Federal Budget 2022
- No Capital Gains Tax Increase or Change to Principal Residence Exemption
- No tax rate changes for individuals
Personal Tax Impacts
- Increase to Home Accessibility Tax Credit from $10,000 to $20,000 for 2022 and subsequent years.
- Labour Mobility Deduction for Tradespeople will allow eligible workers to deduct up to $4,000 in eligible expenses per year for temporary lodging to be 150KMs closer to a work site.
- Medical Expense Tax Credit for Surrogacy and Other Expenses incurred in 2022 and subsequent years will allow for claims for people trying to have children. This will allow claims for surrogate mothers, sperm/ovary donors, which have not been possible in the past.
Impacting High Income Earners
- Change to Alternative Minimum Tax (AMT) will be coming to ensure high income individuals pay at least 15% of their income in taxes. Details to be released.
- Flow-Through Shares are a popular tool to make substantial donations to charities and fund the resource extraction industry (benefits vary by province). The tax credit will increase to become more attractive for investment in 'Critical Minerals' (ie. copper, nickel, lithium, rare earth...), however, the flow-through shares will be phased out for the oil, gas and coal industries.
- "Substantive CCPC" rule will require non-Canadian Controlled Private Corporations ,that are Private Corporations, controlled directly or indirectly by Canadian residents to be subject to the same investment income tax regime as regular Canadian Controlled Private Corporations. (Note: This has been a significant planning tool for wealthy immigrants to Canada)
- Intergenerational share transfers will be reviewed, and they are looking for commentary for new rules
- Small Business Tax Rate (11%) will be expanded to allow Corporations with taxable capital greater than $15 Million to qualify until they reach $50 Million (assuming they do not lose it anyways because of the passive income rules that were brought in a few years ago)
- A review is being launched to evaluate the SR&ED program.
- Support for creating 'employee ownership trusts' to help transfer ownership from private owners to employees.
- Increase to charities disbursement quotas from 3.5% to 5%.
- Charities will get revised and more defined rules on how to manage partnerships with 'non-qualified' donees.
- Review of the use in Canada of using housing as an 'asset class' for investment. Details are unclear but focus is on large entities.
- GST/HST is to be charged on sale of residential assignments (these are the contracts to buy property before the completion date).
- Creation of Tax-Free First Home Savings Account - will allow lifetime contributions up to $40,000 to the plan (contributions are tax-deductible), investment earnings will be tax-free as will the withdrawal of the funds. There are catches though, include unused contribution room cannot be carried forward - so plan to do $8,000 a year for 5 years when opened. This will be launched in 2023, so we will see how it changes during the year. The RRSP Home Buyers Plan will be maintained as well.
- Home Buyers Tax Credit will increase from $750 to $1,500 tax savings on purchase of a first home.
- Multi-generational Home Renovation Tax Credit will apply starting in 2023. This provides a credit of the lesser of 15% of the eligible expenses and $50,000. Focus though is to have parents (seniors) or disabled family members move to a home - does not seem to be designed for children moving on to land of Parents.
- Residential Property Flipping Rules will be coming in to play with the goal of subjecting residential property that is sold within 12 months of acquisition to full taxation. However, proposed life change events would allow for exemption from these rules.
- Proposal to prohibit foreign commercial enterprises and people who are not Canadian citizens or permanent residents from acquiring non-recreational, residential property in Canada for a period of two years. It will be interesting to see how this is actually implemented.
- Additional taxes on banks, life insurers - may impact cost of products - we wil see...
- Investment Tax Credits announced for Carbon Capture to help reduce CO2 emissions.
- Development of a publicly accessible corporate beneficial ownership registry by end of 2023.
- Expansion of health coverage to provide reduced cost dental care to children of families earning less than $90,000.
BONUS! Pleasant Surprise - Support for rebuilding of the Jewish Community Centre of Greater Vancouver
"For generations, the Jewish Community Centre of Greater Vancouver has provided leadership in cultural, recreational, educational, and social activities to families from all backgrounds. Today, the existing facilities are aging and the centre’s services are over-subscribed. A significant redevelopment project is planned, which will see a modernized community centre that will serve diverse communities with new arts, culture, seniors, and recreational facilities. The project will also make a significant contribution to addressing affordability in Vancouver through the creation of hundreds of new affordable rental housing units and child care spaces. The government intends to announce funding for the Jewish Community Centre of Greater Vancouver in the future."
Criminalization to prohibit the communication of statements, other than in private conversation, that wilfully promote antisemitism by condoning, denying or downplaying the Holocaust.
READ THE BUDGET HERE