2021 Federal Budget Highlights
There has been a lot of speculation over what new tax measures would be implemented to pay for the billions in government spending that has taken place over the last year to help soften the pandemic’s economic toll. The federal budget, titled Recovery Plan for Jobs, Growth, and Resilience did not introduce measures that directly impact investors; but also, did not include how the country is going to pay for our $354.2 billion deficit.
What is not in the budget is probably more interesting than what’s in it. There will be no increase to the capital gains inclusion rate, no change to the principal residence exemption, no family wealth tax, and no income tax increases for individuals or corporations.
The government’s first budget in two years emphasizes spending measures to continue the fight against Covid-19, reduce our carbon footprint and provide support for families. Here are some highlights:
Seniors Support – Seniors who will be over the age of 75 by June 2022, will receive a one-time payment of $500 this August 2021. In addition, those seniors over age 75 will see an increase to their regular OAS payments by 10%, on an ongoing basis, starting July 2022.
Workers Support – The Canada Recovery Benefit will be extended by 12-weeks; and The Canada Recovery Caregiving Benefit will be extended by an additional 4 weeks.
Covid-19 Business Support – The Canada Emergency Wage Subsidy and the Canada Emergency Rent Subsidy and the Lockdown Support will be extended to September 25 and/or to November 20 if needed.
Green Stimulus – The government plans to spend $17.6 billion over the next 5 years across several programs to facilitate a green recovery, create jobs, build a clean economy and to fight and protect against climate change.
Childcare and Early Learning – $30 billion over the next 5 years is earmarked to build an early learning and childcare program for Canadian families.
Tax Measures of Interest
New taxation for non-resident/non-Canadian-owned homes – The government intends to implement a national annual 1% tax on the value of non-resident/non-Canadian owned residential real estate that is unused or vacant, effective January 1, 2022.
Luxury Tax – A new tax on the sale of luxury cars and aircraft used for personal use that have a price tag over $100,000 and boats for personal use over $250,000. The tax will be calculated as 10% of the sale price, or 20% of the value over the threshold whichever the lesser. The GST/HST will then be applied on top of this new higher sales price.
As there are not many revenue-generating tax measures in this federal budget, Canadians will have to continue to wait and see how we are going to pay for all this stimulus.
Have a great week,
Tracey
Sources: Budget 2021, TRESP Tax, Retirement &Estate Planning Services Team, Manulife Investment Management posted 04-20-21. 2021 Federal budget analysis, Canada Life Investment Management 04-20-21, 2021 Federal Budget Update, Fidelity Investments 04-20-21, Todd Mattina Mackenzie Financial, webcast 04-20-21
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