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Principal Changes for 2023 in the Partnership Information Return

The principal changes to the Partnership Information Return (form TP-600-V) for 2023 are listed below.

Elimination of flow-through share regime for oil, gas and coal activities

If a partnership holds flow-through shares, directly or through another partnership, any member of the partnership that is an individual or a corporation can request a deduction in calculating its income for a taxation year for its share in the Canadian exploration and development expenses allocated to it by the partnership that were renounced by a development corporation in favour of the partnership.

As well, an individual or a corporation that is a member of a partnership that holds such shares can, where applicable, make additional deductions in calculating its income for a taxation year, particularly if exploration expenses are incurred in Québec.

A development corporation can no longer renounce Canadian oil, gas and coal exploration and development expenses for the benefit of a holder of flow-through shares for a flow-through share agreement that it entered into after March 31, 2023.

Modification to the tax credit relating to resources

If, in a fiscal period, a partnership has an establishment in Québec, carries on a business there and incurs eligible expenses, any qualified corporation that is a member of the partnership can claim the tax credit relating to resources for its share of the partnership's eligible expenses for the taxation year in which the partnership's fiscal period ends.

Eligible expenses for a fiscal period are all expenses the partnership incurred in that period that are attributable to:

  • certain Canadian exploration expenses incurred in Québec that are related to mineral, petroleum and gas resources, and certain Canadian development expenses incurred in Québec;
  • certain expenses relating to natural resources (granite, sandstone, limestone, marble and slate), where the resources are used for the production of dimension stones, cemetery monuments, building stones, paving stones, curbing or roof tiles; and
  • Canadian renewable and conservation expenses that are incurred in Québec.

Expenses related to petroleum, gas and coal that a partnership incurs after March 31, 2023, no longer give entitlement to the tax credit relating to resources.

For further information, refer to the form Crédit d'impôt relatif aux ressources (CO-1029.8.36.EM) and to the page Crédit d'impôt relatif aux ressources (in French only).

Tax credit for the retention of persons with a severely limited capacity for employment

If, in a fiscal period, a qualified partnership paid employer contributions in respect of eligible employees for a calendar year ending in that period, any qualified corporation that is a member of the partnership can claim the tax credit for the retention of persons with a severely limited capacity for employment in respect of its contributions for its taxation year in which the partnership's fiscal period ends. Each qualified corporation can claim the tax credit based on its percentage interest in the partnership.

The term “eligible employee” means, for a given fiscal period, a person with a severe and prolonged impairment in mental or physical functions.

Under the new Basic Income Program, an eligible employee of a qualified partnership may also be, for a given fiscal period, an employee in respect of whom the Minister Responsible for Social Solidarity and Community Action issued a certificate attesting that the employee received an allowance under this program during the calendar year in question or during the previous five calendar years.

This measure applies to a qualified corporation that is a member of a qualified partnership whose fiscal period ends in the corporation's taxation year and after December 30, 2023, in respect of employer contributions the partnership paid for a calendar year after 2022.

For further information, refer to the form Crédit d'impôt pour le maintien en emploi des personnes ayant des contraintes sévères à l'emploi (CO-1029.8.33.CS) and the page Crédit d'impôt pour le maintien en emploi des personnes ayant des contraintes sévères à l'emploi (in French only).

Addition of CCA classes 57, 58, 59 and 60 – carbon capture, utilization and storage

Carbon capture, utilization and storage (CCUS) are a suite of technologies that capture carbon dioxide (CO2) emissions in the air or from the burning of fuel and industrial processes, either to store the CO2 (usually deep underground) or for use in industry. A CCUS project can give entitlement to the federal investment tax credit for carbon capture, utilization and storage.

The property used in a CCUS project falls under classes 57 to 60 for which CCA can be claimed at the following rates:

  • 8%, if included in class 57;
  • 20%, if included in class 58;
  • 100% if included in class 59;
  • 30%, if included in class 60.

These new classes came into effect on January 1, 2022.

Flipping residential property

Since January 1, 2023, the profit from flipping a residential property (including rental property or a purchase option) that a partnership held for fewer than 365 consecutive days is considered fully taxable business income. A member of a partnership that held such a property is therefore not eligible for the 50% capital gains inclusion rate.

Some exceptions may apply, as in the case of an involuntary disposition.

Even if the new rule does not apply due to an exception or because the partnership held the property more than 365 consecutive days, the profit may still be fully taxable if it is determined that it is business income or a capital gain.

This change applies to residential property sold on or after January 1, 2023.

For further information, refer to the page Flipping Your Property (Home or Residential Complex).

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