Here's how the 2021 Federal Budget might impact you or your business.
My 5-year-old son, while trying to fix his toy suddenly, threw up his arms and said, “this is impossible!” and shoved everything away. “Nothing’s impossible big guy, let’s have a look”, I encouraged. With some subtle suggestions phrased as questions he was able to get it fixed. Well now I get to eat my words because I’m going to summarize a 791-page federal budget in about 550 words. It feels impossible but, here are what I think are the important highlights.
Personal Measures
The Canada Recovery Benefits (CRB) and the temporary Employment Insurance (EI) enhancement will be extended. Including those for the Work-Sharing program.
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 not the year they were repaid. You can get your refund from the repayment faster this way, even if it means filing an adjusted personal tax return.
Other Personal Measures
The disability tax credit (DTC) will be broadened with several changes to broaden access to the DTC. These proposals would apply to the 2021 and subsequent taxation years.
Providing new investments totaling up to $30 billion over the next 5 years, and $8.3 billion ongoing for Early Learning and Child Care and Indigenous Early Learning and Child Care, with the goal of providing regulated child care for $10/day on average, within the next five years.
Providing interest-free loans of up to $40,000 to homeowners and landlords who undertake retrofits identified through an authorized EnerGuide energy assessment. Old Age Security augmentation for seniors who will be age 75 and older as of June 2022 with a one-time additional payment of $500 in August 2021.
Business Measures
Two of the main programs for businesses during the pandemic; The Canada Emergency Wage and Rent Subsidies (CEWS and CERS) will be extended. CEWS and CERS will be extended to September 25, 2021 but will both have phasing out provisions
The Canada Recovery Hiring Program was introduced. This program could provide eligible employers with a subsidy of up to 50% of the incremental remuneration paid to eligible employees between June 6, 2021 and November 20, 2021. The higher of CEWS or CRHP could be claimed, but not both.
Other business measures
Businesses will have the ability to immediately expense 100% of many capital asset purchases. The corporate tax rate on zero-emission technology manufacturing will be halved.
Establishing a federal minimum wage of $15 per hour, rising with inflation, for those workers in the federally regulated private sector.
Additional Funding for CRA of $330.6 million over five years to invest in cybersecurity measures and $41.7 million over three years to reduce processing time for adjustments to personal tax returns.
A 1% tax on the value of vacant or underused real estate owned by non-residents will be implemented.
Sales and Excise Tax
One of the more talked about measures is a new luxury tax of up to 10% will apply to the purchase of luxury vehicles and personal aircrafts over $100,000, or boats over $250,000, effective as of January 1, 2022. Keep in mind that the HST will be applied after the new luxury tax has been included in the sale price.
Previously Announced proposals get the go ahead
Intention to proceed with several previously announced measures, such as the accelerated Capital Cost Allowance (CCA) changes for zero-emission vehicles, and expanded disclosure requirements for trusts.
Wrap up
Well, I can hardly call that a thorough review, so some things are not always possible. But hopefully the information provided gives at least some insight to a very important document in relation to our country’s economy.
For our full “2021 Federal Budget Commentary” (English or French) please visit our Insights page (perspectives in french).
Author:
Jared Burns CPA, CA is the Director of Estate and Tax Planning with Louisbourg Investments. Submit your comments to jared.burns@louisbourg.net.
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This writing is for general information purposes only. It is not intended to provide legal, accounting, tax or financial advice. For complex matter you should always seek help from a professional. Any opinions expressed are my own and may not reflect those of Louisbourg Investments.