C-32314264-65Elizabeth II2015-2016An Act to amend the Income Tax Act (rehabilitation of historic property)An Act to amend the Income Tax Act (rehabilitation of historic property)201612

1

Mr. Van Loan421247

SUMMARYThis enactment amends the Income Tax Act to establish a tax credit for expenses related to the rehabilitation of a historic property. It also establishes a tax deduction for the capital cost of property used in the course of such a rehabilitation.

R.S., c. 1 (5th Supp.)Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:

1The Income Tax Act is amended by adding the following after section 127:

Definitions127.01(1)The following definitions apply in this section and in section 127.02.conservation standards means the standards and guidelines for the conservation of historic places in Canada adopted and applied by the Parks Canada Agency. (normes de conservation)historic property means a building or other place that is (a)commemorated or marked as a historic place under section 3 of the Historic Sites and Monuments Act;(b)designated as a heritage or historic site or property under the laws of a province that the Minister, in consultation with the Minister responsible for the Parks Canada Agency, designates as having a purpose similar to that of the Historic Sites and Monuments Act; or(c)listed on the Canadian Register of Historic Places, as administered by the Parks Canada Agency. (propriété historique)rehabilitation expenses means the costs incurred by a taxpayer in a particular taxation year in the course of rehabilitating a historic property that are(a)construction costs,(b)professional fees,(c)insurance costs,(d)development fees,(e)administrative costs,(f)site improvement costs related to the character-defining elements of the property, or(g)prescribed costs,but does not include costs for the acquisition of the historic property, costs to furnish it or costs incurred solely for aesthetic or cosmetic purposes. (frais de réhabilitation)rehabilitation tax credit, in respect of a historic property for a taxation year, means the amount not exceeding 20% of the amount, if any, by which(a)a taxpayer’s rehabilitation expenses for the year exceeds(b)any amount of government assistance, as defined in subsection 127(9), that, at the time of the filing of the taxpayer’s return of income for the taxation year, the taxpayer has received, is entitled to receive or can reasonably be expected to receive, in respect of the rehabilitation expenses for the historic property, in the taxation year. (crédit d’impôt pour la réhabilitation)unused portion, in respect of a historic property for a taxation year, is the amount determined by the formulaA - BwhereAis the amount of the rehabilitation tax credit that the taxpayer was entitled to deduct for the previous taxation year; andBis the amount of the rehabilitation tax credit that the taxpayer deducted in that taxation year (fraction inutilisée)Deduction(2)A taxpayer may, in respect of a historic property that they own, deduct from the tax for the year otherwise payable under this Part an amount not exceeding the total of the rehabilitation tax credit for the taxation year and any unused portion if an architect authorized to practise the profession of architect in Canada certifies that the rehabilitation of the historic property was carried out in accordance with conservation standards.Limitation(3)No amount may be deducted under subsection (2) for a taxation year that begins more than 10 years after the first taxation year for which the taxpayer deducted an amount for the rehabilitation tax credit in respect of the historic property.

Capital cost — rehabilitation of historic property127.02(1)In computing a taxpayer’s income for a taxation year, there may be deducted a portion of the capital cost to the taxpayer of property used in the course of rehabilitating a historic property for which the taxpayer may deduct an amount for the rehabilitation tax credit under section 127.01 if(a)no amount is deducted by the taxpayer in relation to the property under paragraph 20(1)(a); and(b)the taxpayer did not receive assistance, whether as a grant, subsidy, forgivable loan, deduction from tax, investment allowance or as any other form of assist­ance, from a government, municipality or other public authority in respect of, or for the acquisition of, the property.Amount(2)The amount that may be deducted under subsection (1) must not exceed the following percentage of the capital cost of the property for the taxation year in which the property was used by the taxpayer for the rehabilitation:(a)25% for the first taxation year;(b)50% for the second taxation year; and(c)25% for the third taxation year.

Application2(1)Sections 127.01 and 127.02 of the Income Tax Act, as enacted by section 1 of this Act, apply to taxation years that begin on or after January 1 of the year following the year in which this Act receives royal assent.(2)For the first taxation year to which subsection 127.01(1) of the Income Tax Act, as enacted by section 1 of this Act, applies, the reference to “in a particular taxation year”, in the definition rehabilitation expenses in that subsection, is to be read as “in a particular taxation year and in the previous taxation year”.