Canadian Federal Budget 2022
Apr 28, 2022
On April 7, the Liberal government published the new Canadian Budget. Some of the items were expected and some expected anticipated items were not included.
There had been speculation that there would be changes to the capital gains inclusion rate. Thankfully, there were no changes in this Budget, and it will remain, for now, at 50%. There was also a lot of speculation that there may have been changes to the much-coveted principal residence tax exemption. Again, thankfully this will remain intact as well for the time being.
The following are a few of the items of interest in the new 2022 Canadian Budget.
This Budget includes some measures aimed at slowing down the red-hot Canadian real-estate market as well as perhaps making it easier for first time buyers to purchase a home. The feds have introduced a new anti-flipping tax. This new tax will impact residential property held for less than 12 months. If the residence is sold within 12 months the gains from the sales will be taxed as business income. There will be some exemptions such as sale due to certain life circumstances such as death, disability, the birth of a child, a new job, or divorce. The hope is this will slow speculative home purchases.
In an effort to help first time home buyers the new tax-free First Home Savings Account has been created (FHSA). This will allow qualifying first-time home buyers to save up to $40,000. Like an RRSP, the contributions will be tax-deductible; unlike the RRSP but similar to the TFSA, withdrawals (to purchase a first home) will be tax-free. The FHSA will have a maximum $8,000 annual contribution amount, but unused contributions year-over-year cannot be carried forward. It is proposed that you will be able to transfer funds from an RRSP to the FHSA subject to the annual ($8,000) and lifetime ($40,000) limits. If you do not buy a home within 15 years, you will have to close the account and the proceeds would be taxable if not rolled into an RRSP or RRIF account. Any Canadian over 18 residing in Canada who has not owned a home for the previous four calendar years would potentially qualify.
You may have seen a collaborative agreement between the Liberals and the NDP in the news. One of the results of this collaboration is the new National Dental Care Program. The government is promising a dental care program beginning this year for children under 12 years old, and will then expand to cover Canadians under 18 as well as seniors and people with disabilities in 2023. The program is expected to be up and running by 2025 but will be limited to families with annual incomes of less than $90,000.
There are more items in this Budget, and if you have any questions as to how these new measures will impact you, your family, or friends please reach out to your RGF Integrated Wealth Financial Advisor who will be happy to be of assistance.
There had been speculation that there would be changes to the capital gains inclusion rate. Thankfully, there were no changes in this Budget, and it will remain, for now, at 50%. There was also a lot of speculation that there may have been changes to the much-coveted principal residence tax exemption. Again, thankfully this will remain intact as well for the time being.
The following are a few of the items of interest in the new 2022 Canadian Budget.
This Budget includes some measures aimed at slowing down the red-hot Canadian real-estate market as well as perhaps making it easier for first time buyers to purchase a home. The feds have introduced a new anti-flipping tax. This new tax will impact residential property held for less than 12 months. If the residence is sold within 12 months the gains from the sales will be taxed as business income. There will be some exemptions such as sale due to certain life circumstances such as death, disability, the birth of a child, a new job, or divorce. The hope is this will slow speculative home purchases.
In an effort to help first time home buyers the new tax-free First Home Savings Account has been created (FHSA). This will allow qualifying first-time home buyers to save up to $40,000. Like an RRSP, the contributions will be tax-deductible; unlike the RRSP but similar to the TFSA, withdrawals (to purchase a first home) will be tax-free. The FHSA will have a maximum $8,000 annual contribution amount, but unused contributions year-over-year cannot be carried forward. It is proposed that you will be able to transfer funds from an RRSP to the FHSA subject to the annual ($8,000) and lifetime ($40,000) limits. If you do not buy a home within 15 years, you will have to close the account and the proceeds would be taxable if not rolled into an RRSP or RRIF account. Any Canadian over 18 residing in Canada who has not owned a home for the previous four calendar years would potentially qualify.
You may have seen a collaborative agreement between the Liberals and the NDP in the news. One of the results of this collaboration is the new National Dental Care Program. The government is promising a dental care program beginning this year for children under 12 years old, and will then expand to cover Canadians under 18 as well as seniors and people with disabilities in 2023. The program is expected to be up and running by 2025 but will be limited to families with annual incomes of less than $90,000.
There are more items in this Budget, and if you have any questions as to how these new measures will impact you, your family, or friends please reach out to your RGF Integrated Wealth Financial Advisor who will be happy to be of assistance.
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