FEDERAL BUDGET SUMMARY – 2019
Budget 2019 also proposes relief from Canadian withholding tax where the
dividend compensation payment by the Canadian taxpayer is related to fully
collateralized securities lending arrangements with regards to a foreign share that
was lent to the Canadian taxpayer.
The proposed amendment will apply to dividend compensation payments that are
made on or after March 19, 2019.
D. Indirect Tax Measures
Under the Excise Tax Act, cannabis products are subject to an excise duty at the
higher of a flat rate applied to the quantity of cannabis contained in a final
product and a percentage of dutiable amount of a product sold by the producer.
Budget 2019 proposes to apply excise duty at a flat rate of $0.01 per milligram of
tetrahydrocannabinol (THC) in edible cannabis, cannabis extracts (including
cannabis oils) and cannabis topicals. The measure will alleviate compliance issues
relating to the tracking of cannabis materials in the edibles, extracts and topicals.
The proposed duty would be split 75: 25 between the provinces / territories and
the federal government. However, if provinces and territories have requested a
sales tax adjustment to existing Coordinated Cannabis Taxation Agreements
(CCTA’s), the adjustment will continue to be computed as a percentage of dutiable
This measure will take effect on May 1, 2019, except for any products packaged
for final retail sale prior to that date.
E. Scientific Research and Experimental Development
Currently CCPCs are able to generate refundable tax credits of 35 percent on up to
$3 million of qualifying SR&ED expenditures annually. The expenditure limit is
gradually phased out based on two factors which apply in respect of associated
• Where taxable income for the previous year is between $500,000 and
• Where taxable capital employed in Canada for the previous year is
between $10 million and $50 million.