Bill C-31 Second Act Implementing Provisions in Budget Tabled 2025

Bill C-31 A Second Act to Implement Certain Provisions of the Budget Tabled in Parliament on November 4, 2025

Short Title:  Budget 2025 Implementation Act, No. 2

Bill Type:  House Government Bill

Bill Sponsor:  Minister of Finance and National Revenue

Status: At consideration in committee in the House of Commons

Latest activity: Pre-study of House Bill on Wednesday, June 10, 2026 (Senate)

Estimated Read Time:  18 minutes

PART 1 — Income Tax Act and Income Tax Regulations (Sections 1–143)

• Temporary immediate expensing — manufacturing/processing buildings: 100% write-off in year of acquisition for eligible manufacturing or processing buildings, phasing down after 2029. Effective November 4, 2025
• Temporary immediate expensing — eligible greenhouses: Same 100% write-off for eligible greenhouse buildings, phasing down after 2029. Effective November 4, 2025
• Automatic Federal benefits for lower-income individuals (new s. 150(1.5)): Minister can file a return on behalf of eligible lower-income individuals who haven't filed — deemed filed unless individual corrects within 90 days. Applies to 2025 and subsequent tax years
• Anti-avoidance — trust-to-trust transfers: Rule expanded to cover indirect transfers of trust property to other trusts, not just direct transfers. Applies to transfers on or after November 4, 2025
• Tiered Corporate structures — mismatched year ends: New rules limit deferral of tax on investment income where Corporations use tiered structures with different Fiscal Year ends
• Canadian exploration expenses: "Inherent natural qualities" replaces prior wording to clarify what qualifies — applies to expenses renounced under flow-through share agreements entered into on or after November 4, 2025
• Crypto-Asset Reporting Framework (CARF): New information return filing requirements for crypto-asset service providers added to the Income Tax Regulations
• Debt forgiveness — bankrupt entities: Bankrupt corporations, trusts and partnerships removed from the exception to the debt forgiveness rules. Retroactive to April 16, 2024 (Corporations) and August 12, 2024 (Partnerships and Trusts)
• Tax debt anti-avoidance (s. 160): New deemed transfer rules — if a series of transactions is structured to avoid joint and several liability, the transferor is deemed to have transferred property directly to the transferee; consideration is deemed nil in avoidance transactions. Retroactive to April 16, 2024
• Clean hydrogen investment tax credit: Expanded to include hydrogen produced from methane pyrolysis as an eligible production pathway
• Canada Carbon Rebate: No CCR payments will be made in respect of tax returns or adjustment requests filed after October 30, 2026
• Qualified/prohibited investment rules: Consolidated and simplified into new Part L of the Income Tax Regulations (ss. 5000–5006), effective January 1, 2027. Removes standalone "qualified investment" definitions from individual registered plan provisions (RRSP, RRIF, RESP, TFSA, FHSA, RDSP) and centralizes them
• Foreign affiliate surplus — DMTT integration: Domestic minimum top-up tax (Pillar Two) payments by foreign affiliates now integrated into exempt, hybrid and taxable surplus calculations, retroactive to December 31, 2023 (*explainer at bottom)
• Pension plan amendments: Capital guarantee benefits, VPLA fund transfers, disability benefit medical certification expanded to nurse practitioners and psychologists, current service contribution limits updated
• RESP — designated subscriber: New rules allow the Minister responsible for the Canada Education Savings Act to be a subscriber, enabling automatic RESP enrollment for eligible children
• Home Buyers' Plan: Repayment grace period extended to 2032
• Labour Mobility Deduction: Annual limit increased; distance threshold reduced to 120 km
• EV Affordability Program: Integrated with existing CCA rules effective February 16, 2026
• Canada-Russia Income Tax Agreement: Suspended effective November 18, 2024; all obligations and rights deemed extinguished during suspension
• Anti-avoidance — Air Travelers Security Charge Act, Excise Act, 2001, Select Luxury Items Tax Act: Parallel deemed transfer and nil consideration anti-avoidance rules applied across these Acts, retroactive to April 16, 2024
• Coordinating amendments: Contingent on Bill C-30 (Spring Economic Update 2026) receiving royal assent — adjustments to manufacturing building CCA rules
• Technical amendments: Numerous corrections to inconsistencies and alignment with policy intent throughout

PART 2 — Global Minimum Tax Act and Related Legislation (Sections 144–176)

• UTPR (Undertaxed Profits Rule) — new Part 2.1: Canada now implements the UTPR, which subjects Canadian constituent entities of large multinational groups to top-up tax in respect of low-taxed profits of group entities in other jurisdictions that are not already subject to an Income Inclusion Rule (IIR) or qualified domestic minimum top-up tax (DMTT). Applies to Fiscal Years beginning on or after December 31, 2025
• "Reverse hybrid entity" definition repealed — no longer needed under updated GloBE framework
• Substitute loss carry-forward recapture amount: Definition updated to cover situations where a domestic source tax loss is offset against income of a foreign subsidiary or permanent establishment and can be recaptured in subsequent years
• Unclaimed accrual: Definition updated to include aggregations of deferred tax liabilities and to cover elections under new s. 25(7)
• Specified jurisdictional effective tax rate (new s. 4.1): New rule for blended controlled foreign company tax regimes — determines the effective tax rate applicable to a parent entity's share of a subsidiary's income attributed under a blended CFC regime
• Asset transfer rules (s. 48): Updated to account for deferred tax assets that were not created or were reversed solely because a gain on transfer was included in domestic taxable income; no reduction to adjusted covered taxes from newly created deferred tax assets
• Joint and several liability — UTPR: Canadian constituent entities are jointly and severally liable for tax payable by other group members under Part 2.1 (UTPR) and Part 3 (DMTT). Applies to fiscal years beginning on or after December 31, 2025
• Foreign affiliate surplus — DMTT integration (Income Tax Regulations s. 5907): Domestic minimum top-up tax payments integrated into exempt, hybrid and taxable surplus calculations; new DMTT group and domestic minimum top-up amount definitions; rules for primary/secondary affiliate payment arrangements and transparent affiliate situations. Retroactive to December 31, 2023
• Foreign tax credit — DMTT regime (ITA s. 126): DMTT payments excluded from business-income tax and non-business-income tax calculations to prevent double-counting; new apportionment formula for DMTT group members. Retroactive to December 31, 2023
• Access to Information Act: Schedule II reference to Global Minimum Tax Act updated (section 121 → section 123)
• Income Tax Conventions Interpretation Act (new s. 4.4): Tax treaties cannot prevent the application of the Global Minimum Tax Act or require Canada to provide relief for similar legislation in other states. Retroactive to January 1, 2024
• Tax Court of Canada Act: Informal procedure cross-references to Global Minimum Tax Act updated (ss. 89 and 91)
• Technical amendments: Numerous corrections to GloBE Model Rules implementation, administrative guidance from the OECD Inclusive Framework, and alignment with intended policy objectives throughout

PART 3 — Sales Tax

Division 1 — Excise Tax Act / Selected Listed Financial Institutions Regulations (Sections 196–214)

• Ss. 196–199: Technical fixes to how selected listed financial institutions (SLFIs) — insurers, investment plans, banks, trust/loan corps — calculate their Provincial percentage for HST apportionment. Retroactive to August 9, 2022 or August 4, 2023 depending on subsection
• S. 200 (new s. 24(4)): Nil net premiums rule — if the B variable in the insurer percentage formula is zero, fall back to the general s. 23(2) method. Applies to reporting periods ending after August 12, 2024
• S. 201: Trust and loan corporations — replaces "real property" terminology and clarifies loan-based revenue apportionment. Retroactive to August 9, 2022
• S. 202 (new s. 27.1): Apportionment by type of business — if an SLFI changes category mid-period (e.g., switches from insurer to investment plan rules), its Provincial percentage is prorated by days in each category. Retroactive to August 9, 2022
• S. 203: Expands the "look-through" percentage rule to qualifying private investment plans and SLFIs excluded by operation of ss. 11 or 12. Applies to reporting periods ending after August 4, 2023
• Ss. 204–207: Plan merger rules for stratified and non-stratified investment plans — adds new subparagraph (iii) in each case to cover predecessors that are a series of a stratified investment plan (previously only non-stratified plans and series were addressed). Retroactive to August 9, 2022
• S. 208 (new s. 40(a.1)): Surety companies acting under performance bonds on construction contracts can now claim input tax credits for property/services acquired to fulfill their bond obligations. Applies to tax becoming payable after August 15, 2025 (or earlier periods if not already included in net tax)
• S. 209: Narrows the "qualifying investor" definition to exclude qualifying private investment plans (not just qualifying small investment plans). Retroactive to August 9, 2022
• Ss. 210–213: Attribution point rules — plan merger triggers now explicitly include mergers involving a series of an investment plan, not just the plan itself. Retroactive to August 9, 2022
• S. 214 (new s. 66): Investment plan merger rule extended to cover mergers that form a series of an investment plan (not just a whole plan). Retroactive to August 9, 2022

Division 2 — Excise Act, Excise Act, 2001 and Related Regulations (Sections 215–225)

• S. 215: Minister gets a 10-year window to waive or reduce penalties on returns under the Excise Act
• S. 216: Same 10-year waiver authority extended to penalties and interest on amounts payable
• S. 217: Duty imposed on cigars under s. 43 now explicitly excluded from the "sale price" definition
• S. 218: "Administration or enforcement" clarified to include listed international agreements and tax treaties
• S. 219 (new s. 6.1): Negative amounts in algebraic formulas deemed to be zero
• Ss. 220–221: Cannabis products taken for use or unaccounted for are relieved of Federal Duty before Provincial specified duty applies — retroactive to August 12, 2024
• Ss. 222–223: Same relief structure applied to vaping products — retroactive to August 12, 2024
• S. 224: Information requirement authority expanded to include administration of listed international agreements and tax treaties
• S. 225: 3-year licence term cap extended to spirits, wine, user's licenses and certain excise warehouse licenses
• Ss. 226–227: Raw leaf tobacco packaging rules updated — prescribed package now defined as ≤500g in the smallest consumer-facing package. Comes into force first of the month after Royal Assent

PART 4 — Various Measures

Division 1 — Financial Institutions: Bearer Instruments (Sections 228–241)

Applies identically across Trust and Loan Companies Act, Bank Act (banks + bank holding companies) and Insurance Companies Act (companies + insurance holding companies):

• No new bearer-form documents evidencing conversion privileges, options or rights to acquire shares
• Existing bearer-form documents must be converted to registered form on holder's request
• Fractional share certificates and scrip certificates restricted to registered form going forward; existing bearer ones must be exchanged on request
• "Fungible securities" provisions updated to reference all applicable Acts and regulations

Division 2 — Financial Institutions: Good Faith Immunity (Sections 242–244)

• Adds identical "no liability" clauses to the Trust and Loan Companies Act (s. 530.1), Bank Act (s. 977.1) and Insurance Companies Act (s. 1020.1)
• No action lies against the Crown, Minister, Commissioner, Superintendent or their staff for anything done or omitted in good faith under these Acts

Division 3 — Bank Act: Non-Discrimination on Deposit Products (Sections 245–246)

• New Part VIII.1 added to the Bank Act
• Banks and authorized foreign banks must not offer or sell another Canadian financial institution's deposit products in a discriminatory manner
• Institutions must not offer their own deposit products through affiliates in a discriminatory manner
• Minister may make regulations defining "non-discriminatory manner"
• Comes into force by Order in Council

Division 4 — Public Contracts (Sections 247–252)

• S. 247 (Financial Administration Act s. 41): Governor in Council's contract regulation power extended to Crown Corporations; CPPIB only subject to those regulations if covered by a trade agreement
• Ss. 248–250 (Dept. of Public Works Act): Procurement complaints regime updated — regulations now define which contracts and subject-matter are reviewable and who may file complaints
• S. 251 (National Capital Act): Subsection 15(3) repealed
• Comes into force by Order in Council (two separate Orders for different provisions)

Division 5 — Tax Court of Canada Act (Sections 253–264)

• Informal procedure monetary thresholds doubled across the board
• Amounts in issue: $25,000→  $50,000 
• Loss amounts: $50,000 → $100,000 
• Excise Tax Act disputes: $50,000 → $100,000
• Existing appeals (notice filed on or before commencement) continue under old thresholds
• Maximum Amounts for Informal Procedure Regulations repealed (thresholds now in the Act itself)

Division 6 — Access to Information Act (Section 265)

• Retail Payment Activities Act added to Schedule II of the Access to Information Act, with reference to subsections 62(1) and 63(1)

Division 7 — Outstanding Guarantee and Protected Loan Limits (Sections 266–267)

• National Housing Act s. 15: Mortgage-backed securities guarantee cap raised to $1 trillion plus any additional amounts authorized by Parliament on or after Royal Assent
• Protection of Residential Mortgage or Hypothecary Insurance Act s. 27: Protected loan aggregate cap raised to $500 billion plus any additional amounts authorized by Parliament on or after Royal Assent

Division 8 — Bankruptcy and Insolvency Act (Sections 268–270)

• New "reviewable conduct" category (s. 9.1) covering: unlicensed use of "trustee" title, acting as or representing as a licensed trustee, soliciting assignments/proposals/bankruptcy applications, and false/misleading public representations about bankruptcy or insolvency
• Courts (including Federal Court) can order cessation, public notices, restitution and other relief on Superintendent's application
• New offenses (s. 202): unlicensed trustee activity — fines up to $1M (Corporations) or $100K + 1 year imprisonment (individuals); solicitation offenses — same penalties

Division 9 — Canada Labour Code: Non-Compete Clauses (Sections 271–274)

• New Division XI.1 added to the Canada Labour Code
• Prohibition: Employers cannot impose non-compete clauses or other employment-related restrictions on Federally regulated employees
• Void: Such clauses are void (or null in Quebec)
• Exemptions: Business sale/transfer scenarios, CEOs, direct CEO reports in specific C-suite roles and GIC-specified positions
• Anti-reprisal: Employers cannot discipline, demote or disadvantage employees for refusing to agree to or comply with such clauses
• Burden of proof on employer to show a clause is not a non-compete or restriction
• Transitional: Existing clauses in force on commencement day have a 1-year grace period before the void rule applies
• Comes into force by Order in Council

Division 10 — Canadian Human Rights Act (Sections 275–277)

• Commission composition updated: "Deputy Chief Commissioner" title replaced by a named "Accessibility Commissioner" as a distinct full-time member
• Acting Chief Commissioner defaults to most senior full-time member other than the Accessibility Commissioner (when Chief is absent/incapacitated/vacant)
• Transitional: current Deputy Chief Commissioner deemed appointed as Chief Commissioner for remainder of their term

Division 11 — International Development Research Centre Act (Sections 278–280)

• Board size reduced: maximum other Governors cut from 14 to 10
• Canadian citizenship requirement: Chairperson, Vice-chairperson and at least half of other Governors must be Canadian citizens
• Qualification requirement: at least 6 Governors must have international development or science/technology experience
• Quorum: 6 Governors (at least 4 Canadian citizens); majority Canadian citizens required for validity when more than 6 attend

Division 12 — Tobacco and Vaping Products Act (Section 281)

• Mandatory 5-year review cycle begins July 1, 2026, then restarts after each report is tabled
• Report must be tabled in both Houses within 6 months after each 5-year period ends

Division 13 — Pest Control Products Act (Sections 282–285)

• Mandatory re-evaluation cycle replaced with a 15-year assessment trigger: Minister must assess whether health/environmental risks have increased significantly since the last decision or assessment
• Re-evaluation only required if assessment finds significant increase in risks
• Minister may delay assessment if a special review is underway; may narrow re-evaluation scope to exclude aspects covered by the special review
• Minister may terminate a special review if a re-evaluation covering the same aspect is initiated
• All decisions (assessments, delays, terminations) must be made public with reasons
• Transitional: ongoing re-evaluations continue; Minister may initiate an assessment to potentially terminate them if risks have not increased significantly

Division 14 — Territorial Lands Act (Section 286)

• New s. 12.1: Governor in Council can, by Order in the National Interest, cancel licenses/claims/leases in Nunavut, freeze new applications, prohibit transfers and close lands to prospecting
• Notice required to affected rights holders as soon as feasible
• Minister must determine whether compensation will be paid and, if so, the amount within 180 days after notice (extendable by 180 days) for cancelled claims or leases and refused lease issuances or renewals
• No other compensation or damages available beyond what the Minister determines
• Orders published in Canada Gazette within 23 days; Statutory Instruments Act does not apply
• GIC may make regulations on implementation and compensation

Division 15 — Red Tape Reduction Act (Sections 287–289)

• Official Languages Act added to the list of excluded Acts (exempt from the one-for-one rule)
• Minor English and French drafting corrections to ss. 12 and 14.2

Division 16 — Defense Investment Agency Act + Defense Production Act (Sections 290–338)

Subdivision A — Defense Investment Agency Act (new Act)

• Establishes the Defense Investment Agency as a standalone entity (spun out from Public Works)
• Minister designated by GIC presides; CEO appointed by GIC for renewable 5-year terms
• Mandate: assist Minister with powers under the new Act and the renamed Defense and National Security Production and Procurement Act
• Minister's powers cover all matters relating to production, procurement and investment in National Defense/Security not assigned elsewhere
• Minister may make loans, advance payments, guarantees, grants, contributions and acquire shares for Defense purposes (s. 15.1)
• Transitional: existing DIA staff, CEO, contracts and appropriations carry over to new agency
• Added to schedules of Access to Information Act, Financial Administration Act, Privacy Act, Public Service Superannuation Act, Public Sector Compensation Act

Subdivision B — Defense Production Act (renamed and substantially expanded)

• Renamed: Defense and National Security Production and Procurement Act
• "Defense supplies" definition expanded to include intangibles, data, animals and National Security purposes
• New definitions: "Defense Services," "acquire" (includes lease), "dispose" (includes consign and lease)
• "Associated Government" expanded to include NATO partners in good standing, EU and member states
• "Defense projects" expanded to include National Security works and residential communities on DND property
• New competitive procurement rules (ss. 26–29): Minister must conduct competitive process; 13 enumerated exceptions (urgency, National Security, sole source, inter-operability, sensitive technology, etc.); Minister may exclude persons posing National Security risk without giving reasons
• Financial assistance powers (s. 15.1): loans, advance payments, guarantees, grants, contributions, share acquisition
• Consolidated Revenue Fund spending cap for specified payments: $1 billion after permitted deductions (amendable by Appropriation Act)
• Administrative monetary penalties scheme: max $2 million per violation
• 3-year review by Minister after commencement
• Comes into force by Order(s) in Council

Division 17 — Canada Transportation Act: Air Passenger Rights (Sections 339–364)

• Complaint process overhauled: Minister (not Agency) now handles tariff complaints; 30-day decision deadline for carriers; 90-day deadline for Minister to issue Order after failed mediation
• Alternative resolution stream (ss. 85.18–85.29): GIC can suspend the standard process and redirect complaints to designated private persons; carriers must contract with a designated person within 90 days; decisions binding; 30-day payment deadline; enforcement via Federal Court Orders
• Backlog clearance (ss. 355–362): GIC can suspend standard process for previously filed complaints not yet assigned to a complaint resolution officer; Minister or Agency may contract with a person to resolve the backlog; same binding/enforcement rules apply
• Penalties: Violations of payment, reporting and agreement obligations — up to $1 million per violation for corporations
• Air passenger regulations (s. 86.11): Regulations that apply to a complaint are those in force on the date of ticket purchase (not date of complaint)
• Penalty cap for air passenger regulation violations: Up to $1 million for Corporations (up from $25,000)
• Coordinating amendments with Budget Implementation Act, 2023, No. 1 for prior decisions and publication rules
• Comes into force by Order(s) in Council

WHO GAINS POWER

• The Minister can file a tax return on behalf of eligible lower-income individuals without their explicit consent — deemed filed unless the individual corrects it within 90 days
• Government (Governor in Council) can restart the Canada-Russia Tax Agreement by Order — no further Parliamentary vote required; the Bill suspends it retroactively to November 18, 2024)
• Government can cancel mining licenses, claims and leases in Nunavut by Order "in the National Interest" — the Minister decides whether compensation is paid and how much; repayment of exploration costs or fair market value is not guaranteed
• The Minister can exclude any person from Defense procurement on National Security grounds without giving reasons
• Government can redirect all air passenger tariff complaints away from the Canadian Transportation Agency to private designated persons — bypassing the Agency as the complaint decision maker
• The Minister gains authority to file tax returns on behalf of Canadians and to designate private complaint resolvers for air travel disputes
• Multinational corporations subject to Canada's new UTPR are now liable to Canadian tax on profits undertaxed in other countries — Canada collects on behalf of the global minimum tax framework
• Federally regulated employees gain protection from non-compete clauses — existing clauses void after a 1-year grace period

WHO LOSES POWER

• Individual Canadians — the Minister can file your tax return on your behalf; you have 90 days to correct it or it stands as filed
• Parliament — treaty suspensions, Nunavut land cancellations and air complaint redirection all happen by Government Order, not by a vote
• Air passengers — complaints can be redirected to private resolvers contracted and paid by the carriers they are complaining against
• Mining rights holders in Nunavut — licenses, claims and leases can be cancelled by Government Order with no appeal process provided in this section; the Minister decides whether compensation is paid and how much
• Employers of Federally regulated workers lose the ability to enforce non-compete clauses, including existing ones after the grace period

WHO GAINS MONEY

• Lower-income Canadians who haven't filed returns may receive automatic Federal benefits through Minister-filed returns
• Tradespeople — Labour Mobility Deduction annual limit increased; distance threshold reduced to 120 km, making more workers eligible
• Greenhouse operators — 100% immediate expensing for eligible greenhouse buildings, phasing down after 2029
• Home buyers — Home Buyers' Plan RRSP repayment grace period extended to 2032
• Surety companies on construction performance bonds — now eligible for input tax credits on property and services acquired to fulfill bond obligations
• Clean hydrogen producers using methane pyrolysis — now eligible for the clean hydrogen investment tax credit
• Air passengers — carriers must pay compensation or refunds within 30 days of a decision; penalties up to $1 million per violation for non-compliance
• Federally regulated employees — non-compete clauses void; cannot be disciplined for refusing to sign one

WHO LOSES MONEY

• Large multinationals with Canadian subsidiaries — now subject to UTPR top-up tax on group profits undertaxed in other jurisdictions
• Crypto-asset service providers — new mandatory information reporting requirements add compliance costs
• Airlines — penalty cap for air passenger regulation violations raised to $1 million per violation (up from $25,000)
• Unlicensed insolvency operators — new fines up to $1 million (Corporations) or $100,000 + 1 year imprisonment (individuals)
• Nunavut Mining Rights holders — compensation is not guaranteed; no separate damages available for Rights affected by an Order
• Canadians who claimed CCR — no payments on returns or adjustment requests filed after October 30, 2026

THE CATCH

• ⚠️ The Minister can file your tax return without your consent — it is deemed filed unless you correct it within 90 days; any errors from your failure to notify the Minister count as misrepresentations made by you
• ⚠️ Air complaint designated persons are contracted by the carriers — the airline selects and pays the private resolver handling complaints against itself; the Bill sets no express independence requirement, though the Minister can impose conditions on designated persons
• ⚠️ Nunavut land cancellations have no appeal process provided in this section— the Minister decides whether compensation is paid and how much; no separate damages are available and repayment of exploration costs or fair market value is not guaranteed
• ⚠️ The Canada-Russia Tax Treaty is "suspended" not terminated — Government can reinstate it at any time without a Parliamentary vote
• ⚠️ The Canada Carbon Rebate was ended by administrative deadline, not by repeal — Parliament never voted to eliminate the benefit; it was wound down by setting a filing cutoff date of October 30, 2026, returns filed or determination requests after that date are not qualified for the payment
• ⚠️ "Non-discriminatory manner" for deposit products is not defined in the Bill — the Minister defines it by Regulation and can change the definition without a vote
• ⚠️ Defense procurement exclusions require no reasons — the Minister can bar any person from competing for Defense contracts on National Security grounds without explanation and with no appeal process provided in this section
• ⚠️ The $1 billion Consolidated Revenue Fund cap for Defense spending is amendable by Appropriation Act — Parliament can raise it without standalone Legislation

Plain language breakdown:

What is DMTT / Pillar Two? The global minimum tax — large multinationals must pay at least 15% tax somewhere. Canada's domestic version is the DMTT (Domestic Minimum Top-Up Tax).

What is "foreign affiliate surplus"? When a Canadian company owns a foreign subsidiary, the profits sitting in that subsidiary are tracked in three buckets — exempt surplus (not taxed when brought to Canada), hybrid surplus (partially taxed) and taxable surplus (fully taxed when brought home). Which bucket the money sits in determines how much Canadian tax is owed when the money comes back.

What does this rule do? Before this change, when a foreign subsidiary paid the global minimum top-up tax, that payment wasn't factored into which surplus bucket the money went into. That created a mismatch — Canada might tax the same income again when it came home.

This rule fixes that: DMTT payments now count when sorting profits into the right bucket, so the same income isn't double-taxed.

Why retroactive to December 31, 2023? That's when Canada's global minimum tax rules took effect. Making it retroactive means the fix applies from day one — no gap period where the mismatch created a tax liability that wasn't intended.