A Tax on Share Buybacks
The 2022 Fall Economic Statement announced the government’s intention to introduce a corporate-level 2 per cent tax on the net value of all types of share buybacks by public corporations in Canada, effective January 1, 2024. The details of this new tax are expected to be announced in Budget 2023. PBO interprets “all types of share buybacks by public corporations in Canada” to mean all net share buybacks by publicly traded corporations that would pay corporate income tax in Canada.
The PBO estimates the proposed 2% tax on share buybacks will raise $3.0 billion over the first 5 fiscal years of its application.