The federal government intends to amend the Income Tax Act to ensure Canadian multinational insurers pay tax on the Canadian insurance business they do, even when operating through a foreign subsidiary, according to Budget 2025.
The change will “clarify that income derived from assets held by a foreign affiliate of a Canadian insurance company that supports Canadian insurance risks is taxable in Canada,” the budget said.
This will generate $255 million in additional tax revenue over four years beginning in 2026-27. The government expects to receive $50 million in 2026-27 and around $70 million in each subsequent year.
Banking fees and cheque deposits
The government also intends to prohibit investment and registered account transfer fees and require a timely transfer of these accounts.
Currently, these transfer fees cost an average of $150 per account, and the draft legislation will require banks to make it clear to consumers that there are no account transfer fees.
This measure is intended to help consumers switch between financial institutions and increase competition in the banking sector.
The amount of immediately available deposited cheque funds will be increased to $150 from $100 through a proposed amendment to the Bank Act. This will apply to both in-person cheque deposits and cheques deposited via other means like an ATM or a banking app. Previously, banks only had to make the first $100 of in-person cheque deposits available immediately, with means of deposit providing next-day fund availability.
Open banking update
To prepare for open banking, also called consumer-driven banking, the government will provide a data mobility right in the Personal information Protection and Electronic Documents Act to facilitate data sharing.
It will also cost $25.7 million over the next five years for the RCMP and the Canadian Security Intelligence Service to provide national security in open banking.
Stablecoin regulation coming
The Liberals will propose legislation to regulate fiat-backed stablecoins.
The legislation will require issuers to maintain and manage adequate reserves, establish redemption policies and implement risk management frameworks, among other requirements.
It will also amend the Retail Payment Activities Act to enable the regulation of payment service providers that process stablecoin transactions.
The United States passed legislation outlining rules for the sector this year, and some in the industry have raised concerns about the lack of similar rules in Canada.
Relaxing rules for credit unions
To help provincially regulated credit unions enter the federal framework, the government will amend the Bank Act and Canada Deposit Insurance Corporation Act to let credit unions continue their existing auto leasing business permanently.
The federal budget also proposed raising the 35% public holding requirement threshold to $4 billion from $2 billion to let smaller financial institutions grow before changing their ownership structure.