The 2021 Federal Budget has now been released, and it was a doozy (weighing in at 724 pages)!
After a long evening of analysis, the VTN team has come up with this top ten list of areas for accountants and small business advisors:
1) CEWS & CERS: Both programs are extended for four more periods, ending September 25, 2021. The rates will be gradually reduced over the last three periods. A special provision has been added to claw back claims of publicly listed entities whose executives’ earnings increased in 2021 as compared to 2019.
2) New Hiring Incentive: The Canada Recovery Hiring Program (CRHP) will provide a 50% subsidy for eligible remuneration paid in excess of that paid in a baseline reference period. The program lasts for six periods and commences June 6, 2021. The percentage is reduced over the last three periods. A revenue decline of over 0% is needed for the first period, over 10% for the remainder. The greater of CRHP or CEWS can be claimed, but not both.
3) Accelerated CCA Claims: Many depreciable assets will be eligible for a 100% write-off if purchased on or after Budget Day, and if they become available for use before January 1, 2024. There is a $1.5 million limit per associated group. Certain long-term assets, like buildings, are not eligible.
4) Zero-Emission Technology Manufacturers: The federal corporate tax rate would be cut in half starting with fiscal years commencing in 2022.
5) Canada Recovery Benefit and Related Programs: These programs will be extended.
6) Expansion of Current Credits/Benefits: Expanded access to, and value of, a number of personal measures, including, the Disability Tax Credit, Canada Workers Benefit, Northern Residents Deductions, and Old Age Security.
7) COVID-19 Benefit Repayment, Timing of Deduction: 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, rather than the year in which the repayment was made.
8) Tax on Select Luxury Goods: A tax on the retail sale of new luxury cars and personal aircraft priced over $100,000, and boats priced over $250,000, will be introduced, effective January 1, 2022.
9) Mandatory Disclosure Rules: While past Budgets have proposed specific anti-avoidance provisions, Budget 2021 proposes broad-based disclosure requirements for tax strategies considered aggressive by the government.
10) Foreign Owner’s Tax on Real Estate: A new national 1% tax on the value of vacant or underused real estate owned by non-resident, non-Canadians would be introduced. The tax would be levied annually beginning in 2022. Annual filings would be required as of 2023.
Bonus Item!
Electronic Communication between CRA and Taxpayers: Individuals will receive electronic Notices of Assessment where they (or their tax preparer) files their return electronically. Businesses using My Business Account will default to online mail. More tax, GST/HST and information returns will be required to be filed electronically. Electronic payments will be required for all amounts of $10,000 or more.
Subscribe to the VTN Brandable Commentary (for internal review and distribution to clients)
Federal Budget Commentary
Looking to inform your clients of implications, planning and practical points to consider from Federal Budget 2021?
Order your master copy of the Video Tax News' Commentary.
The Video Tax News Editorial Board is using their specialized tax experience to pull the most critical and practical tax updates from the Federal Budget.
Brand this publication with your logo and share it with your clients!
CLICK HERE to learn more about this timely and critical update for your clients.