The recent federal budget included Housing Affordability Measures that may be applicable to your situation, now or in the future. There are three key measures intended to help: an incentive for first-time homebuyers, an increase in the amount of RRSP funds first-time buyers can access for a downpayment, and allowing divorced individuals to use their RRSP funds under the Home Buyers Plan. Let's take a closer look at each:
FIRST-TIME HOME BUYER INCENTIVE (available Fall 2019)
This new measure is basically a shared equity program designed to reduce mortgage payments for first-time buyers with the minimum downpayment. The Canada Mortgage and Housing Corporation (CMHC) will provide 5% of the cost of an existing home, or 10% of a new home in what amounts to an interest-free loan that isn't payable until you sell the property. The extra encouragement to purchase a newly built home is expected to boost home construction and help address a housing shortage in many areas.
There are a few caveats. If your household income is more than $120,000, you aren't eligible for the program. And your total borrowed amount (including the incentive portion) can't be more than four times your household income. With a 5% downpayment and a household income of $120,000, the maximum purchase price would be approximately $505,000.
The program is expected to be launched this Fall. We're still waiting for some details on how the incentive is paid back, and how increases or decreases in equity will be handled. Stay tuned! In the meantime, I can certainly run some numbers to determine if this is something you, or someone you know, may want to take advantage of later this year.
BOLSTERING THE HOME BUYERS' PLAN (available now)
The Home Buyers' Plan (HBP) allows first-time buyers to withdraw up to $25,000 ($50,000 per couple) from their RRSP to help with downpayment and closing costs, without having to pay tax on the withdrawal. HBP withdrawals are not added to a person's income when withdrawn, but instead must be repaid over a 15-year period. The budget proposes to increase the maximum withdrawal amount to $35,000 per qualified buyer, which is effective immediately.
DIVORCED INDIVIDUALS ELIGIBLE FOR HOME BUYERS' PLAN
The budget also proposed that those experiencing the breakdown of a marriage or common-law partnership can now participate in the Home Buyers' Plan. This measure will be available for withdrawals made after 2019, and is great news. After all, a financial plan that starts with homeownership can help both parties make the best possible start on a new path.
The bottom line on budget 2019? There are some good measures for some homebuyer groups that needed a boost. The new first-time buyer incentive program has certainly added another layer of complexity to the already complicated mortgage world that includes two different stress tests. Getting expert advice throughout your mortgage years is more important than ever. Got a homebuying dream? Feel free to get in touch for a review of your situation at any time!
For more info on mortgages or changes call PEI Mortgage Services at 902 940 5927.
2019 Federal Budget Review
On March 19, Finance Minister Bill Morneau unveiled the Liberal government’s fourth Federal Budget – and final budget before the 2019 election. Entitled “Investing in the Middle Class”, Budget 2019 continues with many of the themes of previous Liberal budgets, and anticipates a deficit of $19.8 billion for fiscal 2019-20 and $19.7 billion in 2020-21.
Budget Review: Budget 2019 Link
The key themes of the Budget include:
(i) Housing: increasing supply, improving fairness, and reducing barriers to home ownership by enhancing access to the Home Buyers’ Plan and introducing the First Time Home Buyer Incentive, which provides lower borrowing costs through a shared equity mortgage with the Canada Mortgage and Housing Corporation;
(ii) Training: assistance with the cost of post-secondary education, enhancing access to Employment Insurance for training leaves and the introduction of a new non-taxable Canada Training Credit;
(iii) Pharmacare: creating the Canadian Drug Agency to decrease the high costs of prescription drugs and provide more consistent coverage; and (iv) Secure retirement: increasing the Guaranteed Income Supplement earnings exemption threshold, encouraging the take-up of the Canada Pension Plan retirement pension for contributors who haven’t applied for their CPP pension by age 70 and introducing additional annuity options in registered plans. Finally, as in prior years, tax fairness and integrity remain a key theme of the government, with several measures aimed at improving the efficiency, certainty and fairness of the tax system.
From a personal and small business tax perspective, which is the focus of this review, the Budget did not propose any changes to personal or corporate tax rates. Notable personal tax measures proposed in the Budget include the introduction of additional annuity options for registered plans, restrictions on certain transfers of commuted pension values to Individual Pension Plans, and a proposed future annual cap of $200,000 on employee stock option grants that would receive the current tax-preferred treatment.
There were also limited measures affecting charitable giving and unlike recent budgets, there were only minor proposals affecting Canadian small businesses. The most significant income tax measures affecting individuals and Canadian private companies are summarized below. Note that the measures introduced are only proposals at this stage and may not ultimately be enacted into law. Readers are cautioned to consult with their tax advisers for specific advice on how they may be affected by these proposals.
Summary of Personal Income Tax Proposals
Canada Training Credit
In order to encourage Canadians to enhance their skills to succeed in today’s marketplace, Budget 2019 proposes to introduce the Canada Training Credit to address barriers to professional development for working Canadians. This new refundable tax credit aims to provide financial support to help cover up to half of eligible tuition and fees associated with training. Eligible individuals between the ages of 25 to 64 can accumulate $250 each year in a notional account, to a lifetime limit of $5,000, which can be accessed for this purpose. In order to qualify, the individual must have earnings of at least $10,000 in the year and their net income for the year cannot exceed the top of the third (federal) tax bracket for the year ($147,667 in 2019). The amount of a credit that can be claimed for a taxation year will be equal to the lesser of half of the eligible tuition and fees paid in respect of the taxation year and the individual’s notional account balance for the taxation year (based on amounts used or accumulated in respect of previous years). The amount claimed will offset, dollar for dollar, tax otherwise payable or will be refunded to the individual to the extent that the amount exceeds tax otherwise payable.
This measure will apply to the 2019 and subsequent taxation years. Consequently, the annual accumulation to the notional account will start based on eligibility in respect of the 2019 taxation year and the credit will be available to be claimed for expenses in respect of the 2020 taxation year. Earning and income thresholds under the Canada Training Credit will be subject to annual indexation.
Home Buyers’ Plan Enhancements
Currently, the Home Buyers’ Plan (HBP) helps first-time home buyers save for a down payment by allowing them to withdraw up to $25,000 from a Registered Retirement Savings Plan (RRSP) to purchase or build a home without having to pay tax on the withdrawal. Amounts withdrawn under the HBP must be repaid to an RRSP over a period not exceeding 15 years, starting the second year following the year in which the withdrawal was made.
For HBP purposes, an individual is not considered to be a first-time home buyer if, in the relevant calendar year (or in any of the four preceding calendar years), the individual, or the individual’s spouse or common-law partner, owned and occupied another home which was their principal place of residence.
In order to provide first-time home buyers with greater access to their RRSPs to purchase or build a home, Budget 2019 proposes to increase the HBP withdrawal limit to $35,000 from $25,000. As a result, a couple will potentially be able to withdraw $70,000 from their RRSPs to purchase a first home or a new home.
Budget 2019 also proposes to extend access to the HBP in order to help Canadians maintain homeownership after the breakdown of a marriage or common-law partnership. This measure will apply to HBP withdrawals made after 2019, whereas the increase in the HBP withdrawal limit will apply to the 2019 and subsequent calendar years in respect of withdrawals made after Budget Day.
Multi-Unit Residential Properties – Change In Use Rules
The Income Tax Act deems a taxpayer to have disposed of, and reacquired, a property when the taxpayer converts the property from an income-producing use (e.g., a rental property) to a personal use (e.g., a residential property) or vice versa. Where the use of an entire property is changed to an income-producing use, or an income-producing property becomes a principal residence, the taxpayer may elect that this deemed disposition not apply. As a consequence, the election can provide a deferral of the realization of any accrued capital gain on the property until it is realized on a future disposition.
The deemed disposition also occurs when the use of part of a property is changed. For example, this can occur where a taxpayer owns a multi-unit residential property, such as a duplex, and either starts renting or moves into one of the units. However, under the current rules, a taxpayer cannot elect out of the deemed disposition that arises on a change in use of part of a property.
To improve the consistency of the tax treatment of owners of multi-unit residential properties in comparison to owners of single-unit residential properties, Budget 2019 proposes to allow a taxpayer to elect that the deemed disposition that normally arises on a change in use of part of a property, not apply. This measure will apply to changes in use of property that occur on or after Budget Day.
Registered Plans – Annuities
The tax rules allow funds from certain registered plans to be used to purchase an annuity to provide income in retirement, subject to specified conditions. In exchange for a lump-sum amount of funds, an annuity provides a stream of periodic payments to an individual (i.e., the annuitant), generally for a fixed term, for the life of the annuitant or for the joint lives of the annuitant and the annuitant’s spouse or common-law partner.
To provide Canadians with greater flexibility in managing their retirement savings, Budget 2019 proposes to permit two new types of annuities under the tax rules for certain registered plans:
Variable Payment Life AnnuitiesThe existing tax rules generally require that retirement benefits from a PRPP or defined contribution RPP be provided to a member by means of a transfer of funds, either from: i) the member’s account to an RRSP or RRIF of the member; ii) variable benefits paid from the member’s account; or iii) an annuity purchased from a licensed annuities provider. However, in-plan annuities (annuities provided to members directly from a PRPP or defined contribution RPP) are generally not permitted under the tax rules. Budget 2019 proposes to amend the tax rules to permit PRPPs and defined contribution RPPs to provide a variable payment life annuity (VPLA) to members directly from the plan. A VPLA will provide payments that vary based on the investment performance of the underlying annuities fund and on the mortality experience of VPLA annuitants. These measures will apply to the 2020 and subsequent taxation years.
Registered Disability Savings Plans
Change in Eligibility for the Disability Tax CreditThe Registered Disability Savings Plan (RDSP) is a tax-assisted savings vehicle intended to help an individual with a disability – and the individual’s family – save for the individual’s long-term financial security. An RDSP may be established only for a beneficiary who is eligible for the disability tax credit (DTC).
To encourage long-term saving, the Government of Canada supplements private RDSP contributions with Canada Disability Savings Grants and provides Canada Disability Savings Bonds under the Canada Disability Savings Program. These grants and bonds are eligible to be paid into an RDSP until the end of the year in which a beneficiary of the RDSP turns 49 years of age.
Currently, when a beneficiary of an RDSP ceases to be eligible for the DTC, no further contributions may be made to, and no further Canada Disability Savings Grants and Canada Disability Savings Bonds may be paid into, the RDSP. The income tax rules generally require that the RDSP be closed by the end of the year following the first full year throughout which the beneficiary is not eligible for the DTC. Previous amendments to the Income Tax Act allow an RDSP plan holder to elect to extend the period for which an RDSP may remain open after a beneficiary becomes ineligible for the DTC. To qualify for this extension, a medical practitioner must certify in writing that
the nature of the beneficiary’s condition makes it likely that the beneficiary will, because of the condition, be eligible for the DTC in the foreseeable future.
However, concerns have been raised that the requirements that an RDSP be closed and the assistance holdback amount repaid to the Government upon loss of eligibility for the DTC do not appropriately recognize the period of severe and prolonged disability experienced by an RDSP beneficiary.
Accordingly, Budget 2019 proposes to
i) remove the time limitation on the period that an RDSP may remain open after a beneficiary becomes ineligible for the DTC and
ii) to eliminate the requirement for medical certification that the beneficiary is likely to become eligible for the DTC in the future in order for the plan to remain open. The general rules that currently apply in respect of a period during which an election is valid will apply to an RDSP in any period during which the beneficiary is ineligible for the DTC with some modifications.
This measure will apply after 2020. An RDSP issuer will not, however, be required to close an RDSP on or after Budget Day and before 2021 solely because the RDSP beneficiary is no longer eligible for the DTC.
Unlike RRSPs, amounts held in RDSPs are not exempt from seizure by creditors in bankruptcy. To level the playing field, Budget 2019 also proposes to exempt RDSPs from seizure in bankruptcy, with the exception of contributions made in the 12 months before the filing.
Employee Stock Options
As a continued practice in undertaking a review of federal tax expenditures and the fairness of the tax system, Budget 2019 announced the Government’s intent to limit the use of the current employee stock option tax regime and move toward aligning the tax treatment with that of the United States for employees of large, long-established, mature firms.
Employee stock options, which provide employees with the right to acquire shares of their employer at a designated price, are an alternative compensation method used by businesses to increase employee engagement, and promote entrepreneurship and growth. Many smaller, growing companies, such as start-ups, promote this compensation method to attract and retain talented employees by allowing them to provide a form of remuneration linked to the future success of the company.
To support this objective, current tax rules provide employee stock options with preferential personal income tax treatment in the form of a stock option deduction. This effectively results in the income tax benefit realized being taxed at a rate equal to one half of the normal personal tax rate applicable to other forms of employment income, effectively resulting in the same preferential tax rate as capital gains.
In the Budget, the Government noted that it does not believe that employee stock options should be used as a tax-preferred method of compensation for employees of large, mature companies. In light of this policy rationale, the Government intends to move forward with changes to limit the benefit of the employee stock option deduction for high-income individuals employed at large, long-established, mature firms. In its approach, the Government indicated that it will be guided by two key objectives:
The Budget did not outline the distinction between the types of firms identified above, however the Government stated that further details of this measure will be released before the summer of 2019. The Budget commentary indicated that any changes would apply on a go-forward basis only and would not apply to employee stock options granted prior to the announcement of legislative proposals to implement any new regime.
Proposals Affecting Canadian Businesses
Support for Canadian Journalism
To provide support for Canadian journalism, the Budget proposes to introduce three new tax measures:
Currently, certain relief is provided to Canadian-controlled private corporations (CCPCs) carrying on a farming or fishing business from tax rules designed to prevent the multiplication of the small business deduction (a deduction to reduce a CCPC’s federal corporate income tax rate from 15 per cent to 9 per cent on qualifying income in 2019, up to $500,000). To provide greater flexibility to farming and fishing business, the Budget proposes to extend this relief to sales of farming products and fishing catches to any arm’s length corporation, thereby broadening access to the small business deduction for these businesses.
This measure applies to taxation years that begin after March 21, 2016.
Scientific Research and Experimental Development Program (SR&ED)
Under the SR&ED tax incentive program, qualifying expenditures are fully deductible in the year they are incurred. In addition, these expenditures are eligible for an investment tax credit. The rate and level of refundability of the credit vary depending on the characteristics of the business, including its legal status and its size. For CCPCs, a fully refundable enhanced tax credit at a rate of 35 per cent is available on up to $3 million of qualifying SR&ED expenditures annually. Under the current tax law, this expenditure limit is gradually phased out based on two factors, which apply on the basis of an associated group:
This measure will apply to taxation years that end on or after Budget Day.
Other Notable Proposals
In each of its previous three budgets, the Government has introduced tax measures intended to maintain the integrity of Canada’s tax system as well as to ensure tax rules function as intended and do not result in unfair tax advantages. Budget 2019 continues this approach by proposing further integrity measures that are intended to:
Individual Pension Plans
A further integrity measure announced in Budget 2019 seeks to prevent Individual Pension Plans (IPPs) from avoiding the prescribed transfer limits on commuted pension values. Generally, when an individual terminates membership in a defined benefit Registered Pension Plan, income tax rules allow for a tax-deferred transfer of a prescribed portion (normally about 50 per cent) of the commuted value to the member’s RRSP or similar registered plans.
These limits are meant to prevent inappropriate tax deferrals when individuals transfer assets out of certain types of pension plans. The Government has become concerned with planning being undertaken that seeks to circumvent these prescribed transfer limits to obtain a 100 per cent transfer of pension assets to a new IPP (sponsored by a newly formed corporation controlled by the terminated individual) instead of the restricted transfer limits to the individual’s RRSP or other registered plan. The Budget therefore proposes measures that are intended to ensure the prescribed transfer limits are not circumvented. Specifically, IPPs will be prohibited from providing retirement benefits for past years of employment that were pensionable services under a defined benefit plan of another employer other than the IPP’s participating employer (or a predecessor employer). This measure applies to pensionable service credited under an IPP on or after Budget Day.
Donations of Cultural Property
Enhanced tax incentives are provided under the Income Tax Act to encourage donations of cultural property to certain designated institutions and public authorities in Canada, in order to ensure that such property remains in Canada for the benefit of Canadians. The enhanced tax incentives include a charitable donation tax credit (for individuals) or deduction (for corporations), which may eliminate the donor’s tax liability for a year, and an exemption from income tax for any capital gains arising on the disposition.
To qualify for the incentives, a donated property must be of “outstanding significance” by reason of its close association with Canadian history or national life, its aesthetic qualities or its value in the study of the arts or sciences. In addition, it must be of “national importance” to such a degree that its loss to Canada would significantly diminish the national heritage. These requirements are set out in the Cultural Property Export and Import Act and are also used to regulate the export of cultural property out of Canada.
However, a recent court decision related to the export of cultural property interpreted the “national importance” test as requiring that a cultural property have a direct connection with Canada’s cultural heritage. This decision has raised concerns that certain donations of important works of art that are of outstanding significance but of foreign origin may not qualify for the enhanced tax incentives.
To address these concerns, Budget 2019 proposes to amend the Income Tax Act and the Cultural Property Export and Import Act to remove the requirement that property be of “national importance” in order to qualify for the enhanced tax incentives for donations of cultural property. No changes are proposed that would affect the export of cultural property.
This measure will apply in respect of donations made on or after Budget Day.
Previously Announced Measures
The Budget also confirms the Government’s intention to proceed with certain other previously announced tax and related measures, including the following measures affecting individuals and Canadian private companies:
For more details call on on your PEI Business Federation financial advisers or mortgage brokers: 902 940 5927 - firstname.lastname@example.org
Income Tax Calculator for Individuals 2018
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Broker vs Banker
You want it all: the best available rate with exactly the right features you need to live comfortably with your mortgage and pay if off in record time. If you want the perfect mortgage, you need to shop around. And that’s my strength. I offer access to over 50 of Canada’s leading lenders, including major banks, credit unions, and national, regional and private lenders. I do the research for you, finding you the best mortgage across multiple lenders.
Your bank, as great as they are with your day-to-day banking, may not be the best choice for your mortgage because they represent just one available lender. Access to lender choice is one difference between getting a mortgage from a Bank vs a Broker, here are more:
YOUR MORTGAGE BROKER YOUR BANK
MORTGAGE RATES Mortgage brokerages negotiate discounted rates with lenders, and have access to rate promotions and specials.Rates are set by the Bank. If there’s a better deal in the marketplace, you’ll have to find it yourself.
OBJECTIVITY Your Mortgage Broker works for you, not any one lender.Mortgage specialists are there to build business for the Bank.
SOLUTIONS Brokers have access to mortgages for the self-employed and those with past credit issues.It is difficult to get a mortgage for certain client situations.
COST The winning lender pays your Broker for the services and solution provided.Mortgage specialists are paid and incented by the Bank.
ONGOING SERVICE Brokers offer ongoing advice after your mortgage closes i.e. how to pay off your mortgage faster, power down debt, finance renovations or invest in property. There have been many regulatory changes, so it’s important to have access to a mortgage expert.No proactive ongoing advice is typically provided. You will get an annual mortgage statement.
AT RENEWAL Your Broker will go to bat for you again to make sure you have the best deal possible.You may not be offered the best deal initially, requiring you to proactively contact the Bank to negotiate.
Getting a mortgage is a very significant financial event. That’s why you want someone who is highly specialized in the mortgage marketplace and focused solely on your needs.
Get in touch for advice that is relevant to your situation.
30-year amortizations can be a smart financial strategy
If you have 20 per cent equity or more, you can choose a 30-year amortization mortgage. Homeowners with less than 20 per cent down are not eligible for an amortization over 25 years. A longer amortization allows you to minimize your mortgage payments and free up cash flow for uses like investing, business needs, post-secondary education, maternity leave, home maintenance, or other life situations. You can keep your payments at a shorter amortization and only use this flexibility if the need arises. Having a mortgage that gives you room to breathe may be worth the extra cost in interest, and I can help you determine if this is right for you.
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How Your Credit Score is Calculated
Understanding how your credit score is calculated is a crucial step in improving your score. Your score is made up of five components:
1. Your Payment History (35%): the largest part of your score is made up of your payment history and if you have demonstrated that you can pay your debts on time.
2. How Much You Owe (30%): credit bureaus are looking for how much debt you already owe prior to applying for more credit.
3. The Length of your Credit History (15%): Even if you have managed your credit effectively from day one, if you have a shorter credit history this can also mean your credit score can be lower.
4. New Credit Card Applications (10%): While it is reasonable for a creditor or lender to be cautious of the frequency at which someone is applying for additional credit, there can also be instances when taking on new credit card applications can actually be beneficial.
5. Types of Credit (10%): By maintaining a diverse range of credit types - credit cards, lines of credit, a car loan, a mortgage - this can be an excellent way to demonstrate your ability to manage your debts as a whole.
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The Bank of Canada has raised its benchmark interest rate by a quarter point for the fifth time since last summer, pushing up the cost of borrowing for Canadians.
The bank's rate is now set at 1.75 per cent. That's the highest it's been in almost a decade, dating back to December 2008.
Known as the target for the overnight rate, the benchmark is what Canada's big banks charge each other for short-term loans. It filters down to consumers, because it affects the rates the banks offer their customers for things like variable rate mortgages and savings accounts.
That's already happening, as four of Canada's biggest banks increased their own prime rates by a quarter percentage point on Wednesday.
Royal Bank, TD, BMO and CIBC have all raised their prime lending rates from 3.70 to 3.95 per cent. Scotiabank is expected to follow suit soon, but all the new prime rates will be in effect as of Thursday morning.
PEI Business Federation reacts on CBC Compass. Small business working capital loans and lines of credit will be impacted as well as variable mortgages. More increases expected in December.
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Ottawa now expects to post a $19.4-billion deficit this fiscal year and a $18.1-billion deficit in 2018-19. It is projected to decline to $12.3-billion by 2022-23, meaning the Liberals will not deliver on a campaign pledge to balance the books by the 2019 election.
The federal debt will reach $651.5-billion in 2017-18, rising to $730.1-billion by 2022-23.
When measured as a share of the economy, the debt-to-GDP ratio is expected to decline from 30.4 per cent this year to 28.4 per cent in 2022-23.
The government acknowledges that its ambitious plan to spend $180-billion over 10 years on infrastructure is not rolling out as quickly as planned. Unspent money has been pushed ahead into future years.
The budget also gives the green light for VIA Rail to purchase new trains for its principal corridor in Quebec and Ontario. Further money is set aside to keep studying VIA's "high-frequency rail" plan for exclusive passenger-rail tracks in the Quebec City-to-Windsor corridor.
The budget's appeal to women and the promise of a pharmacare study, headed by former Ontario health minister Eric Hoskins, appears to be aimed at center-left voters who might consider voting for the NDP. New leader Jagmeet Singh has vowed to run the next election on a national pharmacare program.
Regional development agencies will receive a total of $1.3-billion over five years, with more than $900-million going to vote-rich Ontario.
"I would consider this to be very much a left-of-centre budget because of the focus on equality," said Craig Alexander, chief economist for the Conference Board of Canada. "If you look at the title of the budget, it's equality and growth. But I would argue that it's about equality in capital letters and growth in small letters."
Conservative Leader Andrew Scheer said big spending Liberal budgets are failing to produce results.
"Justin Trudeau is failing to balance the budget by 2019 as he promised, ensuring that future generations of Canadians will have more and more debt to pay back," he said, in reference to the Liberal Leader's campaign pledge.
The NDP's Mr. Singh called Tuesday's budget a "timid" document that fails to act on pharmacare or close tax loopholes that favour the rich.
"On pharmacare, what the government is proposing is not a plan. It is a fantasy," he said, noting that the Liberals' promised study does not come with a funding pledge.
The Canadian Taxpayers Federation (CTF) today expressed concern about the Trudeau government’s 2018 budget, which did not lay out a clear path to eliminate the deficit and failed to address growing concerns about Canada’s tax competitiveness.
“The good news is this budget largely holds the line on spending,” said CTF Federal Director Aaron Wudrick. “The bad news is the government has once again failed to tackle the structural deficits it created in the 2016 budget and which will add $80 billion in new federal debt by 2022.”
The federal debt is projected to rise to $730 billion by 2022 with debt interest costs alone expected to jump from $26 billion per year in 2018 to $33 billion per year by 2022.
The government’s proposed treatment of small business passive investment abandoned the proposed hard limit of $50,000 on annual passive investment income in favour of a gradual phase out of the deduction limit for annual passive investment income between $50,000 and $150,000.
“The new passive investment rules, combined with the new income sprinkling rules, will still squeeze businesses for more than $1 billion a year by 2020,” said Wudrick. “But it’s fair to say these further revisions are a big improvement over the government’s original proposals.”
Wudrick also noted that the federal budget does not include any measures to respond to the major business tax cuts in the United States which are expected to impact Canada’s ability to attract and retain jobs and investment.
PEI Business Federation however does applaud the changes in EI that appears to address the so-called "hole" in employment insurance to help families in fish processing and tourism make ends meet until the new work season begins which has had a very negative impact on PEI's seasonal workers.
ECONOMIC AND FISCAL OVERVIEW
ECONOMIC AND FISCAL OUTLOOK
DETAILS OF ECONOMIC AND FISCAL PROJECTIONS
Highlights from Canada's 2017 federal budget tabled Wednesday by Finance Minister Bill Morneau:
-- The deficit (as shown in the above chart) is at $23 billion, and is projected to reach $28.5 billion for 2017-18 -- including a $3 billion contingency fund -- before declining to $18.8 billion in 2021-22.
-- Employment insurance premiums are going up five cents to $1.68 per every $100 of insurable earnings, up from $1.63 -- the maximum allowable increase under the Employment Insurance Act.
-- The 71-year-old Canada Savings Bond program, first established in 1946, is no longer cost effective and is being phased out.
-- Higher taxes on alcohol and tobacco products: the excise duty rate on cigarettes goes up to $21.56 per carton of smokes from $21.03, while the rates on alcohol are going up two per cent. Both will be adjusted every April 1 starting next year, based on the consumer price index.
-- The public transit tax credit, which allows the cost of transit passes to be deducted, is being eliminated effective July 1.
-- The budget dedicates $11.2 billion to cities and provinces for affordable housing over 10 years as part of the second wave of the government's infrastructure program, $5 billion of which is to encourage housing providers to pool their resources with private partners to pay for new projects.
-- An "innovation and skills plan" to foster high-tech growth in six sectors: advanced manufacturing, agri-food, clean technology, digital industries, health/bio-sciences and clean resources-- $523.9 million over five years to prevent tax evasion and improve tax compliance, including more auditors, a crackdown on high-risk avoidance cases and better investigative efforts.
-- $7 billion in spending over 10 years for Canadian families, including 40,000 new subsidized daycare spaces across Canada by 2019, extended parental leave and allowing expectant mothers to claim maternity benefits 12 weeks before their due date.
-- $2.7 billion over six years for labour market transfer agreements with the provinces and territories to modernize training and job supports, to help those looking for work to upgrade skills, gain experience, start a business or get employment counselling.
-- A national database of all housing properties in Canada, known as the Housing Statistics Framework, to track details on purchases, sales, demographics and financing, as well as foreign ownership.
-- $400 million over three years through the Business Development Bank of Canada for a "venture capital catalyst initiative" to make more venture capital available to Canadian entrepreneurs.
-- A comprehensive spending review of "at least three federal departments," to be named later, to eliminate waste and inefficiencies, as well as a three-year review of federal assets and an audit of existing innovation and clean-tech programs.
-- $59.8 million over four years, beginning in 2018-19, to make student loans and grants more readily available for part-time students, and $107.4 million over the same period for assist students with dependent children.
-- $287.2 million over three years, starting in 2018-19, for a pilot project to facilitate adult-student access to student loans and grants.
-- $225 million over four years, starting in 2018-19, for a new organization to support skills development and measurement.
-- $395.5 million over three years for the youth employment strategy.
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