

Now let's say you want to determine whether you will make more money on a travel nursing job than you will by staying on your permanent job. Record all the costs you will incur for the travel nursing job and compare the "Cost Adjusted Value" to your permanent job's pay.

7 Potential Start-Up Costs for Travel Nurses

How Much Do Travel Nurses Make - The Definitive Guide

Just in Time for Spring 🌻 50% Off for 3 Months. BUY NOW & SAVE

50% Off for 3 Months Buy Now & Save

Wow clients with professional invoices that take seconds to create

Quick and easy online, recurring, and invoice-free payment options

Automated, to accurately track time and easily log billable hours

Reports and tools to track money in and out, so you know where you stand

Easily log expenses and receipts to ensure your books are always tax-time ready

Tax time and business health reports keep you informed and tax-time ready

Automatically track your mileage and never miss a mileage deduction again

Time-saving all-in-one bookkeeping that your business can count on

Track project status and collaborate with clients and team members

Organized and professional, helping you stand out and win new clients

Set clear expectations with clients and organize your plans for each project

Client management made easy, with client info all in one place

Pay your employees and keep accurate books with Payroll software integrations

• Team Management

FreshBooks integrates with over 100 partners to help you simplify your workflows

Send invoices, track time, manage payments, and more…from anywhere.

• Freelancers
• Self-Employed Professionals
• Businesses With Employees
• Businesses With Contractors
• Marketing & Agencies
• Construction & Trades
• IT & Technology
• Business & Prof. Services
• Accounting Partner Program
• Collaborative Accounting™
• Accountant Hub
• Reports Library
• FreshBooks vs QuickBooks
• FreshBooks vs HoneyBook
• FreshBooks vs Harvest
• FreshBooks vs Wave
• FreshBooks vs Xero
• Free Invoice Generator
• Invoice Templates
• Accounting Templates
• Business Name Generator
• Estimate Templates
• Help Center
• Business Loan Calculator
• Mark Up Calculator

Call Toll Free: 1.866.303.6061

1-888-674-3175

• All Articles
• Productivity
• Project Management
• Bookkeeping

Resources for Your Growing Business

Medical mileage rate 2024: everything you need to know.

A mileage deduction is a type of reimbursement US citizens can claim on their federal income tax returns, based on how much driving they have done under specific conditions, like for medical or moving purposes. Taxpayers cannot claim a deduction for moving expenses unless they are members of the Armed Forces on active duty moving under orders to a permanent change of station. 

In 2024, the IRS medical mileage rate is 21 cents per mile, offering taxpayers a small break when they drive their vehicle to receive essential medical care.

Unexpected or long-term health issues can quickly drain your bank account, but using the medical deduction can help you recoup some of the expenses associated with traveling to and from doctor’s appointments, going to the hospital, parking fees, and other costs associated with travel for medical reasons, reducing the overall medical expenses you pay over the year and helping you stay financially stable, even during challenging times. 

Key Takeaways

• The medical mileage rate in the US for 2024 is 21 cents for each mile driven.
• Standard medical mileage rates, parking fees, tolls, and other qualified transportation amounts can be deducted when filing your taxes.
• Medical mileage deductions must be directly related to the diagnosis, treatments, prevention, cure, or mitigation of health problems.  
• Travel expenses paid by HSAs, FSAs, and HRAs cannot be deducted from your taxes.
• Itemized medical deductions can be claimed by filing Schedule A (Form 1040) during tax time. 

Table of Contents

• Medical Mileage Rate in 2024
• What Is the IRS Standard Mileage Rate for 2024
• What Is the IRS Medical Mileage Rate for 2024?
• What Is Included in the Medical Mileage Rate
• How To Calculate Medical Mileage With the IRS Medical Mileage Rate
• How To Calculate Your Medical Deductions
• Can HSAs, FSAs, or HRAs Be Used to Pay for Medical Travel?
• How To Claim Tax Deductions Using IRS Mileage Rates
• Effortless Mileage Tracking with FreshBooks
• Frequently Asked Questions

Medical Mileage Rate in 2024 

The IRS medical mileage rate for 2024 is important when determining tax deductions for your medical travel expenses, as it allows you to calculate the approximate dollar amount you can write off using simple math. These types of deductions can relieve some financial strain, especially if you’ve put wear and tear on your vehicle and spent money on fuel and tolls to get to and from medical appointments. 

What Is the IRS Standard Mileage Rate for 2024? 

The standard mileage rate for business use and self-employed individuals is not the same as the rates offered for medical and moving purposes for Armed Forces members. The 2024 standard IRS mileage rates are as follows:

• 67 cents per mile when driving for business use
• 21 cents for each mile when driving for medical reasons
• 21 cents for each mile when qualified active duty members use their vehicle to move
• 14 cents per mile when driving in service of charitable organizations 

These rates apply to cars, hybrid electric automobiles, diesel-powered vehicles, vans, pickup trucks, or panel trucks. 

For claiming medical mileage in 2024, taxpayers may choose to use the standard deduction rate for mileage, tolls, and parking fees, or instead, deduct the cost of gas, oil, and other out-of-pocket expenses. Unlike business deductions, you may not deduct fixed and variable costs like insurance, general repair, or maintenance expenses. 

What Is the IRS Medical Mileage Rate for 2024? 

The IRS medical mileage rate for 2024 is 21 cents per mile. 1 IRS. “ Standard mileage rates ” Accessed March 26, 2024. It has changed from 22 cents per mile to 21 cents, a decrease of 1 cent from 2023. This means that when you take a trip related specifically to medical reasons, 21 cents for each mile driven may be written off from your taxes at the end of the year. You can write medical mileage off provided you have accurately tracked your mileage, and you have supporting documents. You must also keep detailed travel records to prove that the miles driven qualify under IRS rules.

Individuals seeking tax deductions for medical travel expenses benefit as the deduction can help recoup some of their vehicle wear and tear and fuel costs associated with traveling due to medical conditions beyond their control. You can also deduct parking fees, tolls, and other qualified transportation costs related to health diagnosis, treatment, prevention, cure, and mitigation as long as they haven’t been covered by health insurance. This can help relieve some of the financial stress caused by seeking medical care. Deducting some of the costs of traveling for treatment, may allow you to be better able to receive higher-quality care than if you had to receive treatment locally.

If you’re claiming medical mileage on your taxes, you must only count qualified miles for medically related travel, and it’s best to include documentation when possible. If you’re multitasking and make several stops while driving, you may only count the qualified portion of the trip that was medically related, subtracting the miles from the rest of the journey.

By adding up the accumulated miles for the year, you’ll get your qualified mileage which can be claimed on your taxes. A mileage-tracking app is handy in these cases. 

What’s Included in the Medical Mileage Rate 

The IRS website specifies that “you can include only the medical and dental expenses you paid this year, but generally not medical or dental care you will receive in a future year.” 2 IRS. “ Publication 502, Medical and Dental Expenses ” Accessed March 26, 2024. These are the most commonly included expenses included in the IRS medical mileage rates. 

Mileage Expenses 

The IRS standard mileage rate is 21 cents per mile in 2024. To calculate your total annual mileage expenses, tally the number of miles driven for approved medical reasons and multiply that number by 0.21. It’s important to accurately calculate your approved mileage with documentation in case of an audit. 

Parking Fees 

Along with the mileage rate, the IRS will allow you to include certain medically-related parking fees in your deductions. This includes hospital parking, paid parking at your doctor’s office or dentist, and parking meter fees incurred while picking up prescriptions or parking at other medical facilities.

Toll Charges 

You can also include any toll charges incurred during necessary medical travel. Deductible expenses have a wide breadth but must be directly related to medical treatment. If you drive through a toll booth while traveling to another city to visit a relative and then pick up a prescription, this is not deductible, but incurring a toll on the way from your home to the hospital is. 

Transportation Services 

Along with mileage costs, you may be able to write off certain medically related transportation costs, including:

• Ambulance 

Certain eligible transportation expenses for a parent who must accompany a child requiring medical care are also deductible. All travel must be directly related to and essential for medical care. 

Special Circumstances 

Some additional medical travel expenses you may be able to deduct include the following:

• Trips to another city, if the trip is primarily for and essential to receiving medical services. The rate is $50 per night per person and you may include a person traveling with the individual receiving medical care for a total of $100 per night. 
• Any deductible costs of regular visits to see a mentally ill dependent, if these visits are recommended as part of treatment. 
• Transportation expenses of a nurse, or another person who can give medication or treatment if the patient cannot travel alone. 

How To Calculate Medical Mileage With the IRS Medical Mileage Rate 

Calculating your mileage rate is simple. Use these steps to report your standard mileage rate deduction accurately.

Gather Your Records 

To claim medical mileage, you must accurately track the dates, times, and purpose of each medical trip throughout the year, including the total miles driven. Gathering and organizing this information will legitimize your claim to the IRS. 

Use the Current Rate 

Ensure you’re using the current mileage rate when calculating your total as it can change from year to year. For example, the 2023 rate was 22 cents per mile, but the 2024 rate is 21 cents per mile. A small calculation error such as using the wrong rate may trigger an audit.  

Multiply Miles by the Rate 

Multiply your total miles driven for medical purposes by the current 21-cent rate to get the deductible amount. To calculate, multiply the total miles by 0.21 to find the deductible dollar amount.

Add Trip Calculations Together 

To find your deduction amount, you can either add up all miles driven for each qualified medical trip first then multiply that sum by 0.21 to get the rate, or calculate each trip’s rate separately and then add the sums together for the total amount. 

For example, if you drove in this scenario:

• Doctor’s appointment (there and back): 3.2 miles
• Home to hospital: 1.1 miles
• Hospital to specialist: 0.3 miles
• Specialist to pharmacy: 1.5 miles

You can first add all travel up then multiply the amount by 21 cents: 

3.2 + 1.1 + 0.3 + 1.5 = 6.1 miles 

6.1 miles x $0.21 = $1.28 

Or you can choose to calculate each dollar amount first, then add them together:

3.2 x $0.21 = $0.67

1.1 x $0.21 = $0.23

0.3 x $0.21 = $0.06

1.5 x $0.21 = $0.32

Total = $1.28

How To Calculate Your Medical Deductions 

When you itemize your deductions, you may be able to deduct medical and dental expenses you’ve paid for yourself, your spouse, and your dependents, so long as they exceed the Adjusted Gross Income (AGI) threshold. Here’s how to calculate these deductions:

Gather Medical Expense Receipts 

A variety of expenses qualify for medical deductions, including doctor visits, prescriptions, treatments, inpatient care, substance use disorder treatment, mental health care, dental treatments, and more. Gather all documentation, receipts, bills, and paperwork related to your deductions to back up your deduction claims with the IRS.

Separate Mileage from Other Expenses 

Those who have done a lot of traveling for medical reasons may want to claim the standard medical mileage deduction instead of itemizing each driving expense. In this case, separate your mileage from other out-of-pocket medical expenses like medication costs. 

Total Your Medical Expenses 

All of your qualified medical expenses that are not compensated by insurance will be totaled on Form 1040, Schedule A. 3 IRS. “ Topic no. 502, Medical and dental expenses ” Accessed March 26, 2024. This includes adding your calculated mileage deductions from each medical trip into the total sum. 

Check the Threshold 

When inputting the itemized medical and dental expenses on your Schedule A Form 1040 paperwork, you must remember that you can only deduct medical expenses that exceed 7.5% of your Adjusted Gross Income (AGI) for the year. 

Calculate the Deductible Amount 

The IRS defines AGI as “the total gross income from all sources, minus certain adjustments…” You may find your AGI automatically entered on line 11 of your Form 1040 if you use software to prepare your return. 4 IRS. “ Adjusted gross income ” Accessed March 26, 2024.

Subtract 7.5% of your AGI from your total medical expenses to determine your deductible amount. For example, if your AGI is $76,000, and your total medical expenses totaled $12,750, you would find 7.5% of $76,000, then subtract that number from $12,750.

$76,000 x .075 = $5,700

$12,750 – $5,700 = $7,050

In this case, the total amount you may deduct from your taxes would be $7,050. 

Can HSAs, FSAs, or HRAs Be Used to Pay for Medical Travel? 

The IRS iterates that medical travel expenses are only tax deductible if they are not compensated by insurance or otherwise. If you pay for medical travel using money from a health savings account (HSA), a flexible spending account (FSA), or a health reimbursement arrangement (HRA), those costs cannot be deducted from your taxes. 

While you may use HSAs, FSA, and HRAs to pay for travel costs, these funds are already tax-free so do not include them on your Schedule A Form 1040.  

How To Claim Tax Deductions Using IRS Mileage Rates 

Claiming tax deductions using IRS rates is fairly straightforward as long as you’ve stayed organized throughout the year. Follow the simple steps below to claim the standard rates on your federal income tax return.

File Schedule A 

Schedule A Form 1040 is an IRS tax form that allows the itemization of deductions. 5 IRS. “ About Schedule A (Form 1040), Itemized Deductions ” Accessed March 26, 2024. Using this form, you can list each deduction cost for the calendar year in detail, including part of your medical expenses and other expenses. File Schedule A to deduct medical mileage.

Recordkeeping Requirements 

Detailed records are required to be able to deduct medical travel costs. The stronger your evidence is toward the necessity of travel for medical reasons, the better. In the best-case scenario, your records will include:

• The dates of each medical trip
• The purpose of each trip (for example: doctor’s visit, prescription pick-up, etc.)
• The total, accurate number of miles driven for each trip 
• Receipts, bills, and other relevant paperwork

Mileage Log 

Keeping a mileage log in your vehicle is a good way to accurately track the number of miles driven for medical reasons. A written log is an acceptable record-keeping method, as is a mileage-tracking app. Only mark down the travel that’s directly related to accepted medical reasons.

Separate Documentation 

Keeping your medical expense receipts separate from your mileage records will help keep your records tidy. The better organized your documents are, the easier tax time will be. 

Formulas Not Required 

You won’t need to do any calculations on Form 1040 yourself. All the IRS needs from you is the total mileage claimed. This reduces the risk of error due to a miscalculation.

Effortless Mileage Tracking with FreshBooks 

Keeping track of miles driven may feel like a chore when you’re dealing with a health issue, but it’s important to take advantage of all available tax deductions to stay on top of your financial health. Using a convenient mileage-tracking app is the simplest way to separate your everyday driving from medical travel and track how much you’ve driven over the year. 

The FreshBooks mileage tracking app is automated, logging your trips efficiently so you can concentrate on getting where you’re going. In just a few clicks, you can classify your trip as personal or medical, send a mileage report to yourself, or download a full report. The app even saves your travel history in case you need it. 

Find out how FreshBooks can streamline your record-keeping process and make tax time easier. Try FreshBooks for free today.

FAQs About Medical Mileage Rate in 2024 

Learn more with these answers to the most frequently asked questions about medical mileage tax deductions in the US. 

Does medical mileage include picking up prescriptions?

Yes, medical mileage includes picking up prescriptions, along with other trips to doctor’s offices, medical appointments, certain dental procedures, and other health-related activities.

What is the mileage rate for medical vs. business?

The 2024 IRS mileage rate for medical travel is 21 cents while the business mileage rate is 67 cents per mile. 

Can you deduct mileage for medical trips?

Yes, you can deduct mileage for medical trips if the travel is necessary and directly related to a medical issue. The standard deduction rate is 21 cents for each mile driven. 

How much can you deduct for mileage to doctor appointments?

In 2024, you can deduct 21 cents per mile when you drive your personal vehicle to doctor’s appointments. You can also deduct expenses like parking and road tolls related to these medical trips.

What is the IRS rule for deducting medical expenses?

Medical expenses must be directly related to and necessary for diagnosing, mitigating, treating, preventing, or curing a health condition. You must have paid for them yourself, with no compensation by insurance or other entity to qualify for an IRS tax deduction.

Article Sources:

• IRS. “ Standard mileage rates ” Accessed March 26, 2024.
• IRS. “ Publication 502, Medical and Dental Expenses ” Accessed March 26, 2024.
• IRS. “ Topic no. 502, Medical and dental expenses ” Accessed March 26, 2024. 
• IRS. “ Adjusted gross income ” Accessed March 26, 2024.
• IRS. “ About Schedule A (Form 1040), Itemized Deductions ” Accessed March 26, 2024.

Sandra Habiger, CPA

About the author

Sandra Habiger is a Chartered Professional Accountant with a Bachelor’s Degree in Business Administration from the University of Washington. Sandra’s areas of focus include advising real estate agents, brokers, and investors. She supports small businesses in growing to their first six figures and beyond. Alongside her accounting practice, Sandra is a Money and Life Coach for women in business.

RELATED ARTICLES

Save Time Billing and Get Paid 2x Faster With FreshBooks

Want More Helpful Articles About Running a Business?

Get more great content in your Inbox.

By subscribing, you agree to receive communications from FreshBooks and acknowledge and agree to FreshBook’s Privacy Policy . You can unsubscribe at any time by contacting us at [email protected].

👋 Welcome to FreshBooks

To see our product designed specifically for your country, please visit the United States site.

Travel Agent Commission Calculator

Behind the scenes of every booking is a complex web of commissions, percentages, and agreements that fuel the industry. For travel agents, understanding how earnings are determined is paramount, and empowers better decision-making.

The travel agent commission calculator below is designed to help calculate travel agent commissions quickly and accurately.

Commission Calculation Tool

Commission Rate:

Enter as a percentage (e.g., 10 for 10%)

Calculate Reset

Understanding  Travel Agent Commissions

Travel agent commissions are fees or percentages of the total cost of a travel booking that is paid to the travel advisor for their services. The commission rate will vary depending on the agreement between the travel agency and the service provider.

These commissions are typically paid by airlines, hotels, cruise lines, tour operators, and other travel service providers as a way to incentivize them to promote and sell their products and services. The exact commission structure and commission percentage depend on specific arrangements between the host agency and the travel service provider.

Here are some key points to understand about travel agent commissions:

Some agents charge flat fees for their services in addition to (or in place of) commissions. These can be charged for consultation, itinerary planning, and other

Percentage-based Commissions

In many cases, travel agents earn a percentage of the total cost of the travel services they sell. For example, they might earn an 8% commission on the price of a hotel room or airline ticket. Thus, the commission amount is determined by the cost of travel services.

Performance and Volume Incentives

Travel agencies that consistently generate a high volume of bookings for a particular service, may be eligible for different commission levels, or higher commission rates based on performance.

Supplier Agreements

Travel agents often have contracts or agreements with various travel service providers, outlining specific commission rates and terms for each provider’s products or services. Preferred suppliers will usually offer commission types that are significantly greater than their competitors.

Online  Travel Agencies  (OTAs)

Online travel agencies, also referred to as OTAs, earn commissions for bookings made on their platforms. The commission plan for these sites will vary, depending on things like accreditation, annual sales

Specific commission rates and structures can change over time and may vary by region and sale price. Thus, it’s important for travel agents to stay informed about the industry standards and agreements with providers.

How to Calculate Travel Agent Commission

The formula for calculating travel agent commission is simple:

For example, if the total travel cost is $5000 and the commission rate is 10%, the commission would be:

Travel commission Examples

Frequently asked questions, can the commission rate change.

Yes, the commission rate can change. It is always best to confirm the current rate before calculating the commission.

Is the commission calculated before or after taxes?

This can vary, but typically the commission is calculated on the pre-tax amount. Always confirm this with the service provider.

Can I use this calculator for other types of commissions?

Yes, the calculator can be used to calculate any type of commission as long as you know the total cost and the commission rate.

What is a travel agent commission split?

A travel agent commission split is an agreement between two or more travel agents (or agencies) to divide the commissions earned from a travel booking. This arrangement is typically used in the travel industry when multiple entities are involved in serving a client’s needs

How is the commission rate determined for a travel agent?

The commission rate for a travel agent is determined through agreements between the travel agency and the various travel service providers, like airlines, hotels, cruise lines, tour operators, and other travel-related businesses.

Tips For Independent Travel Agents On Tax Filing

T here are several tax filing considerations that you as an independent travel agency need to keep in mind. You are considered self-employed, which means you must handle your own taxes, which is one of the most crucial things to keep in mind since, in contrast to conventional workers, you are.

In order to maximize their tax savings and file their taxes, independent contractors like travel agents may run into problems. When selling hotel reservations, vacation packages, and other travel-related goods, many travel agents operate on a project-basis and make money. Because of the possibility of seasonal employment, revenue fluctuations may sometimes occur. The 1099 tax rate and form (and/or a  w2 template  if you find yourself working as an employee with any business), quarterly tax calculator, and self-employment tax calculator are thus essential tools that may assist you in making wise tax choices.

For independent travel agencies paying taxes, consider these suggestions:

1. Learn the tax regulations

In order to file taxes as an independent travel agency, you must first get familiar with the tax regulations that relate to your industry. Read the IRS publication on small enterprises and self-employed persons to learn how to record your income, deductions, and credits.

For independent travel brokers, it’s important to remember the following tax regulations:

-Unless you request an extension, you must submit your yearly tax return by April 15th and pay any taxes that are required.

– You are required to record all revenue you get from your travel agency, including 1099-style payments.

– Self-employment taxes, also known as Social Security and Medicare taxes, are due by self-employed people and now represent 15.3% of their net income. These taxes cover both the employer and employee components of Social Security and Medicare.

2. Recurring business costs should be monitored

Being a self-employed travel agent has several advantages, including the ability to deduct numerous company expenditures from taxable income, which may reduce your tax burden. You may write off certain costs, such as:

– Costs associated with running an office, such as rent, utilities, and supplies.

– Costs associated with traveling, such as lodging and rental vehicles.

– Marketing expenditures, including web hosting and advertising.

– The cost of your phone, camera, and computer equipment.

Maintaining precise records of all your company expenditures is crucial to ensure you don’t overlook any deductible costs. This is especially important because these agencies are exempt from some taxes, and you can  learn more about the tour operators margin scheme  if you live in Britain, for example. You may maintain a record of your expenditures in a spreadsheet or notepad, or you can use accounting software to manage your costs automatically.

3. Calculate the tax rate on your 1099 form

You get 1099 forms from your customers when you work as a self-employed travel agent, which implies that taxes are not deducted from your salary. Taxes on your income must be paid by you instead. Using a 1099 tax rate calculator is a fantastic idea to make sure you are allocating the right amount of money for taxes.

Based on your income and deductible costs, the calculator will help you establish your tax obligation. In order to assist you avoid underpayment penalties, it will also figure out the projected tax owed for each quarter.

4. Calculate the self-employment taxes

The self-employment taxes, which include Social Security and Medicare taxes, must be paid by self-employed people, as was previously noted. Use a self-employment tax calculator to get a rough idea of your taxes for being self-employed.

With the help of the tool, you can determine how much money you’ll need to put aside for self-employment taxes and an estimate of your tax liabilities depending on your net income. Remember that the self-employment tax rate is presently 15.3%, which includes 12.4% for Social Security and 2.9% for Medicare.

5. Maintain your tax payments on time each quarter

Quarterly anticipated tax payments are necessary if you anticipate owing more than $1,000 in taxes for the whole year. Penalties and interest fees may be assessed if these payments are not made.

Using a quarterly tax calculator to calculate your estimated tax bill for each quarter is crucial to ensuring that you pay your taxes on time and avoiding underpayment penalties. When the time comes to submit your taxes, this will help you prevent any surprises.

For independent travel brokers, handling taxes may be a huge hassle. But you can reduce the stress and increase your tax savings by being informed with tax laws, keeping track of your company spending, utilizing a 1099 tax rate calculator, calculating self-employment taxes, finding tax deductions and staying on top of quarterly tax payments. You can make sure you are remaining in compliance and choosing wisely when it comes to taxes for your travel company by heeding the advice in this guide.

The post Tips For Independent Travel Agents On Tax Filing appeared first on Mom and More .

Money latest: 'Dark tourism' is on the rise - but should you do it?

Interest in a phenomenon known as "dark tourism" has been steadily rising in recent years. Find out what it is, and read all the latest consumer and personal finance news below - and leave your thoughts in the box.

Thursday 25 April 2024 11:32, UK

• Sainsbury's deliveries disrupted by tech issues again
• Renters' Reform Bill signed off - but with indefinite delay to no-fault evictions ban
• John Lewis to publish job interview questions online
• Virgin Media customers share their bad experiences of customer service

Essential reads

• The world of dark tourism - what is it, is it ethical, and where can you go?
• Money Problem : I have a mortgage offer - will it change now rates are rising?
• Savings Guide : Why locking into fixed-rate bond could be wise move
• 'More important than a will': What are lasting power of attorneys and how much do they cost?
• Cheap Eats : Michelin chef's secret lasagne tip - and expensive ingredient you shouldn't use

Ask a question or make a comment

More than 160,000 people switched to Nationwide from other providers at the end of 2023, when the building society was offering a huge cash switching incentive.

According to figures from the Current Account Switch Service (CASS), Nationwide had a net gain of 163,363 account switchers between October and December, after leavers were taken into account.

It was the highest quarterly gain since the same period in 2022, when 111,941 switched to Nationwide, according to the figures cited by This Is Money .

The building society launched a £200 switching bonus for new joiners in September last year - the biggest giveaway on offer at the time. It withdrew the offer just before Christmas.

The latest CASS figures, which show Nationwide had 196,260 total gains before accounting for leavers, suggesting it could have spent up to £39m on nabbing customers from other providers in the last three months of the year.

Barclays and Lloyds Bank saw more modest net gains of 12,823 and 5,800 respectively, while the rest of the UK's big banks reported net losses.

NatWest and Halifax fared worst, losing over 40,000 more switchers each than they gained.

This week saw the last remaining switching offer on the market withdrawn.

Sainsbury's is having technical issues again - with shoppers taking to social media to say their deliveries have been delayed or cancelled.

The supermarket has been replying to customers saying: "I'm really sorry about the tech issues this morning. 

"We're aware of the situation and are working to sort it as quickly as possible. In the meantime, we'd advise you place a new order for a future date."

Customer Andrew Savage wrote: "Order has not been delivered and no confirmation email this morning."

Another, John B Sheffield, said: "So angry! Just got through to your customer line after 40 min WAIT. 

"Tells me NO DELIVERIES TODAY! tech problem? I've NO FOOD IN! ANGRY!"

In a statement to Sky News, a Sainsbury's spokesperson says: "A small technical issue affected some groceries online orders this morning. 

"We have contacted these customers directly to apologise for the inconvenience." 

In another update at 10am, the supermarket said that the issue has been resolved. 

Responding to customers on X, Sainsbury's also offered those affected e-vouchers and details on how to rebook their orders.

It comes a month after the supermarket had to cancel almost all deliveries on a Saturday in mid-March due to another technical issue.

By Daniel Binns, business reporter

A potential $38.8bn (£31bn) takeover of UK-based mining company  Anglo American  has sent its shares soaring - and helped the FTSE 100 hit yet another record high this morning.

The attempted mega-merger, by larger Australian rival BHP, is currently being reviewed by Anglo American's board.

The deal, if it goes through, would create the world's biggest copper mining company - and comes as the price of the metal continues to climb amid soaring demand.

Anglo American's shares have surged as high as 13% this morning as news of the negotiations emerged.

The announcement also helped spur the FTSE 100 to a new intraday (during the day) high of 8,098 points.

The index, of the London Stock Exchange's 100 most valuable companies, has hit a string of records this week, including  an all-time closing high of 8,044 points  on Tuesday.

The score is based on a calculation of the total value of the shares on the index.

Also moving the markets are a string of company results which were published earlier on Thursday.

Among those issuing updates to investors was drugsmaker AstraZeneca. Its stock is up more than 5% after the firm reported quarterly profit and revenue above market estimates.

Unilever is also up 5% following similar better-than-expected quarterly figures.

Another good performer is  Barclays  - despite reporting a 12% fall in profits for the first three months of 2024. Its shares are up more than 4%.

That's because its quarterly figures are slightly better than expected, and the bank has said it expects its fortunes to improve later this year.

Meanwhile, as tensions in the Middle East continue, the price of a barrel of Brent crude oil continues to hover at a price of around $88 (£70).

This morning £1 buys $1.25 US or €1.16, similar to yesterday.

Every week we get experts to answer your Money Problems - usually on a Monday, but today we have a short, bonus addition in light of multiple lenders raising mortgage rates this week on fears an interest rate cut could be delayed to a little later this year (note: many economists still think it will come in summer).

A few readers have got in touch with questions similar to this one...

My remortgage is due to complete on 1 May. I already have an offer but with rates going up, is there any way at all my offer rate could increase? Saz681

We asked David Hollingworth, director at L&C Mortgages, to answer this one...

It's great news that you are already set up with a mortgage offer, Saz - ready to make a smooth switch to a new deal and/or lender, once the current one ends.  

It does take time to set up a new mortgage so shopping around the market a good few months ahead will help you put everything in place and avoid slipping onto a high variable rate.

Fixed rates have been nudging up slightly but you have already got a formal offer in place so shouldn't worry.  

Applying for a mortgage will generally secure that rate and the lender will then carry out any further checks to issue the mortgage offer.  

The offer will be valid for a specified period, often for up to six months. Rates are always shifting for new customers but you can rest easy that your rate should be safe and sound for your switch in May.

This feature is not intended as financial advice - the aim is to give an overview of the things you should think about. Submit your dilemma or consumer dispute, leaving your name and where in the country you are, by emailing [email protected] with the subject line "Money blog". Alternatively, WhatsApp us  here .

By Ollie Cooper , Money team

Interest in a phenomenon known as "dark tourism" has been steadily rising in recent years - but what is it?

To find out, we've spoken with tourism academic  Dr Hayley Stainton  and renowned dark tourist and author Dr Peter Hohenhaus, who runs a  dark tourism website .

What is it?

In general, dark tourism involves travelling to sites connected to death or disaster.

"Dark tourism has been around for as long as we have been travelling to places associated with death," Dr Stainton says. 

However, the term wasn't officially coined until 1996 by John Lennon, a professor of tourism at Glasgow Caledonian University, in Scotland.

"Not everyone is familiar with the term," says Dr Stainton, "[but] many people have been a dark tourist at some time or another, whether intentional or not."

Some examples of the most famous sites

• Auschwitz concentration camp, Poland
• 9/11 Memorial and Museum in New York, US
• Chernobyl, Ukraine 
• Hiroshima and Nagasaki, Japan
• Choeung Ek "killing fields" and the Tuol Sleng genocide museum at the former S-21 prison in Phnom Penh, Cambodia 

Areas with a degree of infamy, like Alcatraz, are extremely popular spots that also fall under the "dark tourism" umbrella. 

How popular is it?

Dr Hohenhaus and Dr Stainton say they have noticed a rise in its popularity. 

"Tourists are looking for more unique and unusual experiences," Dr Stainton says. 

"This has seen a move away from the more traditional 'sun, sea and sand' type holidays to a variety of different tourism forms, which includes dark tourism."

Dr Hohenhaus adds: "Maybe people want to connect to more recent and hence more personally relevant history - that is definitely the case with myself."

He goes on: "I think I've learned more about the world through dark tourism than through all of my formal education or my previous academic career."

Is it ethical?

This is the big question associated with dark tourism. 

Dr Stainton says that while problems do arise, the stigma around the practice is often misguided. 

"People don't visit sites like the killing fields in Cambodia or the site of Chernobyl for 'fun' - they visit for the educational experience, as dark tourism is often also a form of educational tourism," she says.

Problems arise when tourists are not respectful to those who may have been impacted.

"For instance, taking inappropriate photos or laughing and joking when others may be in a state of mourning."

Notorious examples include people taking selfies outside Grenfell Tower and at Auschwitz. 

"It is therefore imperative that dark tourists are considerate of those around them and respectful at all times," Dr Stainton says.

"As long as you are not just after a cheap sensationalist thrill - take dark tourism seriously and do it right, and it can be an immensely enriching thing to engage in."  Dr Hohenhaus

Where could you go? 

These are Dr Hohenhaus' recommendations:

• Ijen crater in Indonesia - where at night you can see the fabled blue flames of the sulphur mines next to the volcano crater lake;
• The Polygon, the former Semipalatinsk nuclear weapons test site of the USSR, now in Kazakhstan;
• The Goli Otok former prison island off the coast of Croatia;
• The Murambi memorial to the Rwandan genocide - which Dr Hohenhaus says is "certainly the very darkest place I have ever been";
• Majdanek concentration camp memorial near Lublin, eastern Poland.

What do you think of dark tourism? Is it misunderstood, educational or abhorrent?  Let us know in the comments section...

John Lewis will be sharing its job interview questions online in an attempt to find the "best talent".

The retail chain hopes that allowing candidates to view questions before an interview will allow prospective employees to "really demonstrate what they can do" and prepare, the Financial Times reports.

John Lewis talent acquisition lead Lorna Bullett told Sky News that interviews can feel daunting and "nerves can seriously impact performance".

She added the company want "the right people" from a variety of backgrounds and with "the best talent" to join.

"It makes absolute business sense to find ways of helping candidates to really demonstrate what they can do," she said.

Ms Bullett added that the process will be "no less rigorous".

Every Thursday we look at a different savings option, explain the pros and cons, and reveal the best deals on the market.  This week we're talking about the best fixed-rate bonds.  Savings Champion founder Anna Bowes  says...

As the name suggests, fixed-rate bonds pay a fixed rate of interest for a fixed term and this interest is taxable at your normal rate – if you exceed your personal savings allowances.

Over the last couple of years, fixed-rate bond rates have increased substantially and many of the top rates are now paying more than inflation, although this may not be the case for those who pay tax on their savings.

That said, the competition has slowed recently as it appears that inflation is more under control, and as a result the Bank of England base rate is expected to start to fall. We have seen the top rates on offer start to come down a little.

What is interesting and a little unusual is that the longer-term bond rates are lower than the short-term rates. Normally you would expect to be rewarded for tying your money up for longer, but that's not the case at the moment. This is a clear indication that the base rate is expected to fall over the next few months and years.

Locking into a longer-term bond, even at lower rates, may turn out to be a very wise move, especially if the interest you are earning is beating inflation for the duration of the bond.

MPs have voted in favour of the government's Renters' Reform Bill - despite it including an indefinite delay to the end of no-fault evictions.

A debate on the legislation ran throughout Wednesday afternoon, including around a new clause from the government which would hold off outlawing Section 21s until a review of the courts system had taken place.

But despite outrage from charities, campaigners and opposition parties around the measure, it got the backing of the majority of MPs - and the bill passed its final stage in the Commons shortly after 6.30pm.

A Section 21 notice is the legal mechanism allowing landlords to evict tenants without providing a reason, which creates uncertainty for those who rent their homes.

The government first promised to ban the notices five years ago, back when Theresa May was still in Number 10.

But it has faced numerous delays amid threats of rebellion from Tory backbenchers - some of them landlords - who said they feared ending Section 21s would see the courts overwhelmed with more complex eviction cases.

Ministers agreed to amend the bill to ensure no ban was enacted until a probe into the courts had been held.

But the clause offers no timeline - leaving no clear date for when Section 21s will actually be scrapped.

Read more here... 

By Daniel Binns , business reporter

Ryanair is suing air traffic control body Nats over last summer's flight chaos when more than 700,000 passengers were hit by cancellations and delays.

The low-cost carrier's chief executive Michael O'Leary said his company had been forced to pay out around £15m in compensation following the  widespread disruption  around the August Bank Holiday Monday.

An investigation into the meltdown found it was caused by a  National Air Traffic Services (Nats) technical glitch .

Around 300,000 people suffered cancellations, while approximately 95,000 endured delays of over three hours, and at least a further 300,000 were hit by shorter delays.

Airlines lost a total of £100m in refunds, rebookings, hotel rooms and refreshments.

Mr O'Leary told Sky's  Business Live with Ian King : "When things go wrong in the airline industry, we have to compensate our passengers and we want to recover those costs directly from Nats."

A spokeswoman for Nats told Sky News: "Our legal team is reviewing the claim and will respond as required."

Yesterday we reported on a Which? survey ranking Virgin Media as having the worst overall customer service among broadband providers...

Virgin Media hit back - saying the annual survey used a sample size of 0.01% of its customer base, and on average 95% of customer complaints were resolved during a customer's first initial call.

And they told the Money blog improvements were being made to customer service...

"We are investing and making changes across our business to deliver tangible customer service improvements and ensure all customers receive the best possible service," the company said.

"For example, we're multi-skilling our teams and rolling out new IT platforms that make it easier for customers to get support and have issues resolved the first time they get in touch." 

Our comments section has been bombarded with people saying they are Virgin Media customers and sharing their experiences - all but two were negative.

Here's a selection...

Virgin Media broadband keeps dropping down in speed, sometimes it drops out all day. Phoning them makes no difference. We will change supplier when our contract is up. Alan Francis

I completely agree. I've had a year of unbelievably bad service relating to the installation of broadband in our new house. It's impossible to communicate with Virgin Media without severe trauma. Everything goes through one number into an automated system that simply doesn't work. Frank

Been with Virgin Media for 13 years and they have really dropped in customer service, they don't value loyalty and all their call handlers seem to be working from home. If there is a problem they transfer you to somebody else who you have to explain your issue to again. Plumby

We moved from Virgin Media for our broadband/TV a few years ago for precisely that reason - very poor customer service. Carol Bell

I left Virgin this week too. New customers get a good price whilst existing customers see prices triple. Non-UK call centre that just pass you around when anything goes wrong. Just cancelling took an hour on the phone. Glad there are new fibre providers in my area. Digger

Current Virgin Media customer and it gives me anxiety knowing I have to call them as it takes too long to get anyone on the call or they have disconnected me, or they say they cannot help and transfer me to another department and then drop the call. LisaJ

A reader calling themselves GH was more positive, saying: "I have just renewed with Virgin Media, great customer service."

And Wells85 said: "I am a Virgin customer and have been for the last nearly seven years and I think their broadband service is top notch and their customer service."

Be the first to get Breaking News

Install the Sky News app for free

Language selection

• Français fr

Tax Measures: Supplementary Information

Tax Measures: Supplementary Information ( PDF , 1.91 MB )

On this page

Lifetime capital gains exemption, canadian entrepreneurs' incentive, capital gains inclusion rate, volunteer firefighters and search and rescue volunteers tax credits, mineral exploration tax credit, alternative minimum tax, canada child benefit, disability supports deduction, employee ownership trust tax exemption, charities and qualified donees, home buyers' plan, qualified investments for registered plans, deduction for tradespeople's travel expenses, indigenous child and family services settlement, clean electricity investment tax credit, polymetallic extraction and processing, accelerated capital cost allowance, canada carbon rebate for small businesses, interest deductibility limits – purpose-built rental housing, non-compliance with information requests, avoidance of tax debts, reportable and notifiable transactions penalty, mutual fund corporations, synthetic equity arrangements, manipulation of bankrupt status, crypto-asset reporting framework and the common reporting standard, withholding for non-resident service providers, extending gst relief to student residences, gst/hst on face masks and face shields, tobacco and vaping product taxation, fuel, alcohol, cannabis, and tobacco sales tax framework, previously announced measures, related documents.

• Notice of Ways and Means Motion to amend the Income Tax Act and the Income Tax Regulations
• Notice of Ways and Means Motion to amend the Excise Tax Act and Other Legislation
• Notice of Ways and Means Motion to amend the Excise Act , 2001 and Other Related Texts

Impacts report

Find out more about the expected gender and diversity impacts for each measure in Tax Measures: Supplementary Information

This annex provides detailed information on tax measures proposed in the Budget.

Table 1 lists these measures and provides estimates of their fiscal impact.

The annex also provides Notices of Ways and Means Motions to amend the Income Tax Act , the Excise Tax Act , the Excise Act, 2001 , the Air Travellers Security Charge Act, the Select Luxury Items Tax Act, the Underused Housing Tax Act and draft amendments to various regulations.

In this annex, all references to "Budget Day" are to be read as references to the day on which this Budget is presented.

Personal Income Tax Measures

The income tax system provides an individual with a lifetime tax exemption for capital gains realized on the disposition of qualified small business corporation shares and qualified farm or fishing property. The amount of the Lifetime Capital Gains Exemption (LCGE) is $1,016,836 in 2024 and is indexed to inflation.

Budget 2024 proposes to increase the LCGE to apply to up to $1.25 million of eligible capital gains. This measure would apply to dispositions that occur on or after June 25, 2024. Indexation of the LCGE would resume in 2026.

Budget 2024 proposes to introduce the Canadian Entrepreneurs' Incentive. This incentive would reduce the tax rate on capital gains on the disposition of qualifying shares by an eligible individual. Specifically, this incentive would provide for a capital gains inclusion rate that is one half the prevailing inclusion rate, on up to $2 million in capital gains per individual over their lifetime.

The lifetime limit would be phased in by increments of $200,000 per year, beginning on January 1, 2025, before ultimately reaching a value of $2 million by January 1, 2034.

Under the two-thirds capital gains inclusion rate proposed in Budget 2024, this measure would result in an inclusion rate of one third for qualifying dispositions. This measure would apply in addition to any available capital gains exemption.

A share of a corporation would be a qualifying share if certain conditions are met, including all the following conditions:

• At the time of sale, it was a share of the capital stock of a small business corporation (for the purposes of the Income Tax Act ) owned directly by the claimant.
• used principally in an active business carried on primarily in Canada by the Canadian-Controlled Private Corporation, or by a related corporation,
• certain shares or debts of connected corporations, or
• a combination of these two types of assets.
• The claimant was a founding investor at the time the corporation was initially capitalized and held the share for a minimum of five years prior to disposition.
• At all times since the initial share subscription until the time that is immediately before the sale of the shares, the claimant directly owned shares amounting to more than 10 per cent of the fair market value of the issued and outstanding capital stock of the corporation and giving the individual more than 10 per cent of the votes that could be cast at an annual meeting of the shareholders of the corporation.
• Throughout the five-year period immediately before the disposition of the share, the claimant must have been actively engaged on a regular, continuous, and substantial basis in the activities of the business.
• operating in the financial, insurance, real estate, food and accommodation, arts, recreation, or entertainment sector; or
• providing consulting or personal care services.
• The share must have been obtained for fair market value consideration.

Coming Into Force

This measure would apply to dispositions that occur on or after January 1, 2025.

One half of a capital gain is included in computing a taxpayer's income. This is referred to as the capital gains inclusion rate. The current one-half inclusion rate also applies to capital losses.

Budget 2024 proposes to increase the capital gains inclusion rate from one half to two thirds for corporations and trusts, and from one half to two thirds on the portion of capital gains realized in the year that exceed $250,000 for individuals, for capital gains realized on or after June 25, 2024.

The $250,000 threshold would effectively apply to capital gains realized by an individual, either directly or indirectly via a partnership or trust, net of any:

• current-year capital losses;
• capital losses of other years applied to reduce current-year capital gains; and
• capital gains in respect of which the Lifetime Capital Gains Exemption, the proposed Employee Ownership Trust Exemption or the proposed Canadian Entrepreneurs' Incentive is claimed.

Claimants of the employee stock option deduction would be provided a one-third deduction of the taxable benefit to reflect the new capital gains inclusion rate, but would be entitled to a deduction of one half the taxable benefit up to a combined limit of $250,000 for both employee stock options and capital gains.

Net capital losses of prior years would continue to be deductible against taxable capital gains in the current year by adjusting their value to reflect the inclusion rate of the capital gains being offset. This means that a capital loss realized prior to the rate change would fully offset an equivalent capital gain realized after the rate change.

For tax years that begin before and end on or after June 25, 2024, two different inclusion rates would apply. As a result, transitional rules would be required to separately identify capital gains and losses realized before the effective date (Period 1) and those realized on or after the effective date (Period 2). For example, taxpayers would be subject to the higher inclusion rate in respect of the portion of their net gains arising in Period 2 that exceed the $250,000 threshold, to the extent that these net gains are not offset by a net loss incurred in Period 1 or any other taxation years.

The annual $250,000 threshold for individuals would be fully available in 2024 (i.e., it would not be prorated) and would apply only in respect of net capital gains realized in Period 2.

Other consequential amendments would also be made to reflect the new inclusion rate. Additional design details will be released in the coming months.

The Volunteer Firefighters Tax Credit and the Search and Rescue Volunteers Tax Credit allow individuals who performed at least 200 hours of combined volunteer service during the year as a volunteer firefighter or a search and rescue volunteer to claim a 15-per-cent non-refundable tax credit based on an amount of $3,000.

Budget 2024 proposes to double the credit amount for the Volunteer Firefighters Tax Credit and the Search and Rescue Volunteers Tax Credit to $6,000. This would increase the maximum tax relief to $900. This enhancement would apply to the 2024 and subsequent taxation years.

Flow-through shares allow resource companies to renounce or "flow through" tax expenses associated with their Canadian exploration activities to investors, who can deduct the expenses in calculating their own taxable income. The Mineral Exploration Tax Credit provides an additional income tax benefit for individuals who invest in mining flow-through shares, which augments the tax benefits associated with the amounts that are flowed through. This tax credit provides support to junior mining companies engaged in certain grassroots mineral exploration. The tax credit is equal to 15 per cent of the specified mineral exploration expenses incurred in Canada and renounced to flow-through share investors. The Mineral Exploration Tax Credit is legislated to expire on March 31, 2024.

As announced on March 28, the government proposes to extend eligibility for the Mineral Exploration Tax Credit for one year, to flow-through share agreements entered into on or before March 31, 2025.

Strategic Environmental Assessment Statement

Mineral exploration, as well as new mining and related processing activities that could follow from successful exploration efforts, can be associated with a variety of environmental impacts to soil, water and air and, as a result, could have an impact on the targets and actions in the Federal Sustainable Development Strategy. All such activity, however, is subject to applicable federal and provincial environmental regulations, including project-specific environmental assessments where required.

The Alternative Minimum Tax (AMT) is a parallel tax calculation that allows fewer tax credits, deductions, and exemptions than under the ordinary personal income tax rules. Taxpayers pay either regular tax or AMT, whichever is highest.

Budget 2023 announced amendments to the Income Tax Act that would change the AMT calculation. Draft legislative proposals to implement these changes were published for consultation in the summer of 2023.

Budget 2024 proposes to make further changes to the AMT proposals, as described below.

Changes to the Tax Treatment of Charitable Donations

Budget 2024 proposes that the tax treatment of charitable donations be revised to allow individuals to claim 80 per cent (instead of the previously proposed 50 per cent) of the Charitable Donation Tax Credit when calculating AMT.

Additional Amendments

Budget 2024 proposes several additional amendments to the AMT proposals. These amendments would:

• fully allow deductions for the Guaranteed Income Supplement, social assistance, and workers' compensation payments;
• allow individuals to fully claim the federal logging tax credit under the AMT;
• fully exempt Employee Ownership Trusts from the AMT; and
• allow certain disallowed credits under the AMT to be eligible for the AMT carry-forward (i.e., the federal political contribution tax credit, investment tax credits, and labour-sponsored funds tax credit).

Budget 2024 also proposes several technical amendments to the AMT legislative proposals.

Proposed Exemption for Certain Trusts for the Benefit of Indigenous Groups

Budget 2024 proposes to provide an exemption from the AMT for trusts established under:

• a law of Canada or a province if the trust is for the benefit of an Indigenous group, community, or people that holds rights recognized and affirmed by section 35 of the Constitution Act, 1982 , or
• a treaty or a settlement agreement between His Majesty in right of Canada, or His Majesty in right of a province, and an Indigenous group, community, or people recognized and affirmed by section 35 of the Constitution Act, 1982 ,

provided that all or substantially all of the contributions to the trust before the end of the year are amounts paid under the law, treaty, or settlement agreement described in paragraph (a) or (b), or are reasonably traceable to those amounts ("Settlement Trusts").

An exemption from the AMT would also be provided for trusts where the beneficiaries are any combination of the following persons or entities:

• all of the members of a recognized Indigenous group, community or people that holds rights recognized and affirmed by section 35 of the Constitution Act, 1982 ; 
• a public body performing a function of government in Canada (within the meaning of the Income Tax Act ) in relation to an Indigenous group, community, or people that holds rights recognized and affirmed by section 35 of the Constitution Act , 1982;
• a registered charity or a non-profit organization that is organized and operated primarily for health, education, social welfare, or community improvement for the benefit of the members of an Indigenous group, community, or people that holds rights recognized and affirmed by section 35 of the Constitution Act , 1982;
• a corporation, all of the shares or capital of which are owned by any combination of persons or entities described in paragraph (b) or (c) above, a Settlement Trust, or another corporation meeting this definition; or
• a Settlement Trust.

The government is interested in stakeholders' views on these proposed exemptions for Indigenous settlement and community trusts. Interested parties are invited to send written representations to the Department of Finance Canada, Tax Policy Branch at [email protected] by June 28, 2024.

These amendments would apply to taxation years that begin on or after January 1, 2024 (i.e., the same day as the broader AMT amendments).

The Canada Child Benefit (CCB) is an income-tested benefit that is paid monthly and provides support for eligible families with children under the age of 18. 

A CCB recipient becomes ineligible for the CCB in respect of a child the month following the child's death. To ensure benefit amounts reflect up-to-date information on family circumstances, a CCB recipient is required to notify the Canada Revenue Agency (CRA) before the end of the month following the month of their child's death. Notifications of a child's death are also provided to the CRA by provincial/territorial vital statistics agencies.

Delays in receiving notification of a child's death can result in the clawing back of CCB payments in respect of the deceased child for a few months after their death.

Budget 2024 proposes to amend the Income Tax Act to extend eligibility for the CCB in respect of a child for six months after the child's death (the "extended period"), if the individual would have otherwise been eligible for the CCB in respect of that particular child.

• For example, if a child dies in July, the child's primary caregiver would be eligible to receive the CCB in respect of this child for August through January under the proposed change, provided all eligibility criteria are met.

The CCB entitlement for each month during the extended period would be based on the age of the child in that particular month as if the child were still alive and would reflect the other family circumstances that apply in that month (e.g., marital status). CCB overpayments unrelated to the death of a child would still need to be repaid.

A CCB recipient would still be required to notify the CRA of their child's death before the end of the month following the month of their child's death to ensure that there are no overpayments after the new extended period of six months ends.

The extended period would also apply to the Child Disability Benefit, which is paid with the CCB in respect of a child eligible for the Disability Tax Credit.

This measure would be effective for deaths that occur after 2024.

The Disability Supports Deduction allows individuals who have an impairment in physical or mental functions to deduct certain expenses that enable them to earn business or employment income or to attend school.

In order for an expense to qualify, it must be specified in the Income Tax Act and a medical practitioner must either prescribe the expense or otherwise certify in writing that the expense is required.

Budget 2024 proposes to expand the list of expenses recognized under the Disability Supports Deduction, subject to the specified conditions:

• the cost of an ergonomic work chair, including related amounts paid for an ergonomic assessment to a person engaged in the business of providing such services;
• the cost of a bed positioning device, including related amounts paid for an ergonomic assessment to a person engaged in the business of providing such services; and
• the cost of purchasing a mobile computer cart.
• the cost of purchasing an alternative input device to allow the individual to use a computer; and
• the cost of purchasing a digital pen device to allow the individual to use a computer.
• Where an individual has a vision impairment, the cost of purchasing a navigation device for low vision.
• Where an individual has an impairment in mental functions, the cost of purchasing memory or organizational aids.

Budget 2024 also proposes that expenses for service animals, as defined under the Medical Expense Tax Credit rules in the Income Tax Act, be recognized under the Disability Supports Deduction. Taxpayers would be able to choose to claim an expense under either the Medical Expense Tax Credit or the Disability Supports Deduction.

This measure would apply to the 2024 and subsequent taxation years.

Budget 2023 proposed tax rules to facilitate the creation of employee ownership trusts (EOTs). These legislative proposals are currently before Parliament in Bill C-59. The 2023 Fall Economic Statement proposed to exempt the first $10 million in capital gains realized on the sale of a business to an EOT from taxation, subject to certain conditions.

Budget 2024 provides further details on the proposed exemption and conditions. 

Qualifying Conditions

The exemption would be available to an individual (other than a trust) on the sale of shares to an EOT where the following conditions are met:

• The individual, a personal trust of which the individual is a beneficiary, or a partnership in which the individual is a member, disposes of shares of a corporation that is not a professional corporation.
• The transaction is a qualifying business transfer (as defined in the proposed rules for EOTs) in which the trust acquiring the shares is not already an EOT or a similar trust with employee beneficiaries.
• the transferred shares were exclusively owned by the individual claiming the exemption, a related person, or a partnership in which the individual is a member; and
• over 50 per cent of the fair market value of the corporation's assets were used principally in an active business.
• At any time prior to the qualifying business transfer, the individual (or their spouse or common-law partner) has been actively engaged in the qualifying business on a regular and continuous basis for a minimum period of 24 months.
• Immediately after the qualifying business transfer, at least 90 per cent of the beneficiaries of the EOT must be resident in Canada.

If the above conditions are satisfied, the individual would be able to claim an exemption for up to $10 million in capital gains from the sale.

If multiple individuals disposed of shares to an EOT as part of a qualifying business transfer and met the conditions described above, they may each claim the exemption, but the total exemption in respect of the qualifying business transfer cannot exceed $10 million. The individuals would be required to agree on how to allocate the exemption.

Disqualifying Events

If a disqualifying event occurs within 36 months of the qualifying business transfer, the exemption would not be available. Where the individual has already claimed the exemption, it would be retroactively denied.

A disqualifying event would occur if an EOT loses its status as an EOT or if less than 50 per cent of the fair market value of the qualifying business' shares is attributable to assets used principally in an active business at the beginning of two consecutive taxation years of the corporation.

If the disqualifying event occurs more than 36 months after a qualifying business transfer, the EOT would be deemed to realize a capital gain equal to the total amount of exempt capital gains.  

Capital gains exempted through this measure would be subject to an inclusion rate of 30 per cent for the purposes of the alternative minimum tax, similar to the treatment for gains eligible for the lifetime capital gains exemption.

Administration

In order for an individual to claim an exemption on the sale to an EOT, the EOT (and any corporation owned by the EOT that acquired the transferred shares) and the individual would need to elect to be jointly and severally, or solidarily, liable for any tax payable by the individual as a result of the exemption being denied due to a disqualifying event within the first 36 months after a qualifying business transfer. As discussed above, following the 36-month period, the trust would be solely liable for tax realized on the deemed capital gain arising on a disqualifying event.

The normal reassessment period of an individual for a taxation year in respect of this exemption is proposed to be extended by three years.

Worker Cooperatives

Budget 2024 also proposes to expand qualifying business transfers to include the sale of shares to a worker cooperative corporation. The worker cooperative would generally need to meet the definition set out under the Canada Cooperatives Act .

Provided the relevant requirements are met, this would allow an individual to claim an exemption on selling a business to a worker cooperative.

A qualifying business transfer to a worker cooperative would also be eligible for the 10-year capital gains reserve and the 15-year exception to the shareholder loan and interest benefit rules announced in Budget 2023. 

Additional details on this aspect of the exemption will be released in the coming months.

Coming into Force

This measure would apply to qualifying dispositions of shares that occur between January 1, 2024 and December 31, 2026.

Budget 2024 proposes to amend the Income Tax Act and Income Tax Regulations to improve the operation of the rules related to registered charities and other qualified donees.

Foreign Charities Registered as Qualified Donees

The Income Tax Act allows a foreign charity to be registered as a qualified donee for a temporary 24-month period. To be eligible for registration, a foreign charity must have received a gift from His Majesty in right of Canada, and be pursuing activities relating to urgent humanitarian aid, disaster relief, or activities in the national interest of Canada.

Budget 2024 proposes to extend the period for which qualifying foreign charities are granted status as a qualified donee from 24 months to 36 months. In addition, foreign charities would be required to submit an annual information return to the Canada Revenue Agency (CRA) that includes the total amount of receipts issued to Canadian donors, the total amount of gifts received from qualified donees, and information on how those funds were used. This information would be made publicly available.

Modernizing Service

Budget 2024 proposes various amendments to the Income Tax Act to help simplify and modernize the way in which the CRA provides services and communicates information relating to registered charities and other qualified donees.

Budget 2024 proposes to permit the CRA to communicate certain official notices digitally, where the charity has opted to receive information from the CRA electronically. Registered charities that have not opted to receive information electronically would receive official notices, other than compliance-related notices, by regular mail. Those charities would continue to receive compliance-related notices, including notices of intention to revoke, annul, or suspend a charity's registration, by registered mail.

Currently, the revocation of the registration of a charity or other qualified donee is effective upon publication in the Canada Gazette. Budget 2024 proposes to remove this requirement. Instead, the revocation of registration would become effective upon the publication of an official notice of revocation on a government webpage.

Budget 2024 also proposes to remove the requirement that certain objections be addressed directly to the Assistant Commissioner of the CRA's Appeals Branch.

Donation Receipts

Registered charities and qualified donees can issue official donation receipts for gifts that they receive. The Income Tax Act and the Income Tax Regulations set out the minimum requirements for a receipt to be valid and the processes that must be followed when issuing receipts.

Budget 2024 proposes a number of changes to simplify the issuance of official donation receipts and to align the process for issuing receipts with modern practices of charities. 

Budget 2024 proposes to remove the requirement that official donation receipts contain:

• the place of issuance of the receipt;
• the name and address of the appraiser, if an appraisal of the donated property has been done; and
• the middle initial of the donor.

Budget 2024 also proposes to allow charities to mark a donation receipt as "void", as an alternative to the term "cancelled", where a receipt has been spoiled, as well as removing the requirement that it be stored with a duplicate copy.

Budget 2024 also proposes to update the regulations to expressly permit charities to issue official donation receipts electronically, provided that they contain all required information, they are issued in a secure and non-editable format, and the charity maintains an electronic copy of the receipts.

Measures relating to the extension of the registration period for foreign charities would apply to foreign charities registered after Budget Day. New reporting requirements for foreign charities would apply to taxation years beginning after Budget Day.

All remaining measures would apply upon royal assent.

The home buyers' plan (HBP) helps eligible home buyers save for a down payment by allowing them to withdraw up to $35,000 from a registered retirement savings plan (RRSP) to purchase or build their first home, or a home for a specified disabled individual, without having to pay tax on the withdrawal. Eligible home buyers purchasing a home jointly may each withdraw up to $35,000 from their own RRSP under the HBP.

Amounts withdrawn under the HBP must be repaid to an RRSP over a period not exceeding 15 years, starting the second year following the year in which a first withdrawal was made. Otherwise, amounts due for repayment within a specific year are taxable as income for that year.

Increasing the withdrawal limit

Budget 2024 proposes to increase the withdrawal limit from $35,000 to $60,000. This increase would also apply to withdrawals made for the benefit of a disabled individual.

This measure would apply to the 2024 and subsequent calendar years in respect of withdrawals made after Budget Day.

Temporary repayment relief

Budget 2024 proposes to temporarily defer the start of the 15-year repayment period by an additional three years for participants making a first withdrawal between January 1, 2022, and December 31, 2025. Accordingly, the 15-year repayment period would start the fifth year following the year in which a first withdrawal was made.

Registered Retirement Savings Plans (RRSPs), Registered Retirement Income Funds (RRIFs), Tax-Free Savings Accounts (TFSAs), Registered Education Savings Plans (RESPs), Registered Disability Savings Plans (RDSPs), First Home Savings Accounts (FHSAs), and Deferred Profit Sharing Plans (DPSPs) can invest only in qualified investments for those plans. A broad range of assets are qualified investments, including mutual funds, publicly traded securities, government and corporate bonds, and guaranteed investment certificates.

Introduced in 1966, the qualified investment rules have been incrementally expanded to include more than 40 types of assets and to reflect the introduction of new types of registered plans (including TFSAs in 2009 and FHSAs in 2023). However, this incremental approach has resulted in qualified investment rules that can be inconsistent or difficult to understand in some cases. For example:

• Different registered plans have slightly different rules for making investments in small businesses.
• Certain types of annuities are qualified investments only for RRSPs, RRIFs, and RDSPs.
• Certain pooled investment products are qualified investments only if they are registered with the Canada Revenue Agency (known as "registered investments").

Budget 2024 invites stakeholders to provide suggestions on how the qualified investment rules could be modernized on a prospective basis to improve the clarity and coherence of the registered plans regime. Specific issues under consideration include: 

• Whether and how the rules relating to investments in small businesses could be harmonized to apply consistently to all registered savings plans.
• Whether annuities that are qualified investments only for RRSPs, RRIFs, and RDSPs should continue to be qualified investments.
• Whether the conditions that certain pooled investment products must meet to be a qualified investment are appropriate, including the ongoing value of maintaining a formal registration process for registered investments.
• Whether and how qualified investment rules could promote an increase in Canadian-based investments.
• Whether crypto-backed assets are appropriate as qualified investments for registered savings plans.

Stakeholders are invited to submit comments to [email protected] by July 15, 2024.

Eligible tradespeople and apprentices in the construction industry are currently able to deduct up to $4,000 in eligible travel and relocation expenses per year by claiming the Labour Mobility Deduction for Tradespeople. A private member's bill was introduced in the 44th Parliament (Bill C-241) to enact an alternative deduction for certain travel expenses of tradespeople in the construction industry, with no cap on expenses, retroactive to the 2022 taxation year.  

Budget 2024 announces that the government will consider bringing forward amendments to the Income Tax Act to provide for a single, harmonized deduction for tradespeople's travel that respects the intent of Bill C-241.

In the First Nations Child and Family Services, Jordan's Principle, and Trout Class Settlement Agreement, approved by the Federal Court on October 24, 2023, the government committed to make best efforts to exempt the income of the trusts established under the settlement agreement from federal taxation. The government also committed to make best efforts to ensure that a class member's receipt of payments would not be considered taxable income and to ensure that federal social benefits and social assistance benefits for class members would not be negatively impacted by payments received pursuant to the settlement agreement. 

Budget 2024 proposes to amend the Income Tax Act to exclude the income of the trusts established under the First Nations Child and Family Services, Jordan's Principle, and Trout Class Settlement Agreement from taxation. This would also ensure that payments received by class members as beneficiaries of the trusts would not be included when computing income for federal income tax purposes.

Business Income Tax Measures

Budget 2023 announced a refundable Clean Electricity investment tax credit equal to 15 per cent of the capital cost of eligible property, with some additional changes announced in the 2023 Fall Economic Statement . Budget 2024 provides the design and implementation details of the tax credit.

Eligible Entities

The Clean Electricity investment tax credit would be available only to Canadian corporations. Eligible corporations would be:

• taxable Canadian corporations;
• provincial and territorial Crown corporations, subject to additional requirements (see section "Proposed Application to Provincial and Territorial Crown Corporations");
• corporations owned by municipalities;
• corporations owned by Indigenous communities; and
• pension investment corporations.

In order to receive the tax credit, corporations with a claim to immunity or exemption from tax would be required to agree to be subject to the provisions of the Income Tax Act related to the tax credit, including provisions related to audit, penalties and collections, and agree not to assert any immunity or exemption in respect of the tax credit.

Where eligible property is owned by a partnership, any partners that are corporations eligible for the credit would be allowed to claim their share of the partnership's Clean Electricity investment tax credit, subject to partnership rules generally consistent with those proposed for the Clean Technology investment tax credit currently before Parliament in Bill C-59. In cases where a property is eligible for both the Clean Electricity and Clean Technology investment tax credits, partners could claim their reasonable share of either credit for which they qualified (but could not claim both credits in respect of the same property).

Eligible Property

The following types of equipment would be eligible for the Clean Electricity investment tax credit:

• equipment used to generate electricity from solar, wind, or water energy that is described under subparagraphs (d)(ii), (iii.1), (v), (vi), or (xiv) of capital cost allowance Class 43.1 of Schedule II of the Income Tax Regulations , but hydro-electric installations would not be subject to a capacity limit as is the case for Class 43.1;
• concentrated solar energy equipment, as defined for the purposes of the proposed Clean Technology investment tax credit, but limited to equipment used to generate electricity;
• equipment used to generate electricity, or both electricity and heat, from nuclear fission, as defined for the purposes of the proposed Clean Technology investment tax credit, but without generating capacity limits or a requirement to be comprised of modules that are factory-assembled and transported pre-built to the installation site;
• equipment used for the purpose of generating electricity, or both electricity and heat, solely from geothermal energy, as described in subparagraph (d)(vii) of Class 43.1, if it is used exclusively for that purpose, but excluding any equipment that is part of a system that extracts fossil fuel for sale;
• equipment that is part of a system used to generate electricity, or both electricity and heat, from specified waste materials, as described in the 2023 Fall Economic Statement ;
• stationary electricity storage equipment that is described under subparagraph (d)(xviii) of Class 43.1 and equipment used for pumped hydroelectric energy storage that is described under subparagraph (d)(xix) of Class 43.1, but excluding equipment that uses any fossil fuel in operation;
• equipment that is part of an eligible natural gas energy system (as described below); and
• equipment and structures used for the transmission of electricity between provinces and territories (as described below).

Qualifying expenditures could include capital expenditures to refurbish existing facilities.

Electricity Generation and Cogeneration from Natural Gas with Carbon Capture

Eligible natural gas energy systems would be those that use fuel all or substantially all of which is natural gas solely to generate electricity, or both electricity and heat, and use a carbon capture system to limit emissions.

Eligible systems would be required to attain an emissions intensity no greater than 65 tonnes of carbon dioxide per gigawatt hour of energy produced, and the captured carbon dioxide would have to be stored appropriately. The proposed emissions intensity limit may not reflect the final emissions performance standard of the Clean Electricity Regulations .

When part of an integrated eligible system, eligible property would include:

• equipment that generates both electrical and heat energy (e.g., gas turbine generators);
• heat recovery equipment (e.g., heat recovery steam generators);
• electrical generating equipment (e.g., steam turbine generators);
• heat generating equipment used primarily for the purpose of producing heat energy to operate the electrical generating equipment (e.g., steam boilers used to produce steam to operate steam turbine generators); and
• carbon capture equipment, including equipment that prepares or compresses captured carbon for transportation.

Eligible property would not include buildings or other structures, heat rejection equipment (e.g., cooling towers), electrical transmission and distribution equipment, fuel handling equipment, or equipment used for carbon dioxide transportation, storage, or use.

Emissions intensity measures the average quantity of carbon dioxide emissions associated with each unit of energy output (i.e., electricity and useful heat) by dividing total carbon dioxide released into the atmosphere by total energy produced over a fixed period of time. As noted above, for a system to be eligible, the maximum allowable emissions intensity would be 65 tonnes of carbon dioxide per gigawatt hour of energy produced. The formula to calculate a system's emissions intensity for the purposes of the Clean Electricity investment tax credit would be a modified version of that used in the Regulations Limiting Carbon Dioxide Emissions from Natural Gas-fired Generation of Electricity under the Canadian Environmental Protection Act . Modifications would include:

• emissions attributable to the combustion of biomass, as defined under the Regulations Limiting Carbon Dioxide Emissions from Natural Gas-fired Generation of Electricity , would be included in the total emissions calculation; and
• emissions that are captured and stored in dedicated geological storage would be removed from the total emissions calculation. Emissions captured and used for enhanced oil recovery or other storage or use would not be removed.

Requirements for dedicated geological storage would be aligned with those proposed for the Carbon Capture, Utilization, and Storage investment tax credit currently before Parliament in Bill C-59. As a result, the geological formation for storage would need to be located in a jurisdiction with sufficient environmental laws and enforcement to ensure that carbon dioxide is permanently stored. Eligible jurisdictions for dedicated geological storage are currently proposed to include Alberta, British Columbia, and Saskatchewan.  

Natural Resources Canada would review project plans to determine equipment and system eligibility before a Clean Electricity investment tax credit claim could be made. Project plans would be required to reflect a front-end engineering design study and any other information required by the Minister of Energy and Natural Resources. Only eligible property in an integrated system with estimated emissions intensity not exceeding the maximum allowable limit would qualify.

Equipment eligibility would also need to be verified by Natural Resources Canada once the expenditures are incurred and before a claim is submitted to the Canada Revenue Agency.

Transmission of Electricity Between Provinces and Territories

Eligible interprovincial and territorial electrical transmission property would be property that is used to transmit or manage electrical energy that primarily originates in, or is destined for, another province or territory. This could include property located exclusively within a province or territory, if the property is used primarily for the purpose of interprovincial transmission. For example, transmission property installed in a province could be eligible if it became operational and began exporting electricity to another province after the completion of connected transmission property that crosses the border.

Eligible property would include:

• electrical transmission equipment (e.g., cables and switches);
• electrical transmission structures (e.g., towers and lattices); and
• related equipment used for managing traded electricity (e.g., transformers, electric power conditioning equipment, and control equipment).

Eligible property would not include buildings, electrical distribution equipment, or electrical transmission equipment rated for voltages less than 69 kilovolts.

Labour Requirements

In order to qualify for the 15-per-cent Clean Electricity investment tax credit, the proposed labour requirements currently before Parliament in Bill C-59 for prevailing wages and apprenticeships would need to be met. A 5-per-cent credit rate would be available if the labour requirements are not met.

Compliance and Recovery

Ongoing compliance with eligibility criteria.

Under the current rules for certain properties described in Class 43.1 or 43.2, all the conditions for inclusion in the Class must be satisfied on an annual basis. There is a limited exception in the  Income Tax Regulations  for property that is part of an eligible system that was previously operated in a qualifying manner. Such property is considered to be operated in the required manner during a period of deficiency, failure or shutdown of the system that is beyond the taxpayer's control if the taxpayer makes all reasonable efforts to rectify the problem within a reasonable time according to the circumstances.

As proposed in the 2023 Fall Economic Statement , similar rules would apply to the Clean Electricity investment tax credit with respect to systems that generate electricity, or both electricity and heat, from specified waste material. This would be extended to include systems that generate electricity, or both electricity and heat, from natural gas with carbon capture equipment.

Potential Repayment Obligations

The Clean Electricity investment tax credit would be subject to potential repayment obligations similar to the recapture rules proposed for the Clean Technology investment tax credit. In general, this means that over a ten-year period (or a 20-year period in the case of eligible natural gas energy systems) from the date of acquiring a particular eligible property, the tax credit could be repayable in proportion to the fair market value of the particular property when it has been converted to an ineligible use, exported from Canada, or disposed of.

Special Rules for Eligible Natural Gas Energy Systems

Systems that generate electricity, or both electricity and heat, from natural gas with carbon capture systems would be subject to a one-time verification of emissions intensity, based on a five-year compliance period.

Over the course of the five-year period, there would be a requirement to report on the emissions intensity of the energy that is produced annually by the system. At the end of the period, compliance would be assessed based on the weighted-average emissions intensity over the entire compliance period. The contribution of annual emissions intensity to the final emissions intensity would be weighted by the electricity and useful heat produced in each year.

Third-party emissions intensity verification reports would need to be submitted to Natural Resources Canada. The reports would have to be prepared by a Canadian engineering firm with an engineering certificate of authorization, appropriate insurance coverage, and expertise in auditing continuous emissions monitoring systems.

An average emissions intensity more than 5 per cent above the limit of 65 tonnes of carbon dioxide per gigawatt hour of energy produced would lead to a full recovery of the Clean Electricity investment tax credit.

After the five-year compliance period ends, there would be a requirement to continue producing emissions intensity reports annually for an additional 15 years. Over this period, an annual emissions intensity above the limit would be considered an ineligible use of the system, in accordance with the general repayment rules for this tax credit (described above under the heading Potential Repayment Obligations).

Interactions with Other Federal Tax Credits

Eligible corporations would be able to claim only one of the Clean Electricity investment tax credit, the Clean Technology investment tax credit, the Carbon Capture, Utilization, and Storage investment tax credit, the Clean Hydrogen investment tax credit, the Clean Technology Manufacturing investment tax credit and the Electric Vehicle Supply Chain investment tax credit, if a particular expenditure is eligible for more than one of these tax credits. However, multiple tax credits could be available for the same project, to the extent that the project includes expenditures eligible for different tax credits. For systems that generate electricity, or both electricity and heat, from natural gas with carbon capture, a project could not claim the Clean Electricity investment tax credit on the energy generation equipment and the Carbon Capture, Utilization, and Storage investment tax credit on the carbon capture equipment.

Eligible corporations would be able to fully benefit from both the Clean Electricity investment tax credit and the Atlantic investment tax credit with respect to the same expenditure, if the expenditure is eligible for both.

Proposed Application to Provincial and Territorial Crown Corporations

The Clean Electricity investment tax credit would be available to provincial and territorial Crown corporations only for investments made in eligible property situated in designated jurisdictions.

The federal Minister of Finance would designate a province or a territory, provided that the Minister was satisfied that the provincial or territorial government has:

• Work towards a net-zero electricity grid by 2035; and
• Provincial and territorial Crown corporations passing through the value of the Clean Electricity investment tax credit to electricity ratepayers in their province or territory to reduce ratepayers' bills.
• Directed provincial and territorial Crown corporations claiming the tax credit to publicly report annually on how the tax credit has improved ratepayers' bills.

Should a provincial or territorial Crown corporation claiming the tax credit not report annually on how the tax credit has improved ratepayers' bills, a penalty would be charged to that Crown corporation.

A provincial or territorial government would need to demonstrate that it has satisfied all of the above conditions, in order for provincial and territorial Crown corporations investing in that jurisdiction to gain access to the Clean Electricity investment tax credit. The federal Minister of Finance would then determine whether the conditions have been satisfied and, if so, would designate the province or territory.

The Department of Finance will consult with provinces and territories on the details of these conditions.

The Clean Electricity investment tax credit would apply to eligible property that is:

• acquired and becomes available for use on or after Budget Day and before 2035, provided it has not been used for any purpose before its acquisition; and
• not part of a project that began construction before March 28, 2023. For this purpose, construction would not include obtaining permits or regulatory approval, conducting environmental assessments, community consultations or impact assessment studies, or similar activities.

Similar rules would apply for eligible property acquired by provincial and territorial Crown corporations, with the following modifications:

• If a province or territorial government has satisfied all the conditions by March 31, 2025 and subsequently been designated by the Minister of Finance, then provincial and territorial Crown corporations investing in that jurisdiction would be able to access the Clean Electricity investment tax credit for property that is acquired and becomes available for use on or after Budget Day for projects that did not begin construction before March 28, 2023.
• If a provincial or territorial government has not satisfied all the conditions by March 31, 2025, then provincial and territorial Crown corporations investing in that jurisdiction would not be able to access the Clean Electricity investment tax credit until the province or territory is designated. The Clean Electricity investment tax credit would apply to property that is acquired and becomes available for use from the date when the province or territory is designated by the Minister of Finance, for projects that did not begin construction before March 28, 2023.

This measure is expected to have a positive environmental impact by encouraging investment in projects that would generally be expected to help reduce emissions of greenhouse gases and air pollutants, in support of Canada's targets set out in the Federal Sustainable Development Strategy. The measure would be expected to help Canada reach its goal of reducing greenhouse gas emissions by 40 to 45 per cent below 2005 levels by 2030 and achieving net-zero greenhouse gas emissions by 2050. It would also be expected to help Canada achieve its target of generating 90 per cent of electricity from renewable and non-emitting sources by 2030 and 100 per cent in the long term.

Positive environmental impacts could be partly offset to the extent that certain supported technologies release greenhouse gases as a result of fuel combustion, as well as particulate matter and other air pollutants that impact the environment and human health. In addition, upstream activities related to natural gas energy systems (e.g., natural gas extraction) can have negative environmental impacts, such as increased greenhouse gas emissions. However, the emissions intensity requirement of the investment tax credit ensures that only natural gas energy systems using carbon capture technology of the highest performance will be incentivized, ensuring that emissions are maximally reduced. Additionally, the combustion of waste biomass is generally viewed as carbon neutral on a lifecycle basis, and potentially carbon-negative when combined with carbon capture, utilization, and storage.

Budget 2023 proposed the Clean Technology Manufacturing investment tax credit, which would provide a refundable tax credit equal to 30 per cent of the cost of investments in eligible property used all or substantially all for eligible activities. Draft legislative proposals to implement the tax credit were released in December 2023.

As specified in the draft legislative proposals, eligible activities for the tax credit would include qualifying mineral activities producing all or substantially all qualifying materials (i.e., copper, nickel, cobalt, lithium, graphite, and rare earth elements). Qualifying mineral activities would consist of extraction; certain processing activities at mine or well sites, tailing ponds, mills, smelters, or refineries; certain recycling activities; and certain graphite activities.

Recognizing that the production of qualifying materials may occur at polymetallic projects (i.e., projects engaged in the production of multiple metals), Budget 2024 proposes adjustments to the Clean Technology Manufacturing investment tax credit to provide greater support and clarity to businesses engaged in these activities.

Use of Values

Budget 2024 proposes to clarify that the value of qualifying materials would be used as the appropriate output metric when assessing the extent to which property is used or is expected to be used for qualifying mineral activities producing qualifying materials.

"Primarily" Test for Property at Mine or Well Sites

Budget 2024 proposes to modify eligible expenditures to include investments in eligible property used in qualifying mineral activities that are expected to produce primarily qualifying materials at mine or well sites, including tailing ponds and mills located at these sites. The "primarily" test would generally mean that eligible property must be used or be expected to be used for activities in which 50 per cent or more of the financial value of the output comes from qualifying materials.

To support this expectation and a claim for the tax credit, businesses would be required to submit an attestation from an arm's-length qualified engineer or geoscientist to the Canada Revenue Agency for each relevant mine or well site.

Recapture and Safe Harbour Rule

As specified in the draft legislative proposals, where a property benefits from the tax credit and, within a ten-year period following its acquisition, is converted to a use in a non-qualifying activity (e.g., is no longer sufficiently used in qualifying mineral activities producing qualifying materials), the tax credit could be subject to recapture. For example, this could apply where the value of the materials extracted from a mine site is not primarily from qualifying materials.

To mitigate against the effects of mineral price volatility on the potential recapture of the tax credit, Budget 2024 also proposes to provide a safe harbour rule applicable to the recapture rule. Under the safe harbour rule, if the calculation of the expected production from the eligible property when claiming the tax credit is done using specified five-year historical average mineral prices, then the same specified mineral prices would be used to calculate the ratio of qualifying materials produced from the property over the ten-year recapture period. Details in respect to the design of the safe harbour rule will be provided at a later date.

The safe harbour rule would apply in respect of all qualifying mineral activities.

These changes would apply for property that is acquired and becomes available for use on or after January 1, 2024 (i.e., the same application date as the other aspects of the Clean Technology Manufacturing investment tax credit).

Increased investment in extraction and processing related to key critical minerals used in clean technologies can lead to lower prices of these minerals and technologies, which would encourage greater adoption of clean technologies in Canada, contributing to reductions in emissions of greenhouse gases and air particulates. This would help Canada meet its 2030 target of reducing total greenhouse gas emissions by 40 per cent to 45 per cent relative to 2005 levels.

However, increased extraction and mineral processing activities in Canada could negatively impact local habitats through increased soil erosion and mine runoff, increase emissions of greenhouse gases and air particulates, and increase production of industrial waste. This could offset some of the positive environmental impacts of the proposal. Also, environmental benefits in Canada could be reduced to the extent that key critical minerals and their associated technologies are exported outside of Canada.

The capital cost allowance (CCA) system determines the deductions that a business may claim each year for income tax purposes in respect of the capital cost of its depreciable property. Depreciable property is generally divided into CCA classes with each having its own rate in Schedule II to the Income Tax Regulations .

Purpose-Built Rental Housing

Currently, purpose-built rental buildings are eligible for a CCA rate of four per cent under Class 1.

Budget 2024 proposes to provide an accelerated CCA of ten per cent for new eligible purpose-built rental projects that begin construction on or after Budget Day and before January 1, 2031, and are available for use before January 1, 2036.

Consistent with eligibility under the temporary enhancement to the Goods and Services Tax (GST) New Residential Rental Property Rebate, eligible property would be new purpose-built rental housing that is a residential complex:

• with at least four private apartment units (i.e., a unit with a private kitchen, bathroom, and living areas), or 10 private rooms or suites; and
• in which at least 90 per cent of residential units are held for long-term rental.

Projects that convert existing non-residential real estate, such as an office building, into a residential complex would be eligible if the conditions above are met. The accelerated CCA would not apply to renovations of existing residential complexes. However, the cost of a new addition to an existing structure would be eligible, provided that addition meets the conditions above.

Interaction with the Accelerated Investment Incentive

Investments eligible for this measure would continue to benefit from the Accelerated Investment Incentive, which currently suspends the half-year rule, providing a CCA deduction at the full rate for eligible property put in use before 2028.

After 2027, the half-year rule would apply, which limits the CCA allowance in the year an asset is acquired to one-half of the full CCA deduction.

Productivity-Enhancing Assets

Currently, assets included in Class 44 (patents or the rights to use patented information for a limited or unlimited period), Class 46 (data network infrastructure equipment and related systems software), and Class 50 (general-purpose electronic data-processing equipment and systems software) are prescribed CCA rates of 25 per cent, 30 per cent, and 55 per cent, respectively.

Budget 2024 proposes to provide immediate expensing for new additions of property in respect of these three classes, if the property is acquired on or after Budget Day and becomes available for use before January 1, 2027. The enhanced allowance would provide a 100-per-cent first-year deduction and would be available only for the year in which the property becomes available for use.

Property that becomes available for use after 2026 and before 2028 would continue to benefit from the Accelerated Investment Incentive.

Restrictions

Property that has been used, or acquired for use, for any purpose before it is acquired by the taxpayer would be eligible for the accelerated CCA only if both of the following conditions are met:

• neither the taxpayer nor a non-arm's-length person previously owned the property; and
• the property has not been transferred to the taxpayer on a tax-deferred "rollover" basis.

Short taxation year

Under the short taxation-year rule, the amount of CCA that can be claimed in a taxation year must generally be prorated when the taxation year is less than 12 months. When this rule applies, the accelerated CCA would apply in respect of an eligible property on the same prorated basis and would not be available in the following taxation year in respect of the property.

Currently, the federal backstop pollution pricing fuel charge applies in the provinces of Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, Nova Scotia, Prince Edward Island, and Newfoundland and Labrador. In each of these provinces, the federal government returns more than 90 per cent of direct proceeds from the fuel charge to individuals through the Canada Carbon Rebate. Proceeds relating specifically to the use of natural gas and propane by farmers are returned to farmers via a refundable tax credit. The government has committed to return the remainder of fuel charge proceeds to Indigenous governments and small and medium-sized businesses. All direct proceeds collected are returned in their province of origin.

In respect of the government's commitment to small and medium-sized businesses, Budget 2024 proposes to return a portion of fuel charge proceeds from a province via the new Canada Carbon Rebate for Small Businesses, an automatic, refundable tax credit directly for eligible businesses, sized in proportion to the number of persons they employ in the province.

Eligible Businesses

With respect to the 2019-20 to 2023-24 fuel charge years, the tax credit would be available to a Canadian-controlled private corporation that files a tax return for its 2023 taxation year by July 15, 2024. Additionally, to be eligible for a credit in respect of an applicable fuel charge year, the corporation would need to have had no more than 499 employees throughout Canada in the calendar year in which the fuel charge year begins.

For instance, eligibility for receiving a payment in respect of the 2022-23 fuel charge year would be based on the number of persons employed by the eligible corporation for the 2022 calendar year.

Automatic Payments

Corporations would not have to apply for this tax credit. The Canada Revenue Agency would automatically determine the tax credit amount for an eligible corporation and pay the amount to the eligible corporation through the new Canada Carbon Rebate for Small Businesses.

Credit Determination

The tax credit amount in respect of an eligible corporation for an applicable fuel charge year would be determined for each applicable province in which the eligible corporation had employees in the calendar year in which the fuel charge year begins. The tax credit amount would be equal to the number of persons employed by the eligible corporation in the province in that calendar year multiplied by a payment rate specified by the Minister of Finance for the province for the corresponding fuel charge year.

The Minister of Finance will specify payment rates for the 2019-20 to 2023-24 fuel charge years once sufficient information is available from the 2023 taxation year.

The tax credit would return proceeds for future fuel charge years, including 2024-25, in a similar manner. That is, a payment rate would be specified for each applicable province for a particular fuel charge year, and a payment made to an eligible corporation that has filed a tax return for a taxation year ending in the calendar year in which the fuel charge year begins.

In response to the recommendations under Action 4 of the OECD/G20 Base Erosion and Profit Shifting (BEPS) Project, Budget 2021 announced an earnings stripping measure that limits the amount of net interest and financing expenses that may be deducted by certain taxpayers in computing taxable income. Legislative proposals to implement this measure (the excessive interest and financing expenses limitation (EIFEL) rules) are currently before Parliament in Bill C-59.

The EIFEL rules provide an exemption for interest and financing expenses incurred in respect of arm's length financing for certain public-private partnership infrastructure projects.

Budget 2024 proposes expanding this exemption to also include an elective exemption for certain interest and financing expenses incurred before January 1, 2036, in respect of arm's length financing used to build or acquire eligible purpose-built rental housing in Canada. 

Consistent with eligibility under the temporary enhancement to the Goods and Services Tax (GST) New Residential Rental Property Rebate and the proposed Accelerated Capital Cost Allowance for Purpose-Built Rental Housing included in Budget 2024, eligible purpose-built rental housing would be a residential complex:

This change would apply to taxation years that begin on or after October 1, 2023 (i.e., consistent with broader EIFEL amendments).

Limits to existing information gathering powers provided to the Canada Revenue Agency (CRA) under the Income Tax Act impede the effectiveness of the CRA's compliance and enforcement actions. The 2018 Report of the Office of the Auditor General noted that the provision of information by some taxpayers lagged for months or even years, making it more difficult for the CRA to collect tax owing.

Budget 2024 proposes several amendments to the information gathering provisions in the Income Tax Act . These proposed amendments are intended to enhance the efficiency and effectiveness of tax audits and facilitate the collection of tax revenues on a timelier basis. Analogous amendments are also proposed to other federal tax statutes administered by the CRA. Budget 2024 also proposes certain technical amendments to ensure the rules meet their policy objectives.

Notice of Non-Compliance

Budget 2024 proposes to amend the Income Tax Act toallow the CRA to issue a new type of notice (referred to as a "notice of non-compliance") to a person that has not complied with a requirement or notice to provide assistance or information issued by the CRA. The issuance of a notice of non-compliance would be reviewable by the CRA on request of the person. After reconsideration, the notice of non-compliance would be vacated if the CRA determines that it was unreasonable to issue the notice of non-compliance or that the person had reasonably complied, at the time the notice of non-compliance was issued, with the initial requirement or notice. There would be a further statutory right of review by a judge of the Federal Court.

Where a notice of non-compliance related to a taxpayer has been issued to the taxpayer or a person that does not deal at arm's length with the taxpayer, the normal reassessment period for any taxation year of the taxpayer to which the notice of non-compliance relates would be extended by the period of time the notice of non-compliance is outstanding.

To further improve compliance with information requests, Budget 2024 proposes to impose a penalty on a person that has been issued a notice of non-compliance of $50 for each day that the notice is outstanding, to a maximum of $25,000. This penalty would not apply if a notice of non-compliance is ultimately vacated by the CRA or a court.

Questioning Under Oath

Budget 2024 proposes to amend the Income Tax Act to allow the CRA to include in a requirement or notice that any required information (oral or written) or documents be provided under oath or affirmation.

Compliance Orders

Currently, the CRA can obtain a compliance order from a court that directs a non-compliant taxpayer to comply with the CRA's information requests. However, the use of compliance orders has generally not been effective in compelling compliance. This is because the primary consequence for not complying is a contempt order, which is time consuming to obtain and does not generally impose a material financial cost on the taxpayer.

Budget 2024 proposes to amend the Income Tax Act to impose a penalty when the CRA obtains a compliance order against a taxpayer. The penalty would be equal to 10 per cent of the aggregate tax payable by the taxpayer in respect of the taxation year or years to which the compliance order relates. The proposed penalty, which would apply when the CRA is successful in obtaining a compliance order, would create an incentive for taxpayers to comply with the original request for information or assistance. The penalty would only be applied if the tax owing in respect of one of the taxation years to which the compliance order relates exceeds $50,000.

Budget 2024 further proposes an amendment to allow the CRA to seek a compliance order when a person has failed to comply with a requirement to provide foreign-based information or documents.

Stopping the Reassessment Limitation Clock

Under existing rules, a taxpayer may seek judicial review of a requirement or notice issued to the taxpayer by the CRA. In these circumstances, the reassessment period is extended by the amount of time it takes to dispose of the judicial review. An analogous rule applies in respect of a compliance order. These rules are intended to ensure that the CRA has the time to properly review any information obtained before expiry of the statutory reassessment period fixed by the Income Tax Act . These "stop the clock" rules currently do not apply to all situations where a taxpayer does not comply with a requirement or notice issued by the CRA.

Budget 2024 proposes to amend the stop the clock rules to provide that they apply when a taxpayer seeks judicial review of any requirement or notice issued to the taxpayer by the CRA in relation to the audit and enforcement process or during any period that a notice of non-compliance is outstanding. Analogous rules would apply where a requirement or notice has been issued to a person that does not deal at arm's length with the taxpayer.

Other Tax Statutes Administered by the CRA

Budget 2024 proposes that other tax statutes administered by the CRA, which have provisions similar to the Income Tax Act , also be amended, as needed, to address the issues discussed above. Those statutes include the Excise Tax Act (e.g., GST/HST, fuel excise tax), Air Travellers Security Charge Act , Excise Act, 2001 (alcohol, tobacco, cannabis, and vaping duties), the Underused Housing Tax Act , and the Select Luxury Items Tax Act .

These amendments would come into force on royal assent of the enacting legislation.

The Income Tax Act includes an anti-avoidance rule that is intended to prevent taxpayers from avoiding paying their tax liabilities by transferring their assets to non-arm's length persons. The effect of this tax debt avoidance rule is to make the transferee jointly and severally, or solidarily, liable with the transferor for the transferor's tax debts, to the extent that the value of the property transferred exceeds the amount of consideration given by the transferee for the property.

The Income Tax Act contains a number of rules that address various planning techniques employed by taxpayers in an attempt to circumvent the tax debt avoidance rule, as well as a penalty for those who engage in, participate in, assent to, or acquiesce in planning activity that they know, or would reasonably be expected to know, is tax debt avoidance planning.

Some taxpayers continue to engage in planning that is intended to circumvent the tax debt avoidance rule, often with the assistance of a planner who receives a significant fee that is effectively funded by a portion of the avoided tax debt.

Although this planning can be challenged by the government based on existing rules in the Income Tax Act , these challenges can be both time-consuming and costly. As a result, the government is proposing a specific legislative measure.

Budget 2024 proposes to introduce a supplementary rule to strengthen the tax debt anti-avoidance rule. This rule would apply in the following circumstances:

• there has been a transfer of property from a tax debtor to another person;
• as part of the same transaction or series of transactions, there has been a separate transfer of property from a person other than the tax debtor to a transferee that does not deal at arm's length with the tax debtor; and
• one of the purposes of the transaction or series is to avoid joint and several, or solidary, liability.

Where these conditions are met, the property transferred by the tax debtor would be deemed to have been transferred to the transferee for the purposes of the tax debt avoidance rule. This would ensure that the tax debt avoidance rule applies in situations where property has been transferred from a tax debtor to a person and, as part of the same transaction or series, property has been received by a non-arm's length person. 

The Income Tax Act contains a penalty for those who engage in, participate in, assent to, or acquiesce in planning activity that they know, or would reasonably be expected to know, is tax debt avoidance planning. The penalty is equal to the lesser of:

• 50 per cent of the tax that is attempted to be avoided; and
• $100,000 plus any amount the person, or a related person, is entitled to receive or obtain in respect of the planning activity.

Budget 2024 proposes to extend this penalty to tax debt avoidance planning that is subject to the proposed supplementary rule.

Expanded Joint and Several, or Solidary, Liability

As noted above, in many cases tax debt avoidance planning is facilitated by a planner who receives a significant fee that is effectively funded by a portion of the avoided tax debt. The courts have held that a taxpayer who engages in tax debt avoidance planning is normally not jointly and severally, or solidarily, liable for the portion of the tax debt that has effectively been retained by the planner as a fee. This remains the case even where the amount retained by the planner is moved offshore and out of the reach of the Canada Revenue Agency.

To further enhance the effectiveness of the tax debt anti-avoidance rule, Budget 2024 proposes that taxpayers who participate in tax debt avoidance planning be jointly and severally, or solidarily, liable for the full amount of the avoided tax debt, including any portion that has effectively been retained by the planner.

Similar Statutes

Similar amendments would be made to comparable provisions in other federal statutes (e.g., the Excise Tax Act , the Excise Act, 2001 , the Select Luxury Items Tax Act , and the Underused Housing Tax Act ).

These measures would apply to transactions or series of transactions that occur on or after Budget Day.

The Income Tax Act includes a general provision that provides that a person who fails to file or make a return or comply with certain specified rules is guilty of an offence, and liable to penalties up to $25,000 and imprisonment up to a year. The mandatory disclosure rules in the Income Tax Act also include specific penalties that apply in these circumstances, making the application of this general penalty provision unnecessary.

Budget 2024 announces the government's intention to remove from the scope of this general penalty provision the failure to file an information return in respect of a reportable or notifiable transaction under the mandatory disclosure rules.

This amendment would be deemed to have come into force on June 22, 2023.

A mutual fund is a type of investment vehicle that allows investors to pool their money and invest in a portfolio of investments without purchasing the investments directly. A mutual fund corporation is a mutual fund organized as a corporation that meets certain conditions set out in the Income Tax Act.

The Income Tax Act includes special rules for mutual fund corporations that facilitate conduit treatment for investors (shareholders). For example, these rules generally allow capital gains realized by a mutual fund corporation to be treated as capital gains realized by its investors. In addition, a mutual fund corporation is not subject to mark-to-market taxation and can elect capital gains treatment on the disposition of Canadian securities.

To qualify as a mutual fund corporation under the Income Tax Act , a corporation must satisfy several conditions, including that the corporation is a "public corporation", which may be satisfied where a class of shares of the corporation is listed on a designated stock exchange in Canada. These conditions are premised on the idea of a mutual fund corporation being widely held. However, a corporation controlled by a corporate group may qualify as a mutual fund corporation even though it is not widely held.

A corporation can qualify as a mutual fund corporation under the Income Tax Act if a class of its shares is listed on a designated stock exchange in Canada, even if all other shares of the corporation are held by a corporate group and those shares represent all or substantially all of the fair market value of the issued shares of the corporation. This could allow a corporate group to use a mutual fund corporation to benefit from the special rules available to these corporations in an unintended manner .

Although using a mutual fund corporation to defer or avoid income taxes by a corporate group can be challenged by the government based on existing rules in the Income Tax Act , these challenges can be both time-consuming and costly.

Budget 2024 proposes amendments to the Income Tax Act to preclude a corporation from qualifying as a mutual fund corporation where it is controlled by or for the benefit of a corporate group (including a corporate group that consists of any combination of corporations, individuals, trusts, and partnerships that do not deal with each other at arm's length). Exceptions would be provided to ensure that the measure does not adversely affect mutual fund corporations that are widely held pooled investment vehicles.

This measure would apply to taxation years that begin after 2024.

The  Income Tax Act  allows a corporation to deduct the amount of any dividends received on a share of a corporation resident in Canada, subject to certain limitations.

One of these limitations is an anti-avoidance rule that denies the dividend received deduction in respect of synthetic equity arrangements. Synthetic equity arrangements include agreements that provide all or substantially all of the risk of loss and opportunity for gain or profit (the "economic exposure") in respect of a share to another person.

Where a taxpayer enters into a synthetic equity arrangement in respect of a share, the taxpayer is generally obligated to compensate the other person for the amount of any dividends paid on the share. This compensation payment may result in a tax deduction for the taxpayer in addition to the dividend received deduction. Unless the anti-avoidance rule applies to deny the dividend received deduction, a tax loss would generally arise as a result of the two deductions.

The anti-avoidance rule incorporates certain exceptions, including where the taxpayer establishes that no tax-indifferent investor has all or substantially all of the economic exposure in respect of the share. An associated exception is also available for synthetic equity arrangements traded on a derivatives exchange. 

Budget 2024 proposes to remove the tax-indifferent investor exception (including the exchange traded exception) to the anti-avoidance rule. This measure would simplify the anti-avoidance rule and prevent taxpayers from claiming the dividend received deduction for dividends received on a share in respect of which there is a synthetic equity arrangement.

This measure would apply to dividends received on or after January 1, 2025.

Under the Income Tax Act , losses and other tax attributes that arise from expenditures for which a taxpayer did not ultimately bear the cost are generally not recognized. The Income Tax Act contains a set of debt forgiveness rules that apply where a commercial debt is settled for less than its principal amount. These rules generally reduce tax attributes by the amount of debt that is forgiven and, where tax attributes have been fully reduced, the rules cause an income inclusion equal to half of the remaining forgiven amount. The Act also contains a rule that entitles an insolvent corporation to a corresponding deduction to offset all or part of an income inclusion from the debt forgiveness rules.

Bankrupt taxpayers are generally excluded from these debt forgiveness rules. Instead, a separate loss restriction rule applies to extinguish the losses of bankrupt corporations that have received an absolute order of discharge.   

Some taxpayers have sought to manipulate the bankrupt status of an insolvent corporation, with a view to benefiting from the exception in the debt forgiveness rules while also avoiding the loss restriction rule applicable to bankrupt corporations. This planning seeks to preserve the losses and other tax attributes of the insolvent corporation (which would otherwise be eliminated upon the forgiveness of its debts) for their acquisition and use in avoiding corporate income tax by a profitable corporation.

Although the manipulation of bankrupt status can be challenged by the government based on existing rules in the Income Tax Act , these challenges can be both time-consuming and costly. As a result, the government is proposing a specific legislative measure.

Budget 2024 proposes to repeal the exception to the debt forgiveness rules for bankrupt corporations and the loss restriction rule applicable to bankrupt corporations. This change would subject bankrupt corporations to the general rules that apply to other corporations whose commercial debts are forgiven. The bankruptcy exception to the debt forgiveness rules would remain in place for individuals. While bankrupt corporations would be subject to the reduction of their loss carryforward balances and other tax attributes upon debt forgiveness, as insolvent corporations they could qualify for relief from the debt forgiveness income inclusion rule provided under the existing deduction for insolvent corporations.

These proposals would apply to bankruptcy proceedings that are commenced on or after Budget Day.

International Tax Measures

Exchange of tax information between national revenue agencies is an important tool for combating offshore tax evasion. The Common Reporting Standard (CRS) is the global standard developed and endorsed by the Organization for Economic Cooperation and Development (OECD) for the automatic exchange of financial information for tax purposes. Under Canada's implementation of the CRS in the Income Tax Act , Canadian financial institutions report to the Canada Revenue Agency information on financial accounts held in Canada by non-residents. The Canada Revenue Agency shares this information with foreign tax authorities. In exchange, Canada receives information on financial accounts held by Canadian residents outside of Canada.

Crypto-Asset Reporting Framework

Since the implementation of the CRS, financial markets have continued to evolve. One major development is the emergence of crypto-assets (including stablecoins, derivatives issued in the form of a crypto-asset, and certain non-fungible tokens), which can be transferred or held without interacting with traditional financial intermediaries and do not need to be reported under the CRS. To ensure appropriate reporting, the OECD has developed a new framework (referred to as the Crypto-Asset Reporting Framework, or CARF) that provides for the automatic exchange of tax information in relation to transactions in crypto-assets.

Budget 2024 proposes to implement the CARF in Canada. The measure would impose a new annual reporting requirement in the Income Tax Act on entities and individuals (referred to as crypto-asset service providers) that are resident in Canada, or that carry on business in Canada, and that provide business services effectuating exchange transactions in crypto-assets. This would include crypto exchanges, crypto-asset brokers and dealers, and operators of crypto-asset automated teller machines.

Crypto-asset service providers would be required to report to the Canada Revenue Agency, in respect of each customer and in respect of each crypto-asset, the annual value of:

• exchanges between the crypto-asset and fiat currencies;
• exchanges for other crypto-assets; and
• transfers of the crypto-asset, including the requirement to report information in respect of a customer of a merchant where the crypto-asset service provider processes payments on behalf of the merchant and the customer has transferred crypto-assets to the merchant in exchange for goods or services with a value exceeding US$50,000.

Reportable crypto-assets would exclude central bank digital currencies and specified electronic money products (e.g., digital representations of fiat currencies), which would be reportable under the amendments to the CRS described below.

In addition to information on crypto-asset transactions, crypto-asset service providers would be required to obtain and report information on each of their customers, including name, address, date of birth, jurisdiction(s) of residence, and taxpayer identification numbers for each jurisdiction of residence. If a customer is a corporation or other legal entity, the same information would need to be collected and reported in respect of the natural persons who exercise control over the entity. Reporting would be required with respect to both Canadian resident and non-resident customers.

Common Reporting Standard

Budget 2024 also proposes to implement amendments to the CRS that have been endorsed by the OECD in connection with the CARF. The changes would broaden the scope of the CRS to include specified electronic money products and central bank digital currencies which are not covered by the CARF. The amendments would also ensure effective coordination between the CRS and the CARF and limit instances of duplicative reporting between the two frameworks. Other changes would require that additional information be reported in respect of financial accounts and account holders and would strengthen the due diligence procedures financial institutions are required to follow.

In response to recommendations of the Global Forum on Transparency and Exchange of Information for Tax Purposes, Budget 2024 proposes two other changes to the CRS.

• First, the CRS would be amended to remove Labour-Sponsored Venture Capital Corporations (LSVCCs) from the list of non-reporting financial institutions and treat a non-registered account held in an LSVCC as an excluded account provided that annual contributions to the account do not exceed US$50,000. This would generally extend the same treatment to non-registered accounts currently available to registered accounts, e.g., Registered Retirement Savings Plans, which already qualify as excluded accounts. Due diligence and reporting requirements do not apply in respect of excluded accounts.
• Second, the anti-avoidance provision of the CRS would be amended to clarify that it applies when an individual or any entity enters into an arrangement or engages in a practice, if it can reasonably be considered that the primary purpose is to avoid an obligation of any person under the CRS.

These measures would apply to the 2026 and subsequent calendar years. This would allow the first reporting and exchange of information under the CARF and amended CRS to take place in 2027 with respect to the 2026 calendar year.

Existing income tax rules require a person who pays a non-resident for services provided in Canada to withhold 15 per cent of the payment and remit it to the Canada Revenue Agency (CRA). This acts as a pre-payment of any Canadian tax that the non-resident may ultimately owe. Canada generally taxes non-residents on their income from carrying on business in Canada. However, many non-resident service providers do not ultimately owe Canadian tax either because they do not have a permanent establishment in Canada under an applicable tax treaty, or because the service is international shipping or operating an aircraft in international traffic, both of which are generally exempt from Canadian tax.

Non-resident service providers with no Canadian tax liability may apply to the CRA for an advance waiver of the withholding requirement for a specific planned transaction. Alternatively, they may apply for a refund of the withheld amounts. However, many non-resident service providers instead pass the cost of the withholding requirement on to the payors. This increases costs for Canadians.

Budget 2024 proposes to provide the CRA with the legislative authority to waive the withholding requirement, over a specified period, for payments to a non-resident service provider if either of the following conditions are met:

• the non-resident would not be subject to Canadian income tax in respect of the payments because of a tax treaty between its country of residence and Canada; or
• the income from providing the services is exempt income from international shipping or from operating an aircraft in international traffic.

This proposal would allow the CRA to waive the withholding requirement on multiple transactions with a single waiver, subject to any conditions and information requirements necessary to reduce compliance risks.

This measure would come into force on royal assent of the enacting legislation.

Sales and Excise Tax Measures

On September 14, 2023, the government announced that it would temporarily remove the Goods and Services Tax (GST) from new purpose-built rental housing projects, such as apartment buildings, student housing, and senior residences built specifically for long-term rental accommodation.

The removal of the GST is being implemented through an Enhanced (100-per-cent) GST Rental Rebate for new qualifying purpose-built rental housing projects.

Qualifying purpose-built rental housing units include those that are part of a residential complex

• that contains at least four private apartment units or at least 10 private rooms or suites; and
• in which all or substantially all of the residential units meet the conditions for the existing GST Rental Rebate.

The Enhanced GST Rental Rebate applies to projects that begin construction after September 13, 2023 and before 2031, and that complete construction before 2036.

Universities, Public Colleges, and School Authorities

Under the existing GST/Harmonized Sales Tax (HST) rules in the Excise Tax Act , universities, public colleges, and school authorities are not eligible for a GST Rental Rebate in respect of new student housing they provide. This is due to the often temporary nature of student residences and the special GST/HST rules that apply to these entities.

Rental Rebate Conditions

One of the main eligibility conditions for a GST Rental Rebate is that the unit is for long-term rental. In this regard, the Excise Tax Act generally requires that the unit's first use be as the primary place of residence for an individual under a lease for a period of at least 12 months. However, many universities, public colleges, and school authorities would likely not meet this condition in respect of traditional student residences due to the more temporary nature of the housing.

Special GST Rules

When universities, public colleges, and school authorities build a new residence for their students, they are not subject to the normal GST/HST rules for builders, which require tax to be paid on the final value of a newly constructed residential complex. Instead, they are subject to a special set of relieving GST/HST rules under which they only incur GST/HST on their construction inputs. However, because of this, there is no final tax amount, which is the amount on which the GST Rental Rebates are based.

Proposed Modifications

To ensure that universities, public colleges, and school authorities can claim the Enhanced (100-per-cent) GST Rental Rebate, Budget 2024 proposes to modify the Excise Tax Act to allow them to apply the normal GST/HST rules that apply to other builders (i.e., paying GST/HST on the final value of the building) in respect of new student housing projects.

Additionally, Budget 2024 proposes to amend the Excise Tax Act and its regulations to relax the rebate conditions for new student housing provided by universities, public colleges, and school authorities that operate on a not-for-profit basis. These are generally educational institutions that would currently qualify for the Public Service Body rebates under the GST/HST.

The relaxed rebate conditions would allow these entities to claim the 100-per-cent rebate in respect of any new student residence that they acquire or construct provided it is primarily for the purpose of providing a place of residence for their students. That is, it would no longer be necessary that the first use of a unit in the student housing project be as a primary place of residence of an individual under a lease for a period of at least 12 months.

The relaxed rebate conditions would not be extended to universities, public colleges, and school authorities that operate on a for-profit basis.

The proposed measures would apply to student residences that begin construction after September 13, 2023 and before 2031, and that complete construction before 2036.

Budget 2024 proposes to amend the Excise Tax Act to repeal the temporary zero-rating of certain face masks or respirators and certain face shields under the GST/HST. The temporary relief announced in the 2020 Fall Economic Statement was proposed to be in effect until the use of face coverings was no longer broadly recommended by public health officials for the COVID-19 pandemic.

This measure would apply to supplies made on or after May 1, 2024.

Excise Duty on Tobacco

Budget 2024 announces the Government's intention to increase the tobacco excise duty rate by $4 per carton of 200 cigarettes (i.e., for a total of $5.49 including the automatic inflationary adjustment of $1.49 per carton of 200 cigarettes that took effect on April 1, 2024), along with corresponding increases to the excise duty rates for other tobacco products outlined in Table 2.

Inventories of cigarettes held by certain manufacturers, importers, wholesalers and retailers at the beginning of the day after Budget Day would be subject to an inventory tax of $0.02 per cigarette (subject to certain exemptions) to account for the $4 increase. Taxpayers would have until June 30, 2024 to file a return and pay the cigarette inventory tax.

This measure would come into force on the day after Budget Day.

Importation Limit for Packaged Raw Leaf Tobacco for Personal Use

Currently under the Excise Act, 2001 , no one is allowed to possess or import unstamped tobacco products unless an exemption applies. One of the exemptions is that the products are imported for personal use in quantities not in excess of prescribed limits (e.g., five cartons of cigarettes). There is currently no limit on importation of packaged raw leaf tobacco for personal use.

Budget 2024 proposes to provide a new prescribed limit of up to 2500 grams of packaged raw leaf tobacco for importation for personal use. Consequential to the imposition of the new importation limit, Budget 2024 also proposes to amend the definition of "packaged" for raw leaf tobacco to ensure the proper enforcement of the new limit for importation, and to better reflect current business practices.

This measure would come into force on the first day of the month following royal assent to the enabling legislation.

Process for Prescribing Tobacco Products

Brands of tobacco products that are destined for the export market must be prescribed by regulation before the products can be exported without markings and the imposition of a special excise duty. Applications need to be made to the Canada Revenue Agency for eligibility assessments, and the Canada Revenue Agency would in turn recommend qualifying brands for prescription through the regulatory process.

To improve the administration of the current process, Budget 2024 proposes to replace the prescription through the regulatory process with an authorization for the Minister of National Revenue to specify the brands of tobacco products for export that are exempted from the special excise duty and marking requirement.

Requiring Information Returns from Tobacco Prescribed Persons

Persons that are prescribed by regulation (i.e., "prescribed persons") may be issued excise stamps for either tobacco products or vaping products, stamps they may then provide to overseas manufacturers of those products to allow the eventual importation of stamped products into Canada. Generally, prescribed persons do not manufacture tobacco or vaping products in Canada, and excise duties are paid once the products are imported into Canada.

Prescribed persons that are issued vaping excise stamps are currently required to file information returns each month, but the same requirement does not apply to prescribed persons that are issued tobacco excise stamps.

To improve controls and accountability for tobacco excise stamps, Budget 2024 proposes to require tobacco prescribed persons to file information returns for tobacco excise stamps.

Excise Duty on Vaping Products

Budget 2024 announces the Government's intention to increase the vaping product excise duty rate as outlined in Table 3.

This proposed increase would also apply to the additional duty imposed in respect of participating jurisdictions under the coordinated vaping product taxation framework. This measure would come into force on July 1, 2024; i.e., the same day as the effective date for the introduction of the coordinated vaping product taxation regime for Ontario, Quebec, the Northwest Territories, and Nunavut.

Sharing of Confidential Information

Currently, under the Excise Act, 2001 , the Canada Revenue Agency is allowed to share confidential information for the purposes of administration or enforcement of the Cannabis Act .

To enhance collaboration between the Canada Revenue Agency and Health Canada in their respective responsibilities with regard to tobacco and vaping products, Budget 2024 proposes to amend the Excise Act, 2001 to allow the Canada Revenue Agency to share confidential information for the purposes of the administration or enforcement of the Tobacco and Vaping Products Act .

This measure would come into force upon royal assent to the enabling legislation.

Other Tax Measures

The First Nations Goods and Services Tax Act provides a legislative framework for interested Indigenous governments to levy broad-based value-added taxes, referred to as the First Nations Goods and Services Tax (FNGST), that are fully harmonized with the federal Goods and Services Tax (GST) or federal component of Harmonized Sales Tax (HST), including applying at the same rate (five per cent).

Budget 2024 proposes to amend the First Nations Goods and Services Tax Act to provide additional flexibility to Indigenous governments seeking to exercise tax jurisdiction on their lands. Specifically, the amendments would enable Indigenous governments to enact a value-added sales tax, under their own laws, on fuel, alcohol, cannabis, tobacco, and vaping (FACT) products within their reserves or settlement lands. The FACT sales tax would be analogous to the FNGST, including applying at the same five per cent GST rate, but would be limited to fuel, alcohol, cannabis, tobacco, and vaping products.

Indigenous governments would have the choice to levy FACT sales taxes and would have the flexibility to choose which FACT product(s) to tax. These taxes would be implemented through negotiated tax administration agreements between the federal government and interested Indigenous governments. FACT sales taxes would apply to all persons buying the taxed FACT products sold on the lands of an opt-in Indigenous government. On products for which an Indigenous FACT sales tax applies, the federal GST, or federal component of HST, would not apply.

Among other administrative matters, tax administration agreements would include provisions for the appropriate sharing of tax room between Indigenous governments and Canada in circumstances where Indigenous government FACT revenues are generated primarily from persons who would otherwise pay the federal GST or federal component of HST.

The government intends to propose amendments to the First Nations Goods and Services Tax Act to enable FACT sales taxes and streamline administration of taxes under that Act. Additional engagement and negotiation of tax administration agreements would be required prior to implementation of value-added FACT taxes by interested Indigenous governments.

Budget 2024 confirms the government's intention to proceed with the following previously announced tax and related measures, as modified to take into account consultations, deliberations, and legislative developments, since their release.

• Legislative proposals released on March 9, 2024, to extend by two years the two per cent cap on the inflation adjustment on beer, spirit, and wine excise duties, and to cut by half for two years the excise duty rate on the first 15,000 hectolitres of beer brewed in Canada.
• The Clean Hydrogen investment tax credit;
• The Clean Technology Manufacturing investment tax credit;
• Concessional Loans;
• Short-Term Rentals;
• Vaping Excise Duties; and
• International Shipping.
• The Canadian journalism labour tax credit;
• Proposed expansion of eligibility for the Clean Technology and Clean Electricity investments tax credits to support generation of electricity and heat from waste biomass;
• The addition of psychotherapists and counselling therapists to the list of health care practitioners whose professional services rendered to individuals are exempt from the Goods and Services Tax/Harmonized Sales Tax (GST/HST);
• Proposals relating to the GST/HST joint venture election rules;
• The application of the enhanced (100-per-cent) GST Rental Rebate to qualifying co-operative housing corporations; and
• Proposals relating to the Underused Housing Tax.
• Regulatory proposals released on November 3, 2023, to temporarily pause the federal fuel charge on deliveries of heating oil.
• Legislative and regulatory amendments to implement the enhanced (100-per-cent) GST Rental Rebate for purpose-built rental housing announced on September 14, 2023.
• The Carbon Capture, Utilization, and Storage investment tax credit;
• The Clean Technology investment tax credit;
• Labour Requirements Related to Certain investment tax credits;
• Enhancing the Reduced Tax Rates for Zero-Emission Technology Manufacturers;
• Flow-Through Shares and the Critical Mineral Exploration Tax Credit – Lithium from Brines;
• Employee Ownership Trusts;
• Retirement Compensation Arrangements;
• Strengthening the Intergenerational Business Transfer Framework;
• The Income Tax and GST/HST Treatment of Credit Unions;
• The Alternative Minimum Tax for High-Income Individuals;
• A Tax on Repurchases of Equity;
• Modernizing the General Anti-Avoidance Rule;
• Global Minimum Tax (Pillar Two);
• Digital Services Tax;
• Technical amendments to GST/HST rules for financial institutions;
• Providing relief in relation to the GST/HST treatment of payment card clearing services;
• Enhancements to the vaping product taxation framework;
• Tax-exempt sales of motive fuels for export;
• Excessive Interest and Financing Expenses Limitations;
• Extending the quarterly duty remittance option to all licensed cannabis producers;
• Revised Luxury Tax draft regulations to provide greater clarity on the tax treatment of luxury items; and
• Technical tax amendments to the  Income Tax Act  and the  Income Tax Regulations .
• Legislative amendments to implement changes discussed in the transfer pricing consultation paper released on June 6, 2023.
• Tax measures announced in Budget 2023, including the Dividend Received Deduction by Financial Institutions.
• Substantive Canadian-Controlled Private Corporations;
• Technical amendments to the  Income Tax Act  and  Income Tax Regulations ; and
• Remaining legislative and regulatory proposals relating to the GST/HST, excise levies and other taxes and charges announced in the August 9, 2022 release.
• Legislative amendments to implement the Hybrid Mismatch Arrangements rules announced in Budget 2021.
• Legislative proposals released in Budget 2021 with respect to the Rebate of Excise Tax for Goods Purchased by Provinces.
• Regulatory proposals released in Budget 2021 related to information requirements to support input tax credit claims under the GST/HST.
• The income tax measure announced on December 20, 2019, to extend the maturation period of amateur athlete trusts maturing in 2019 by one year, from eight years to nine years.

Budget 2024 also reaffirms the government's commitment to move forward as required with other technical amendments to improve the certainty and integrity of the tax system.

Page details

An official website of the United States Government

• Kreyòl ayisyen
• Search Toggle search Search Include Historical Content - Any - No Include Historical Content - Any - No Search
• Menu Toggle menu
• INFORMATION FOR…
• Individuals
• Business & Self Employed
• Charities and Nonprofits
• International Taxpayers
• Federal State and Local Governments
• Indian Tribal Governments
• Tax Exempt Bonds
• FILING FOR INDIVIDUALS
• How to File
• When to File
• Where to File
• Update Your Information
• Get Your Tax Record
• Apply for an Employer ID Number (EIN)
• Check Your Amended Return Status
• Get an Identity Protection PIN (IP PIN)
• File Your Taxes for Free
• Bank Account (Direct Pay)
• Payment Plan (Installment Agreement)
• Electronic Federal Tax Payment System (EFTPS)
• Your Online Account
• Tax Withholding Estimator
• Estimated Taxes
• Where's My Refund
• What to Expect
• Direct Deposit
• Reduced Refunds
• Amend Return

Credits & Deductions

• INFORMATION FOR...
• Businesses & Self-Employed
• Earned Income Credit (EITC)
• Child Tax Credit
• Clean Energy and Vehicle Credits
• Standard Deduction
• Retirement Plans

Forms & Instructions

• POPULAR FORMS & INSTRUCTIONS
• Form 1040 Instructions
• Form 4506-T
• POPULAR FOR TAX PROS
• Form 1040-X
• Circular 230

IRS issues standard mileage rates for 2023; business use increases 3 cents per mile

More in news.

• Topics in the News
• News Releases for Frequently Asked Questions
• Multimedia Center
• Tax Relief in Disaster Situations
• Inflation Reduction Act
• Taxpayer First Act
• Tax Scams/Consumer Alerts
• The Tax Gap
• Fact Sheets
• IRS Tax Tips
• e-News Subscriptions
• IRS Guidance
• Media Contacts
• IRS Statements and Announcements

IR-2022-234, December 29, 2022

WASHINGTON — The Internal Revenue Service today issued the 2023 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on January 1, 2023, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

• 65.5 cents per mile driven for business use, up 3 cents from the midyear increase setting the rate for the second half of 2022.
• 22 cents per mile driven for medical or moving purposes for qualified active-duty members of the Armed Forces, consistent with the increased midyear rate set for the second half of 2022.
• 14 cents per mile driven in service of charitable organizations; the rate is set by statute and remains unchanged from 2022.

These rates apply to electric and hybrid-electric automobiles, as well as gasoline and diesel-powered vehicles.

The standard mileage rate for business use is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.

It is important to note that under the Tax Cuts and Jobs Act, taxpayers cannot claim a miscellaneous itemized deduction for unreimbursed employee travel expenses. Taxpayers also cannot claim a deduction for moving expenses, unless they are members of the Armed Forces on active duty moving under orders to a permanent change of station. For more details see Moving Expenses for Members of the Armed Forces .

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

Taxpayers can use the standard mileage rate but generally must opt to use it in the first year the car is available for business use. Then, in later years, they can choose either the standard mileage rate or actual expenses. Leased vehicles must use the standard mileage rate method for the entire lease period (including renewals) if the standard mileage rate is chosen.

Notice 2023-03 PDF contains the optional 2023 standard mileage rates, as well as the maximum automobile cost used to calculate the allowance under a fixed and variable rate (FAVR) plan. In addition, the notice provides the maximum fair market value of employer-provided automobiles first made available to employees for personal use in calendar year 2023 for which employers may use the fleet-average valuation rule in or the vehicle cents-per-mile valuation rule.

•  Facebook
•  Twitter
•  Linkedin

Official websites use .mil

Secure .mil websites use HTTPS

• Login to DTS
• BAH Rate Lookup
• BAH Data Collection
• Frequently Asked Questions

Download the BAH Primer

For a detailed overview of how BAH rates are determined.

Basic Allowance for Housing Rate Lookup

Use the forms below to find BAH rates by ZIP code, supplemental rate information, or to download annual BAH rate data for all locations and all pay grades.

• Year * 2024 2023 2022 Increased Rates (Effective 10/01/2022) 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001
• Pay Grade * E-1 E-2 E-3 E-4 E-5 E-6 E-7 E-8 E-9 W-1 W-2 W-3 W-4 W-5 O1E O2E O3E O-1 O-2 O-3 O-4 O-5 O-6 O-7+
• Year 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015
• File Type ASCII PDF/Excel
• Year 2024 2023 2022T 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013

Preparing for the tidal wave of Canadian tax changes

2024 Canadian ESG Reporting Insights

Findings from the 2024 Global Digital Trust Insights

PwC Canada's Federal budget analysis

Canada’s Draft Sustainability Disclosure Standards

27th Annual Global CEO Survey—Canadian insights

2023 Canadian holiday outlook

Embracing the future of capital markets

Five opportunities facing Canadian government and public-sector organizations

How can Canadian family business founders and owners create the right outcomes

Managed Services

PwC Canada drives adoption of Generative AI with firmwide implementation of Copilot for Microsoft 365

Our purpose, vision and values

Inclusion and diversity

Apply today! Now hiring students and new graduates

We’re empowering women to thrive in tech

Why join our assurance practice?

Loading Results

No Match Found

2024 Federal Budget analysis

On April 16, 2024, the Deputy Prime Minister and Minister of Finance, Chrystia Freeland, presented the government’s budget. The budget:

• increases the capital gains inclusion rate from 1/2 to 2/3, effective June 25, 2024 (up to $250,000 of annual gains for individuals will continue to benefit from the 1/2 inclusion rate)
• raises the lifetime capital gains exemption to $1.25 million and introduces a new 1/3 inclusion rate for up to $2 million of certain capital gains realized by entrepreneurs
• confirms previously announced alternative minimum tax proposals effective January 1, 2024, but softens the impact of these proposals on charitable donations
• provides design and implementation details for the clean electricity investment tax credit
• introduces accelerated capital cost allowance (CCA) for, and relief from interest deductibility limitations for debt incurred to fund the construction of, certain purpose-built rental housing
• provides immediate expensing for the cost of certain patents and computer equipment and software
• gives the Canada Revenue Agency (CRA) additional information gathering powers

This Tax Insights discusses these and other tax initiatives proposed in the budget.

Tax measures

Capital gains inclusion rate.

• Lifetime Capital Gains Exemption

Canadian Entrepreneurs’ Incentive

• Alternative Minimum Tax

Employee Ownership Trust Tax Exemption

Volunteer firefighters tax credit and search and rescue volunteers tax credit, mineral exploration tax credit for flow-through share investors.

• Canada Child Benefit

Disability Supports Deduction

Charities and qualified donees.

• Home Buyers’ Plan

Qualified Investments for Registered Plans

Deduction for tradespeople’s travel expenses, indigenous child and family services settlement, clean electricity investment tax credit, ev supply chain investment tax credit, clean technology manufacturing investment tax credit.

• Accelerated Capital Cost Allowance

Interest Deductions and Purpose-Built Rental Housing

Taxing vacant lands to incentivize construction, confronting the financialization of housing, halal mortgages, non-compliance with information requests, synthetic equity arrangements, mutual fund corporations, canada carbon rebate for small business, avoidance of tax debts, reportable and notifiable transactions penalty, manipulation of bankrupt status.

• Scientific Research and Experimental Development

International

Crypto-asset reporting, withholding for non-resident service providers, international tax reform.

• Extending GST Relief to Student Residences

GST/HST on Face Masks and Face Shields

Previously announced, personal tax measures.

The budget proposes to increase the capital gains inclusion rate from 1/2 to:

• 2/3 for dispositions after June 24, 2024 for corporations and trusts, and
• 2/3 for the portion of capital gains realized after June 24, 2024 in excess of an annual $250,000 threshold for individuals

The $250,000 annual threshold would apply to capital gains realized by an individual, either directly or indirectly via a partnership or trust, net of:

• current year capital losses
• capital losses of other years applied to reduce current year capital gains, and
• capital gains in respect of which the Lifetime Capital Gains Exemption (LCGE), the proposed Employee Ownership Trust Exemption or the proposed Canadian Entrepreneurs’ Incentive is claimed

As a result, the following rates will apply to capital gains earned by individuals in excess of the $250,000 threshold who are subject to the top marginal income tax rate (i.e. on taxable income exceeding: $355,845 in Alberta, $252,752 in British Columbia, $1,103,478 in Newfoundland and Labrador, $500,000 in the Yukon and $246,752 in all other jurisdictions).

The budget also proposes to decrease the stock option deduction to 1/3 to align with the new capital gains inclusion rate.  Individuals would continue to benefit from a deduction of 1/2 of the taxable benefit up to a combined $250,000 for both employee stock options and capital gains.

The inclusion rate for net capital losses carried forward and applied against capital gains will be adjusted to reflect the inclusion rate of the capital gains being offset.   

Transitional rules will apply to taxation years that begin before June 25, 2024 and end after June 24, 2024 such that capital gains realized before June 25, 2024 would be subject to the 1/2 inclusion rate and capital gains realized after June 24, 2024 (net of any losses) would be subject to a 2/3 inclusion rate. The $250,000 threshold will not be prorated for individuals in 2024 and will apply only against capital gains incurred after June 24, 2024.

Additional details will be provided in the coming months.   

Earning capital gains through a Canadian-controlled private corporation (CCPC)

In most jurisdictions, the increase in the capital gains inclusion rate makes it less attractive for individuals to earn capital gains in excess of $250,000 through a CCPC instead of directly. The  Appendix shows the resulting income tax deferral (prepayment) and the tax cost for an individual who realizes capital gains in excess of $250,000 and pays tax at the top tax rate.

> Back to top

Lifetime Capital Gains Exemption (LCGE)

The budget proposes to increase the LCGE on eligible capital gains from $1,016,836 to $1,250,000 for dispositions that occur after June 24, 2024. The indexing of the LCGE to inflation will resume in 2026.

The budget introduces the Canadian Entrepreneurs’ Incentive, which will reduce the taxes on capital gains from the disposition of shares by eligible individuals which meet the following conditions:

• at the time of the sale the share was a share of a small business corporation owned directly by an individual
• used principally in an active business carried on primarily in Canada by the CCPC or a related corporation
• certain shares or debts of connected corporations, or
• a combination of these assets
• the individual was a founding investor and the individual held the share for a period of five years prior to the disposition
• at all times since the share subscription until the time immediately before the sale, the individual directly owned shares with a fair market value (FMV) of more than 10% of the FMV of all of the issued and outstanding shares of the corporation and shares entitling the individual to more than 10% of the votes
• throughout the five year period before the disposition the individual was actively engaged in a regular, continuous and substantial basis in the activities of the business
• the share does not represent a direct or indirect interest in a professional corporation, a corporation whose principal asset is the reputation or skill of one or more employees, or a corporation that carries on certain types of businesses including a business operating in the financial, insurance, real estate, food and accommodation, arts, recreation, or entertainment sector, or providing consulting or personal care services
• the share must have been obtained for fair market value consideration

The incentive would provide a capital gains inclusion rate of one half of the prevailing inclusion rate on up to $2 million in capital gains per individual during their lifetime. The $2 million limit will be phased in over 10 years by increments of $200,000 per year reaching $2 million by January 1, 2034.  

Applying the proposed 2/3 inclusion rate would result in an inclusion rate of 1/3 for qualifying dispositions.  This will apply in addition to the LCGE.

This measure would apply to dispositions that occur after December 31, 2024.

Alternative Minimum Tax (AMT)

The 2023 budget announced amendments to change the calculation of the AMT. Draft legislative proposals were released for consultation in the summer of 2023. (For more information, see our Tax Insights “ Proposed changes to the alternative minimum tax: How will it affect individuals and trusts ”.)

The budget proposes to revise the proposed charitable donation tax credit claim to allow individuals to claim 80% when calculating AMT (as opposed to the previously proposed 50%).

The budget also proposes additional amendments to the AMT proposals including:

• allowing deductions for the Guaranteed Income Supplement, social assistance and workers compensation payments
• fully exempting employee ownership trusts (EOTs) from the AMT, and
• allowing certain disallowed credits under the AMT to be eligible for the AMT carry-forward (i.e. the federal political contribution tax credit, investment tax credits (ITCs), and labour-sponsored funds tax credit)

The amendments would apply to taxation years that begin after December 31, 2023.

The budget also proposes certain technical amendments to the AMT legislative proposals to exempt certain trusts for the benefit of Indigenous groups.

The 2023 budget proposed tax rules to create EOTs. The 2023 Fall Economic Statement proposed to exempt $10 million of capital gains on the sale of a business to an EOT subject to certain conditions.

The budget introduces the conditions for this exemption. The exemption will be available to an individual (other than a trust) on the sale of a business to an EOT where the following conditions are met:

• the individual, a personal trust of which the individual is a beneficiary, or a partnership in which the individual is a member, disposes of shares of a corporation that is not a professional corporation
• the transaction is a qualifying business transfer (as defined in the proposed rules for EOTs) in which the trust acquiring the shares is not already an EOT or a similar trust with employee beneficiaries
• throughout the 24 months immediately prior to the qualifying business transfer, the transferred shares were exclusively owned by the individual claiming the exemption, a related person, or a partnership in which the individual is a member; and over 50% of the FMV of the corporation’s assets were used principally in an active business
• at any time prior to the qualifying business transfer, the individual (or their spouse or common-law partner) has been actively engaged in the qualifying business on a regular and continuous basis for a minimum period of 24 months
• immediately after the qualifying business transfer, at least 90% of the beneficiaries of the EOT are resident in Canada

Where multiple individuals dispose of shares to an EOT as part of a qualifying transfer and meet the conditions above, they may each claim an exemption, however the total exemption in respect of the sale cannot exceed $10 million. The individuals would have to agree on the allocation of the exemption.

If an EOT has a disqualifying event within 36 months of the transfer, the exemption claim will be retroactively denied. If this occurs more than 36 months after a transfer the EOT will be deemed to realize a capital gain equal to the total exempt capital gains. A disqualifying event would result where an EOT loses its status as an EOT or if less than 50% of the FMV of the qualifying business shares is attributable to assets used principally in an active business at the beginning of two consecutive years of the corporation.

The EOT, any corporation owned by the EOT that acquired the transferred shares, and the individual will need to elect to be jointly and severally, or solitarily liable for any tax payable by the individual as a result of an exemption being denied due to a disqualifying event occurring during the first 36 months.  

For the purposes of the AMT calculation the capital gain on the transfer would be subject to an inclusion rate of 30% (consistent with the inclusion rate for capital gains eligible for the LCGE).            

An individual’s normal reassessment period as it relates to this exemption is proposed to be extended by an additional three years.

The budget also proposes to expand qualifying business transfers to include the sale of shares to a workers cooperative corporation, provided it meets certain conditions.

These measures will apply to qualifying dispositions of shares that occur between January 1, 2024 through December 31, 2026.

The budget proposes to double the volunteer firefighters tax credit and the search and rescue volunteers tax credit to $6,000 for the 2024 and subsequent taxation years; this increases the maximum annual tax savings to $900.

The budget proposes to extend the eligibility for this credit for an additional year, so that it will apply to flow-through share agreements entered into before April 1, 2025.

Canada Child Benefit (CCB)

A CCB recipient is no longer eligible to claim the CCB in respect of a child in the month following the child’s death. The budget proposes to extend eligibility for the CCB to six months after the child’s death, provided the individual continued to be eligible for the CCB.

The budget proposes to extend the list of expenses recognized for the disability supports deduction.

It also provides that expenses for service animals, as defined under the medical expense tax credit (METC) rules, will be recognized under the disability supports deduction. The individual will choose whether to claim under the METC or the disability supports deduction.

A foreign charity may register as a qualified donee for a 24-month period where it received a gift from His Majesty in right of Canada and it is pursuing certain activities in the national interest of Canada.  The budget proposes to extend the eligibility of a foreign charity to be considered a qualified donee from 24 months to 36 months.  The foreign charity would also be required to submit an annual information return to the CRA that would be made publicly available. The extension will apply to foreign charities registered after April 16, 2024. The reporting requirements will apply to taxation years beginning after April 16, 2024.        

The budget also proposes to simplify the issuance of official donation receipts by removing certain requirements.

Home Buyers’ Plan (HBP)

To help first-time home buyers, the budget proposes to:

• increase, from $35,000 to $60,000, the amount that an eligible home buyer can withdraw from their Registered Retirement Savings Plan (RRSP) under the HBP, without subjecting the withdrawal to tax, to buy or build a qualifying home (i.e. a first home or a home for a specified disabled individual), effective for the 2024 and subsequent calendar years, for withdrawals made after April 16, 2024
• temporarily extend the repayment grace period by three years, to five years, under the HBP, so that eligible home buyers who withdraw from their RRSP between January 1, 2022 and December 31, 2025 will have up to five years before they need to start repayments to their RRSP

Registered plans (RRSPs, Registered Retirement Income Funds, Tax-Free Savings Accounts, Registered Education Savings Plans, Registered Disability Savings Plans, First Home Savings Accounts, and Deferred Profit Sharing Plans) can invest only in qualified investments for those plans. Qualified investments include mutual funds, publicly traded securities, government and corporate bonds and guaranteed investment certificates. Over the years the qualified investment rules have been expanded to include additional investments for certain plans and to reflect the introduction of new types of plans, but there are inconsistencies and the qualified investment rules are difficult to understand in some cases.

Specific issues are currently under consideration. Stakeholders are invited to submit comments by July 15, 2024 as to how the qualified investment rules can be modernized on a prospective basis to improve the clarity and coherence of the registered plans regime.

Eligible tradespeople and apprentices in the construction industry are currently able to deduct up to $4,000 in eligible travel and relocation expenses per year by claiming the labour mobility deduction for tradespeople. A private member’s bill (Bill C-241) was introduced to enact an alternative deduction for certain travel expenses of tradespeople in the construction industry, with no cap on expenses, retroactive to the 2022 taxation year.

The budget announces that the government will consider bringing forward amendments to the Income Tax Act (ITA) to provide a single, harmonized deduction for tradespeople’s travel that respects the intent of Bill C-241.

The budget proposes to amend the ITA to exclude from taxation the income of the trusts established under the First Nations Child and Family Services, Jordan’s Principle, and Trout Class Settlement Agreement. This will also ensure that payments received by class members as beneficiaries of the trusts will not be included when computing income for federal income tax purposes.

This measure will apply to the 2024 and subsequent taxation years.

Business tax measures

The 2023 budget proposed a refundable ITC for clean electricity, equal to 15% of the capital cost of eligible property. The 2024 budget provides the design and implementation details of the ITC, including the eligibility criteria. It also includes special rules for property that generates electricity from natural gas with carbon capture and property used to transmit electrical energy between provinces or territories, as well as details of the compliance and recovery process.

The ITC will be available only to eligible Canadian corporations, which are defined as:

• taxable Canadian corporations and pension investment corporations
• provincial and territorial Crown corporations (subject to additional requirements)
• corporations owned by municipalities or Indigenous communities

Property eligible for the ITC includes equipment used to generate electricity from:

• solar, wind or water energy (certain class 43.1 property, but hydroelectric installations would not be subject to a capacity limit)
• concentrated solar energy (as defined for the purposes of the proposed clean technology ITC)
• nuclear fission, including heat generating equipment (as defined for the purposes of the proposed clean technology ITC, without the generating capacity limits and other certain requirements of that credit)
• geothermal energy, including heat generating equipment, if it is used exclusively for that purpose (excluding equipment that is part of a system that extracts fossil fuel for sale)
• specified waste materials, as part of a system

Eligible property also includes equipment that is:

• stationary electricity storage equipment and equipment used for pumped hydroelectric energy storage (excluding any that uses a fossil fuel in operation)
• part of an eligible natural gas energy system (special rules apply)
• used for transmission of electricity between provinces and territories (special rules apply)

Previously proposed labour requirements must be met to qualify for the 15% ITC, otherwise a 5% ITC is available. The ITC will be subject to potential repayment obligations, repayable in proportion to the FMV of the particular property when it has been converted to an ineligible use, exported from Canada, or disposed of.

The ITC will be available for new eligible property (i.e. has not been used for any purposes before its acquisition) that is acquired and becomes available for use after April 15, 2024 and before 2035 in respect of projects that did not begin construction before March 28, 2023.

The budget introduces the EV supply chain ITC, equal to 10% of the cost of buildings used in Canada in the following electric vehicle supply chain segments:

• electric vehicle assembly
• electric vehicle battery production
• cathode active material production

To qualify for the ITC, the taxpayer (or member of a group of related taxpayers) must claim the clean technology manufacturing ITC (CTMITC) in all three of the segments (or must claim the CTMITC in two of the three segments and hold at least a qualifying minority interest in an unrelated corporation that claims the CTMITC in the third segment – the building costs of the unrelated corporation would also qualify for the new ITC).

The ITC is effective for property that is acquired and becomes available for use after December 31, 2023. The ITC will be reduced to 5% for 2033 and 2034 and 0% after 2034. Design and implementation details of the ITC will be provided in the 2024 Fall Economic Statement.

The 2023 budget proposed a clean technology manufacturing ITC, and draft legislative proposals were released in December 2023. The 2024 budget proposes to update the clean technology manufacturing ITC for production of qualifying minerals (such as copper, nickel, cobalt, lithium, graphite and rate earth elements) that occur at polymetallic projects (i.e. projects engaged in the production of multiple minerals) by:

• clarifying that the value of qualifying materials will be used as the appropriate output metric when assessing the extent to which property is used (or expected to be used) for qualifying mineral activities producing qualifying materials
• modifying eligible expenditures to include investments in eligible property used in qualifying mineral activities that are expected to produce primarily qualifying materials at mine or well sites, including tailing ponds and mills located at these sites (50% or more of the financial value of the output comes from qualifying materials)

A safe harbour rule will apply to the recapture rule for all qualifying mineral activities, to mitigate against the effects of mineral price volatility on the potential recapture of the ITC, the details of which will be provided at a later date.

Accelerated Capital Cost Allowance (CCA)

Purpose-built rental housing.

The budget provides an accelerated CCA of 10% for new eligible purpose-built rental projects that begin construction after April 15, 2024 and before January 1, 2031, and are available for use before January 1, 2036.

Eligible property will be new purpose-built rental housing that is a residential complex:

• with at least four private apartment units, or 10 private rooms or suites, and
• in which at least 90% of residential units are held for long-term rental

The Accelerated Investment Incentive (AII), which suspends the half-year rule, will continue to apply to eligible property put in use before 2028. The accelerated CCA will not apply to renovations of existing residential complexes, but new additions to an existing structure will be eligible. Projects that convert existing non-residential real estate into a residential complex will be eligible.

Productivity-enhancing assets

The budget provides immediate expensing (i.e. a 100% first-year CCA deduction) for property that is acquired after April 15, 2024 and becomes available for use before January 1, 2027, for the following CCA classes of assets:

• class 44 (patents or rights to use patented information for a limited or unlimited period)
• class 46 (data network infrastructure equipment and related systems software)
• class 50 (general-purpose electronic data-processing equipment and systems software)

The accelerated CCA will be available only for the year in which the property becomes available for use. For a short taxation year, the accelerated CCA must be prorated and will not be available in the following taxation year. Property that becomes available for use after 2026 and before 2028 will continue to benefit from the AII.

Property that has been used (or acquired for use) for any purpose before it is acquired by the taxpayer will be eligible for the accelerated CCA only if both of the following conditions are met:

• neither the taxpayer nor a non-arm’s length person previously owned the property, and
• the property has not been transferred to the taxpayer on a tax-deferred “rollover” basis

The excessive interest and financing expenses limitation (EIFEL) rules restrict a Canadian taxpayer’s deductions for interest and financing expenses, based upon a percentage of its “tax-EBITDA” (i.e. its taxable income, adjusted for items such as interest expenses, depreciation and amortization). For a discussion of the EIFEL rules, see our  Tax Insights “ Bill C-59 ─ Excessive interest and financing expenses limitation (EIFEL) regime .” The EIFEL rules currently include a single sector-specific exemption, for certain interest and financing expenses relating to public-private partnership (P3) infrastructure projects. The budget proposes to extend this election, on an elective basis, for certain interest and financing expenses relating to arm’s length financing that is used to build or acquire certain purpose-built rental housing located in Canada. This exemption will be effective for taxation years beginning after September 30, 2023, consistent with the EIFEL rules more generally. However, this exemption will be available only for expenses incurred before January 1, 2036.

The government is concerned that some landowners are holding residentially zoned vacant land as a speculative investment. The budget announces that the government will consider introducing a new tax on residentially zoned vacant land to spur development. The government will launch consultations later this year.

In March 2024, the government began consultations on how federal policies can better support the needs of all Canadians seeking to become homeowners. The government will provide an update in the 2024 Fall Economic Statement.

The budget announces the government’s intention to restrict the acquisition of existing single-family homes by very large corporate investors. The government will consult in the coming months and provide further details in the 2024 Fall Economic Statement.

The budget announces that the government is exploring new measures to expand access to alternative financing products for home purchasers, such as halal mortgages. These measures could include changes in the tax treatment of these products or a new regulatory regime for financial service providers, while ensuring adequate consumer protections are in place.

The budget proposes several amendments to the CRA’s information gathering provisions in the ITA, with the intent of enhancing the efficiency and effectiveness of tax audits and facilitating the collection of tax revenues on a timelier basis. These changes include:

• allowing the CRA to issue a new type of notice, referred to as a “notice of non-compliance” and to levy a monetary penalty
• permitting the CRA to specify that any required information (oral or written) or documents be provided under oath or affirmation
• imposing a penalty when the CRA obtains a compliance order against a taxpayer, and
• extending the stop the clock rules (which suspend the counting of days in the assessment limitation period), so that these rules apply when a taxpayer seeks judicial review of any requirement or notice issued to the taxpayer by the CRA in relation to the audit and enforcement process, and during any period that a notice of non-compliance is outstanding

Analogous amendments are also proposed to other federal tax statutes administered by the CRA. The budget also proposes certain technical amendments to ensure the rules meet their policy objectives.

These amendments would come into force upon royal assent of the enacting legislation.

The ITA allows a corporation to deduct the amount of any dividends received on a share of a corporation resident in Canada, subject to certain limitations.

One of these limitations is an anti-avoidance rule that denies the dividend received deduction in connection with synthetic equity arrangements. Synthetic equity arrangements include arrangements in which a person receives a dividend on a share, but all or substantially all of the risk of loss and opportunity for gain or profit (the “economic exposure”) in respect of the share are provided to another person.

Where a taxpayer enters into a synthetic equity arrangement in respect of a share, the taxpayer is generally obligated to compensate the other person for the amount of any dividends paid on the share. This compensation payment may result in a tax deduction for the taxpayer in addition to the dividend received deduction. Unless the anti-avoidance rule applies to deny the dividend received deduction, a tax loss would generally arise as a result of the two deductions.

The anti-avoidance rule incorporates certain exceptions, including where the taxpayer establishes that no tax-indifferent investor has all or substantially all of the economic exposure in respect of the share. An associated exception is also available for synthetic equity arrangements traded on a derivatives exchange.

The budget proposes to remove the tax-indifferent investor exception (including the exchange traded exception) to the anti-avoidance rule. This measure would prevent taxpayers from claiming the dividend received deduction for dividends received on a share in respect of which there is a synthetic equity arrangement.

This measure would apply to dividends received after December 31, 2024.

A mutual fund is a type of investment vehicle that allows investors to pool their money and invest in a portfolio of investments without purchasing the investments directly. A mutual fund corporation is a mutual fund organized as a corporation that meets certain conditions set out in the ITA.

The ITA includes special rules for mutual fund corporations that facilitate conduit treatment for investors (shareholders). For example, these rules generally allow capital gains realized by a mutual fund corporation to be treated as capital gains realized by its investors. In addition, a mutual fund corporation is not subject to mark-to-market taxation and can elect capital gains treatment on the disposition of Canadian securities.

To qualify as a mutual fund corporation under the ITA, a corporation must satisfy several conditions, including that it must be a “public corporation”. A corporation can meet this condition if a class of its shares is listed on a designated stock exchange in Canada. A corporation that is controlled by a corporate group may satisfy this condition, and qualify as a mutual fund corporation, even though it is not widely held. The government is concerned that this could allow a corporate group to use a mutual fund corporation to benefit from the special rules available to these corporations in an unintended manner.

Although the government believes this planning can be challenged based on existing rules in the ITA, the budget proposes specific amendments to the ITA to preclude a corporation from qualifying as a mutual fund corporation where it is controlled by or for the benefit of a corporate group (including a corporate group that consists of any combination of corporations, individuals, trusts, and partnerships that do not deal with each other at arm’s length). Exceptions would be provided to ensure that the measure does not adversely affect mutual fund corporations that are widely held pooled investment vehicles.

This measure would apply to taxation years that begin after 2024.

The budget introduces the Canada Carbon Rebate for Small Business, to return a portion of the federal backstop pollution pricing fuel charge proceeds collected from a province. This will be an automatic refundable tax credit for CCPCs with less than 500 employees in Canada in the calendar year in which the fuel charge begins. The tax credit in respect of the 2019-20 to 2023-24 fuel charge years will be available to a CCPC that files a tax return for its 2023 taxation year by July 15, 2024 (with similar timelines for future fuel charge years).

The tax credit amount:

• is determined for each applicable province in which the eligible corporation had employees in the calendar year in which the fuel charge year begins; and
• is equal to the number of persons employed by the eligible corporation in the province in that calendar year multiplied by a payment rate specified by the Minister of Finance for the province for the corresponding fuel charge year

The ITA includes an anti-avoidance rule that is intended to prevent taxpayers from avoiding payment of their tax liabilities by transferring their assets to non-arm’s length persons. The effect of this tax debt avoidance rule is to make the transferee jointly and severally, or solidarily, liable with the transferor for the transferor’s tax debts, to the extent that the value of the property transferred exceeds the amount of consideration given by the transferee for the property.

The ITA contains a number of rules that address various planning techniques employed by taxpayers attempting to circumvent the tax debt avoidance rule, as well as a penalty for those who engage in, participate in, assent to, or acquiesce in planning activity that they know, or would reasonably be expected to know, is tax debt avoidance planning.

The budget includes a new specific measure to address tax debt avoidance planning (although the government believes this planning can also be challenged based on existing rules in the ITA). The measure would apply in the following circumstances:

• there has been a transfer of property from a tax debtor to another person
• as part of the same transaction or series of transactions, there has been a separate transfer of property from a person other than the tax debtor to a transferee that does not deal at arm’s length with the tax debtor, and
• one of the purposes of the transaction or series is to avoid joint and several, or solidary, liability

Where these conditions are met, the property transferred by the tax debtor would be deemed to have been transferred to the transferee for the purposes of the tax debt avoidance rule. This would ensure that the tax debt avoidance rule applies in situations where property has been transferred from a tax debtor to a person and, as part of the same transaction or series, property has been received by a non-arm’s length person. The penalty applicable to those who participate in tax debt avoidance planning would also be extended to this proposed new rule.

In many cases, tax debt avoidance planning is facilitated by a planner who receives a significant fee, which is effectively funded by a portion of the avoided tax debt. The courts have held that a taxpayer who engages in tax debt avoidance planning is normally not jointly and severally, or solidarily, liable for the portion of the tax debt that has effectively been retained by the planner as a fee. The budget proposes that taxpayers who participate in tax debt avoidance planning be jointly and severally, or solidarily, liable for the full amount of the avoided tax debt, including any portion that has effectively been retained by the planner.

Similar amendments would be made to comparable provisions in other federal statutes.

These measures would apply to transactions or series of transactions that occur after April 15, 2024.

The ITA includes a general rule providing that a person who fails to file or make a return or comply with certain specified rules is guilty of an offence, and liable to penalties of up to $25,000 and imprisonment for up to a year. The mandatory disclosure rules in the ITA also include specific penalties that apply in these circumstances, making the application of this general penalty provision unnecessary.

The budget therefore proposes to remove from the scope of the general penalty provision the failure to file an information return in respect of a reportable or notifiable transaction under the mandatory disclosure rules.

This amendment would be deemed to have come into force on June 22, 2023, which is the day the enhanced mandatory disclosure rules received royal assent.

Under the ITA, losses and other tax attributes that arise from expenditures for which a taxpayer did not ultimately bear the cost are generally not recognized. The ITA contains a set of debt forgiveness rules that apply where a commercial debt is settled for less than its principal amount. These rules generally reduce tax attributes by the amount of debt that is forgiven and, where tax attributes have been fully reduced, the rules cause an income inclusion equal to half of the remaining forgiven amount. The ITA also contains a rule that entitles an insolvent corporation to a corresponding deduction to offset all or part of an income inclusion from the debt forgiveness rules.

Bankrupt taxpayers are generally excluded from these debt forgiveness rules. Instead, a separate loss restriction rule applies to extinguish the losses of bankrupt corporations that have received an absolute order of discharge.

The government is concerned that some taxpayers have sought to manipulate the bankrupt status of an insolvent corporation, with a view to benefiting from the exception in the debt forgiveness rules while also avoiding the loss restriction rule applicable to bankrupt corporations. This planning seeks to preserve the losses and other tax attributes of the insolvent corporation (which would otherwise be eliminated upon the forgiveness of its debts), so that these attributes can be acquired and used by a profitable corporation. This planning is the subject of a designated transaction under the notifiable transactions element of the mandatory disclosure rules.

Although the government believes that manipulation of bankrupt status can be challenged based on existing rules in the ITA, the budget proposes a specific legislative measure to address this issue: repealing the exception to the debt forgiveness rules for bankrupt corporations and the loss restriction rule applicable to bankrupt corporations. This change would subject bankrupt corporations to the general rules that apply to other corporations whose commercial debts are forgiven. The bankruptcy exception to the debt forgiveness rules would remain in place for individuals. While bankrupt corporations would be subject to the reduction of their loss carryforward balances and other tax attributes upon debt forgiveness, as insolvent corporations they could qualify for relief from the debt forgiveness income inclusion rule provided under the existing deduction for insolvent corporations.

These proposals would apply to bankruptcy proceedings that are commenced on or after April 16, 2024.

Scientific Research and Experimental Development (SR&ED)

The government launched a consultation on the existing SR&ED tax incentives on January 31, 2024, which closed on April 15, 2024. The budget announces a second phase of consultations, to focus on specific policy parameters, explore how Canadian public companies could become eligible for the enhanced SR&ED ITC and inform how additional funding announced by the budget can support future enhancements to the SR&ED program. Further details of the consultation will be released on the Department of Finance Canada website at a later date.

International tax measures

The Organisation for Economic Co-operation and Development (OECD) has developed a framework for the automatic exchange of tax information relating to transactions in crypto-assets, the Crypto-Asset Reporting Framework (CARF). The budget proposes to implement the CARF in Canada. The new reporting rules will apply to crypto-asset service providers that are resident in Canada, or carry on business in Canada, and that provide services effectuating exchange transactions in crypto-assets. These service providers will need to report certain information regarding their customers and crypto-asset transactions. The budget also includes proposed amendments to the Canadian rules implementing the OECD’s Common Reporting Standard, including changes relating to electronic money products and central bank digital currencies. These measures will apply to 2026 and subsequent calendar years.

A person who makes a payment to a non-resident for services rendered in Canada is currently required to withhold 15% of the payment and remit that amount to the CRA. This is intended to serve as a prepayment of tax that the non-resident may ultimately owe in Canada. Certain non-residents do not owe Canadian tax for these services, e.g. due to exemptions in tax treaties, or exemptions for specific activities like international shipping. In these circumstances, the CRA may provide an advance waiver from the withholding obligation for specific transactions, or the non-residents may apply for refunds of amounts that have already been withheld. The budget proposes to give the CRA legislative authority to grant single waivers that cover multiple transactions occurring over a specific time period, where certain conditions are satisfied. This measure will take effect upon royal assent of the enacting legislation.

The OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting has developed a two-pillar plan to reform the international tax system, as part of the “BEPS 2.0” initiative. On October 8, 2021, Canada and 135 other countries in the Inclusive Framework committed to adopt this plan (for a discussion on that commitment, see our  Tax Insights  “ The new international tax framework and Canada’s digital services tax ”). The budget provides an update on the two pillars of this international tax reform initiative.

Pillar One will introduce new rules for allocating taxing rights between countries to address challenges raised by the digital economy. These rules will generally apply to multinational enterprises (MNEs) with annual revenue above €20 billion and profit margins above 10%. The right to tax a portion of these MNEs’ profits will be reallocated to market countries (i.e. the countries where the MNEs’ users and customers are located).

The budget reaffirms Canada’s commitment to bringing Pillar One into effect as soon as a critical mass of countries is willing to participate. In the meantime, Canada is moving ahead with its plan to enact the Digital Services Tax (DST). Implementing legislation for the DST is currently before Parliament in Bill C-59. The DST will take effect beginning in calendar year 2024, with the first year covering taxable revenues earned since January 1, 2022. (For a discussion of the DST, see our  Tax Insights  “ Digital Services Tax: One step closer to becoming a reality .”)

Pillar Two will introduce a 15% global minimum tax. This tax will generally apply to MNEs with global revenues of at least €750 million. These MNEs will be required to compute their effective tax rate (ETR) in each country where they operate. If the ETR for a particular country is below 15%, a top-up tax will be imposed, to raise that ETR to 15% (this top-up tax may be reduced by a substance-based income exclusion, which is computed based on the payroll costs and net book value of tangible assets located in the jurisdiction). Draft legislative proposals for a Global Minimum Tax Act to implement the Pillar Two regime in Canada were released for public comment in August 2023 (for a discussion of those proposals, see our  Tax Insights  “ Canada releases draft Global Minimum Tax Act ”). The budget states that Canada is moving forward with this implementing legislation and intends to introduce it in Parliament soon.

Sales tax measures

Extending goods and services tax (gst) relief to student residences.

On September 14, 2023, the government announced that it would temporarily remove the GST from new purpose-built rental housing projects (i.e. apartment buildings, student housing and senior residences built specifically for long-term rental accommodation) by implementing an Enhanced (100%) GST Rental Rebate for new qualifying purpose-built rental housing projects (for more information, see our  Tax Insights  “ Enhanced GST rental rebate for rental apartments that begin construction after September 13, 2023 ").

To ensure that universities, public colleges and school authorities can also claim the Enhanced (100%) GST Rental Rebate for student residences that are built for short-term use, the budget proposes to amend the  Excise Tax Act  to allow them to apply the normal GST/Harmonized sales tax (HST) rules that apply to other builders (i.e. paying GST/HST on the final value of the building) in respect of new student housing projects.

The budget also proposes to relax the rebate conditions so that universities, public colleges and school authorities that operate on a not-for-profit basis (i.e. those that would currently qualify for the Public Service Body rebates under the GST/HST) can claim the 100% rebate in respect of any new student residence that they acquire or construct provided it is primarily for the purpose of providing a place of residence for their students.

The proposed measures would apply to student residences that begin construction after September 13, 2023 and before 2031, and that complete construction before 2036.

The budget proposes to repeal the temporary zero rating of certain face masks or respirators and certain face shields under the GST/HST for supplies made after April 30, 2024.

Previously Announced Measures

The budget confirms that the government will proceed with the following previously announced measures, as modified to take into account consultations, deliberations and legislative developments since their announcement or release:

• legislative proposals released on December 20, 2023, which include measures relating to the clean hydrogen ITC, the clean technology manufacturing ITC, concessional loans and short-term rentals
• legislative and regulatory proposals announced in the 2023 Fall Economic Statement, which include measures relating to the Canadian journalism labour tax credit, the expansion of eligibility for the clean technology and clean electricity ITC, the GST/HST joint venture election rules and the Underused Housing Tax
• legislative and regulatory amendments to implement the Enhanced (100%) GST Rental Rebate for purpose-built rental housing announced on September 14, 2023
• the carbon capture, utilization and storage and the clean technology ITCs and labour requirements related to certain “clean economy” ITCs
• enhancing the reduced tax rates for zero-emission technology manufacturers
• flow-through shares and the critical mineral exploration tax credit – lithium from brines
• Retirement Compensation Arrangements
• strengthening the Intergenerational Business Transfer framework
• the income tax and GST/HST treatment of credit unions
• a tax on repurchases of equity
• modernizing the General Anti-Avoidance Rule
• global minimum tax and DST
• technical amendments to GST/HST rules for financial institutions
• providing relief in relation to the GST/HST treatment of payment card clearing services
• extending the quarterly duty remittance option to all licensed cannabis producers
• revised Luxury Tax draft regulations to provide greater clarity on the tax treatment of luxury items
• technical tax amendments to the ITA and the Income Tax Regulations
• legislative amendments to implement changes discussed in the transfer pricing consultation paper released on June 6, 2023
• tax measures announced in the 2023 budget, including the dividend received deduction by financial institutions
• substantive CCPCs
• technical amendments to the ITA and Income Tax Regulations
• legislative amendments to implement the hybrid mismatch arrangements rules announced in the 2021 budget

The budget also reaffirms the government’s commitment to move forward, as required, with technical amendments to improve the certainty and integrity of the tax system.

Integration – Capital gains ($)

(taxation year ended December 31, 2024, and $10,000 of capital gains earned after June 24, 2024)

This table shows:

• the income tax deferral (prepayment) if capital gains in excess of $250,000 are earned and retained in a corporation as opposed to being earned directly by an individual
• the tax (cost) if the after-tax corporate income is paid out as a dividend to the shareholder in 2024

The table assumes:

• the individual is in the top marginal tax rate
• no capital gains deductions are available
• the non-taxable portion of the capital gain is distributed as a tax-free capital dividend
• the taxable dividend paid is sufficient to generate a full refund of refundable tax 

Download a PDF

Tax Insights: 2024 Federal budget ─ Supporting housing, raising taxes

Dean Landry

National Tax Leader, PwC Canada

Tel: +1 416 815 5090

© 2018 - 2024 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.

• Cookies info
• Terms & Conditions
• Site Provider
• Accessibility