Federal Budget 2019 – A Breath of Fresh Air

March 21, 2019, Personal Income Tax


Welcome Spring with a Budget that is a breath of fresh air!
“Protecting the environment and growing the economy go together.”
Government of Canada

 

Before I get into the tax highlights from the federal budget relevant for my clients, I am pleased to inform that each of you will get a Climate Action Incentive payment from the federal government in your taxes this year, which will increase in subsequent years, as this reflects the price on pollution and is redistributed to families and investments to reduce emissions.

  • $154 for a single adult or the first adult in a couple.
  • $77 for the second adult in a couple. Single parents will receive this amount for their first child.
  • $38 for each child in the family (starting with the second child for single parents).

Under this proposal, an Ontario family of four will receive $307 in 2019. The average household in Ontario will receive $300, taking into account the various family sizes and circumstances.

 

Federal Budget 2019
Personal Income Tax
Home Buyers’ Plan Increased

 

  • To help a first time home buyer to purchase or build a home, you can now withdraw up to $35,000 from your RRSP starting in 2019, up from $25,000, without being taxed on the withdrawal.
  • You have up to 15 years to repay it back to your RRSP by making a minimum RRSP contribution every year equal to one fifteenth of the amount withdrawn. If you miss that minimum contribution for the year, it simply gets taxed in that year.
  • If you previously owned a home, you can still be a first time buyer if four years have passed since owning a home last.

New Canada Training Tax Credit

  • To retrain and upskill a labour market so Canadians aren’t behind the eight ball, the government introduced the Canada Training Credit, a $250 yearly cumulative tax credit (maximum lifetime credit of $5,000) to be applied to their training costs.
  • To accumulate the $250 yearly credit, Canadian residents between 25 and 64 years old must file a tax return and have working-type earnings in excess of $10,000 and net income less than the top of the third tax bracket ($147,667 for 2019).

New Tax Credit for Digital News Subscriptions

 

Keeping on-the-go Canadians informed and supporting journalism is the reason for this new tax credit, a breath of fresh air from the attack on media and “fake news” south of the border.
The credit will be capped at $500 for a combined digital and newsprint subscription.

 

Small Business Tax
Accelerated Equipment Write-Offs with a Clean Energy Focus

 

Purchases of manufacturing and processing equipment and clean energy equipment made after November 20, 2018 and before the year 2024 can be fully expensed (100% write-off) in the year acquired.

The write-off for manufacturing and clean energy equipment gets reduced to 75% in the years 2024 and 2025, and again reduced to 55% in years 2026 and 2027.
There is an accelerated investment incentive three times the normal first year write off for purchases of other types of equipment after November 20, 2018 and before 2024. For example, businesses can write off 82.5% of the cost of computers the year they are bought, instead of 27.5%. The incentive gets reduced to two times the normal first year write off in the years 2024 to 2027.

 

Notice to Reader

 

Dean Constand CPA publishes this blog for information purposes only. Feel free to distribute to colleagues and friends. Although the material has been carefully prepared, it is not a substitute for professional advice.