Federal Budget – What do you need to know?
The Liberals released their budget containing over 290 measures and 739 pages. This article lists a few of these measures. I have subdivided these measures into four groups:
- Individuals,
- New Taxes,
- Businesses,
- Non-Profits.
INDIVIDUALS:
1. National Childcare System: 30 Billion over five years to help the cost of early learning and childcare services. Liberal’s goals are Childcare costs to be $10 per day per child. Liberals believe reducing Childcare expenses will make life more affordable AND will drive economic growth by drawing more women into the work force.
2. Canada Recovery Benefit (and Employment Benefits):
a. extended by 12 weeks with benefits for up to 50 weeks.
b. raising claw back to $22,944 ($26,177- married).
3. Expansion of Current Credits/Benefits: Expanded access to, and value of, several personal measures, including, the Disability Tax Credit, Canada Workers Benefit, Northern Residents Deductions, and Old Age Security.
4. Establishing a Federal $15.00 Minimum Wage program:
5. COVID-19 Benefit Repayment, Timing of Deduction: Individuals will have the option to claim a deduction in respect of the repayment of a COVID 19 benefit amount for the year when the benefit was received, rather than the year in which the repayment was made.
6. Electronic Communication between CRA and Taxpayers: Individuals will receive electronic Notices of Assessment where they (or their tax preparer) files their return electronically. Businesses using My Business Account will default to online mail. More tax, GST/HST and information returns will be required to be filed electronically. Electronic payments will be required for all amounts of $10,000 or more.
NEW TAXES
1. Tax on Luxury Goods: A up to 20% tax on the retail sale of new luxury cars and personal aircraft priced over $100,000. And boats priced over $250,000. Effective January 1, 2022.
2. “Netflix Tax”: a 3% tax on foreign digital services.
3. Foreign Owner’s Tax on Real Estate: A new national 1% tax on the value of vacant or underused real estate owned by non-resident, non-Canadians effective 2022. Foreigners’ new reporting requirement effective 2023 are that they will have annual CRA filings on the use of their property (vacant/not used).
4. New Vaping tax and higher cigarette tax: No information on taxes for vaping. Cigarette tax set at another $4 per carton.
BUSINESSES
1. EXTENDED Wage Subsidy (CEWS) and EXTENDED Rent Subsidy (CERS): Extended for four more periods, ending September 25, 2021. July to September subsidy gradually is reduced. Publicly Companies with increased EXECUTIVE earnings will pay back Wage Subsidy.
2. New Hiring Incentive: The Canada Recovery Hiring Program (CRHP) provides a 50% subsidy for eligible salaries paid more than that paid in a baseline reference period. The program lasts for six periods and commences June 6, 2021. The percentage is reduced over the last three periods. A revenue decline of over 0% (???) is needed for the first period, over 10% for the remainder. Can only claim the greater of CRHP or CEWS, but not both.
3. Accelerated CCA Claims: Many depreciable assets will be eligible for a 100% write-off if purchased on or after Budget Day, and if they become available for use before January 1, 2024. There is a $1.5 million limit per associated group. Certain long-term assets, like buildings, are not eligible.
4. Zero-Emission Technology Manufacturers: The federal corporate tax rate would be cut in half starting with fiscal years commencing in 2022.
5. Mandatory Disclosure Rules: Budget 2021 proposes broad-based disclosure requirements for tax strategies considered aggressive by the government.
6. Enhancing Funding for Small businesses: 500K to 1 mil:
NON-PROFITS
1. Enhanced funding.
2. 200 Million for local festivals administered by Heritage Canada.
3. 200 Million to support major ARTS and CULTURE festivals with funding flowing through reginal agencies.
Prepared by Carlos Teixeira
Managing Partner/Teixeira Accounting Firm Inc.
Download the Budget book, click here.
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