2022 Federal Budget Commentary
On April 7, 2022, the Deputy Prime Minister and Finance Minister, the Honourable Chrystia Freeland, presented Canada’s 2022 federal budget: A Plan to Grow Our Economy and Make Life More Affordable, to the House of Commons.
No changes to personal or corporate tax rates, nor changes to the inclusion rate with respect to capital gains were introduced. However, several new personal and business measures were announced. The details with respect to these measures are provided in the attached commentary.
Highlights of the 2022 Federal Budget
A. Personal Measures
Several proposals target housing affordability. A Tax-Free First Home Savings Account and a refundable Multigenerational Home Renovation Tax Credit will be introduced. Existing home-related tax credits will also be enhanced.
Residential real estate sales within a year of purchase will generally be fully taxable, not capital gains and not eligible for the principal residence exemption.
B. Business Measures
Access to the small business deduction will be enhanced for corporations with taxable capital between $10 million and $50 million. Businesses that did not previously qualify for the small business deduction, due to taxable capital exceeding $15 million, can now access a lower rate up to $500,000 of income.
Anti-avoidance measures targeting private corporations attempting to avoid the refundable tax regime for investment income will be introduced.
Tax benefits for flow-through shares will be enhanced for critical mineral exploration and removed for oil, gas and coal.
C. International Measures
Digital platform operators will be required to disclose details of the activities of Canadian participants in the digital economy.
D. Sales and Excise Tax
All new residential property assignment sales will be subject to GST/HST.
An excise tax regime will be introduced for vaping products.
E. Retirement Plans
The fair market value of Registered Retirement Savings Plan (“RRSP”) and Registered Retirement Income Fund (“RRIF”) assets will be provided to CRA annually.
F. Charities Measures
The disbursement quota will be increased for many charities.
New rules will be introduced to allow charities to work with other organizations to fulfill their charitable objectives.
G. Previously Announced Measures
Intention to proceed with previously announced measures, such as the immediate expensing Capital Cost Allowance (“CCA”) provisions, the luxury tax, requirements for electronic interaction with CRA and a full review of the employment insurance system.
Please refer to the following link: https://mcusercontent.com/0f4c3720a52cee776e0e9f094/files/8d16ef8a-65d3-6e9c-7332-9ea2cc252f8d/2022_Federal_Budget_Commentary.pdf
W&P is Here to Help
Our team at Williams & Partners is available to provide further information and assistance to businesses and individuals with concerns regarding eligibility and recommended action items with respect to the 2022 federal budget. Should you have any questions or concerns, please do not hesitate to contact our office.
Yours very truly,
Williams & Partners