See ENR 1.2 section 2.1.2:
2.1.2 Carriage
The carriage of a serviceable transponder capable of replying to Mode A and C is compulsory for all aircraft operating:
- in class C airspace
- in all MIL controlled airspace.
An exemption to this rule may be granted, provided that the request is made before the FLT to the authority having jurisdiction over the airspace concerned.
AIC 2008-05 refers to Mode S:
For VFR flights, conducted in airspace where currently the carriage and operation of SSR transponders is mandatory:
A Level 2 transponder is needed with Elementary Surveillance (including SI-code) functionality as a minimum, compliant with ICAO Annex 10 SARPS, with effect from 01 JAN 2011.
Ninja edit: Interesting that the AIP only says carriage is a requirement, where the AIC says demands carriage
and operation.