The 2022 Canadian Federal Budget was recently unveiled, providing Canadians with a roadmap for a year of Government funding and economic recovery. The entire report is just over 300 pages, but we’ve pulled out the most important changes and how they could potentially impact your finances. The key changes that are most likely to impact the finances of everyday Canadians are those that affect housing and taxes.
1. Federal Government action on housing
In towns and cities across Canada, home prices have risen dramatically since the start of the pandemic, and so too have anxieties about affordability. The Canadian Government hopes to address these concerns with the following programs:
- The Tax-Free First Home Savings Account, an all-new registered plan designed to help Canadians save money for the purchase of their first home. Details still need to be ironed out, but it’s expected you can invest up to $8000/year into the account with a maximum contribution of $40,000.
- Looking to address housing supply shortages, the budget also outlines a Housing Accelerator Fund with the goal of building 100,000 new homes by 2025.
For those who invest in real estate as part of their financial plans, big changes are on the way that may shape their near-term plans.
- The budget calls for a 2-year ban on the purchase of homes by foreign buyers to be used as non-primary residences
- It’s also introducing a “house flipping” tax that disallows personal exemptions and capital gains earned on all homes that are sold within 12 months of purchase–any income earned from flipping a house will be treated as interest income.
Canadians will receive a 15% tax credit for home renovation costs up to $50,000 when used to build a second unit for dependents with disabilities who are in their care. This will not apply to the construction of secondary units built for rental purposes.
2. Key initiatives for individual and family finances
Homeownership isn’t the only major agenda item on the budget. The budget outlines other big changes for Canadians including:
- For families earning less than $90,000 per year, a national dental care program is being outlined, though details are still unclear.
- High-income earners will be looking at a new minimum tax, with details expected to arrive in fall 2022.
Canadians may also enjoy benefits from more specialized programs, including:
- Deductions of up to $4000 in relocation expenses for tradespeople who have to travel for work.
- A continuation of zero-emissions vehicle incentives until March 2025.
Part of the funding for these and other initiatives may come from a new “sin tax” the budget introduces for vaping products. It’s expected to be implemented while excise duties for low-alcohol beers are removed.
Speak with an advisor today
The Canadian economy is improving and the federal deficit is shrinking, but the recovery isn’t over, and the 2022 Federal Budget is far from balanced. To help make sense of the Federal Budget and how it may impact your finances, speak with one of our advisors over the phone at 1.888.517.7000 or book an appointment online.
This article is provided for general information purposes only. It is not to be relied upon as financial, tax, or investment advice or guarantees about the future, nor should it be considered a recommendation to buy or sell. Information contained in this article, including information relating to interest rates, market conditions, tax rules, fees, and other investment factors are subject to change without notice and Cost Capital Savings Federal Credit Union is not responsible to update this information. All third party sources are believed to be accurate and reliable as of the date of publication and Coast Capital Savings Federal Credit Union does not guarantee accuracy or reliability of such sources. Readers should consult their own professional advisor for specific financial, investment, and/or tax advice tailored to their needs to ensure that individual circumstances are considered properly and action is taken based on the latest available information.