The Government of Canada is today launching consultations to advance measures, including Budget 2023 and Budget 2022 commitments, which will protect Canadian consumers by cracking down on predatory lenders faster and reviewing the legislation that regulates Canada's financial institutions, and to support Canada's growing clean economy. The government is also consulting Indigenous organizations and governments on exempting Indigenous Settlement Trusts from the Alternative Minimum Tax.
Canadians and stakeholders are invited to share their views and feedback as the government works towards implementation in the coming months.
The Department of Finance is consulting Canadians on and moving forward with the following:
Measures to Protect Canadian Consumers
- Cracking Down on Predatory Lending Faster: To protect the most vulnerable Canadians, the government announced in Budget 2023 that it is cracking down on predatory lending by lowering the criminal rate of interest from 47 per cent APR to 35 per cent APR. Through today's new consultation, the government is exploring how much further the criminal rate of interest should be lowered, increasing access to low-cost, small-value credit, as well as additional revisions to the payday lending exemption. The government is seeking feedback on key questions by November 30, 2023.
- Upholding the Integrity of Canada's Financial Sector: To help address the challenges Canadians face in accessing financial services, as announced in Budget 2022, and required by statute, the government is launching consultations on the federally regulated financial institutions (FRFI) statutes. The government is seeking feedback by December 4, 2023, on key questions including whether technological and geopolitical changes are affecting the financial sector, and whether technical changes are required to protect consumers, national security, and the safety and integrity of Canada's financial sector. The most recent review was completed in 2018.
Measures to Support Canada's Growing Clean Economy
- Defending Canadian Businesses Against Foreign Tax Credit Restrictions: To help Canadian businesses and their workers thrive in the clean economy, as committed in Budget 2023, the government is consulting on the possibility of introducing reciprocal treatment for Canada's Clean Electricity Investment Tax Credit and Clean Technology Investment Tax Credit, in light of domestic content restrictions associated with certain tax credits introduced by some foreign countries. To ensure foreign businesses operating in Canada face the same tax treatment as Canadian businesses do abroad, the government invites views by November 17, 2023, on key questions regarding proposals to match other countries' clean economy tax credit domestic content restrictions.
- Carbon Contracts for Difference: The government is also undertaking targeted consultations to advance its Budget 2023 commitment to engage with stakeholders on a potential broad-based approach to carbon contracts for difference. Such contracts could help make carbon pricing more predictable, thereby enabling investment decisions that build a more competitive clean economy in Canada.
- Labour Requirements for Investment Tax Credits: To protect jobs and ensure workers today and tomorrow benefit from the government's significant investments in the clean economy, the government has announced robust labour requirements for the Investment Tax Credits for Clean Technology, Clean Hydrogen, Clean Electricity, and Carbon Capture, Utilization, and Storage. Meeting these labour requirements, which include paying prevailing wages and creating apprenticeship opportunities, will offer clean economy employers higher incentive rates for the above tax credits. To allow for additional due diligence as these tax credits are finalized, the government today confirms the effective date for the labour requirements will be the date enabling legislation for these labour requirements is first tabled.
Exempting Indigenous Settlement Trusts from Alternative Minimum Tax
- Following the government's previous consultation on reforming the Alternative Minimum Tax (AMT), which will ensure the wealthiest Canadians pay their fair share, the government is considering exempting Indigenous settlement claim trusts to ensure they are not unintentionally affected by the AMT.
Specifically, the revised AMT would not apply to trusts established to hold funds paid pursuant to a settlement agreement between the Crown and an Indigenous organization, community, or people who hold rights under s.35 of the Constitution Act, 1982. Indigenous governments and organizations, and all Canadians, are invited to share their views on this proposal by October 30, 2023.
