The 2019 federal budget is full of winners and losers. In fact, everyone from first-time home buyers, to seniors, to workers looking to upgrade their skills walked away with money in their pocket. But small business and high-income earners? Not so much. Here are 18 key ways the federal budget will hit your pocketbook.
1. First-time home buyers can now borrow $35,000 from RRSPs—up from $25,000. It must still be repaid in 15 years.
2. A new first-time Home Buyer Incentive will allow buyers who have the minimum down payment for a mortgage to finance 10 percent on a new home or five percent on an existing home through a “shared equity mortgage” with the Canadian Mortgage and Housing Corporation (CMHC). Doing so will lower buyers’ monthly mortgage payments—but terms and conditions apply. The main one? Only households with combined incomes lower than $120,000 annually will qualify. Still, for buyers who qualify, monthly mortgage payments could be lowered by several hundred dollars.
3. Housing supply got a boost, too. Liberals are vowing to build 42,500 new housing units in low-supply areas for rentals over the next nine years.
4. A new Canada Training Benefit will chip in a small amount towards the cost of job-related training fees. It’s a credit of $250 a year that can accumulate to help pay for future training, up to $5,000 over a person’s career. People between the ages of 25 and 64 are eligible.
5. A new Employment Insurance Training Support Benefit will be set up. It will allow those who want to get more job and skills training to take 4 weeks off every 4 years to do so, with some living expenses covered.
6. A program will be created with the provinces to allow people to leave a job to get more skills, and still have a job when they return. To qualify, workers need to be making between $10,000 and $150,000. (Note: this won’t kick in until the end of 2020.)
7. The Canada Student Financial Assistance Act will be changed so that borrowers don’t accrue debt on their student loans in the six-month period after they leave school.
8. Interest rates on Canada Student Loans and Canada Apprentice loans will be lowered to the prime rate. Right now it’s at prime + 2.5 percent.
9. Cash rebates worth up to $5,000 on purchases of zero-emission vehicles—mostly electric cars, will be offered. This will apply to vehicles with a retail value of less than $45,000 and goes into effect today.
10. Businesses that buy e-vehicles could also write them off completely in the first year.
11. Tax breaks will be given to consumers who subscribe to Canadian digital news sites. The non-refundable tax credit will be worth up to $75 a year. That means each Canadian will be able to claim up to $500 in costs towards eligible digital subscriptions.
12. The Liberal government also is planning to remove the GST from sales of eggs and embryos used for in-vitro fertilization procedures. (Human sperm for this purpose already has no GST.)
13. The budget promises to adjust the rules to allow employed seniors to earn more money in their jobs before having to give up their Guaranteed Income Supplement (GIS) money through claw-backs. The government also aims to expand eligibility for the GIS earnings redemption. When in place, this could mean an increase of $2,500 annually per recipient. Right now, eligible seniors and their spouses can only earn up to $3,500 a year each before having GIS benefits clawed back—and that limit only applies to employment income. The new rules would apply equally to employment and self-employment earnings and allow seniors to make up to $5,000 a year before the government starts rolling back their benefits. For the next $10,000 in annual earnings, the budget proposes a 50-per cent exemption. These changes mean the annual income at which GIS benefits are fully clawed back would rise to about $30,000 a year. That’s up from just over $20,000 a year for seniors with employment income—and up from less than $20,000 for those with self-employment income.
14. A new option, the so-called advanced life deferred annuities (ALDAs), were introduced. Right now, Canadians can buy annuities with their RRIF money but payouts must start at age 71. With the new ALDAs, Canadians would be able to defer payouts until the end of the year they turn 85. A limit of 25 percent of their registered holdings to a maximum lifetime dollar value of $150,000 would apply. Best of all, the value of the ALDA would not be included in the calculation the government uses to calculate how much seniors over age 71 must withdraw from their RRIF annually. This would effectively allow Canadians to keep more money in their RRIFs for longer—very helpful in later senior years, which can be expensive due to the sky-high costs of long-term care, etc.
15. All eligible Canadians will automatically be enrolled in the Canada Pension Plan (CPP). Right now, you have to apply by age 70 to receive it. If you miss the deadline, then you don’t receive the benefit.
16. The government is planning to limit the use of employee stock options by changing the tax rules around them. They are now taxed more favorably than personal income.
17. No measures to lower personal income tax rates for high earners.
18. No small business tax breaks.
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