Budget 2022 proposed a broad array of changes impacting a wide variety of individuals, businesses, charities and other organizations. While there was some speculation, the Budget included no changes to the personal or corporate tax rates, nor to the inclusion rate on taxable capital gains.
After a long evening of analysis, the VTN team has come up with this list of ten areas for accountants and small business advisors:
1) Housing Affordability – Proposed new measures and enhancements to existing measures
New Tax-Free First Home Savings Account whereby contributions (of up to $8,000 annually and $40,000 in total) would be deductible, and income in account and withdrawals to make the purchase of a first home would not be taxable.
Doubling of the Home Buyers’ Tax Credit.
Doubling the maximum Home Accessibility Tax Credit.
New Multigenerational Home Renovation Tax Credit which would provide a refundable tax credit on up to $50,000 of eligible expenditures in respect of renovations to build a qualifying secondary suite for an eligible relation (65+ or eligible for the disability tax credit).
Two-year prohibition of foreign commercial enterprises and people who are not Canadian citizens or permanent residents from acquiring non-recreational, residential property in Canada.
New residential property flipping rule that all gains arising from dispositions of residential property (including rental property) that was owned for less than 12 months to be business income, except where certain life events are experienced, such as a death, relationship breakdown, birth or addition to the family, or disability.
2) New residential property assignment sales will be subject to GST/HST.
3) Medical expense tax credit being broadened to be accessible by those who rely on a surrogate or a donor to become a parent.
4) Labour mobility deduction for tradespeople to allow for a deduction of up to $4,000/year related to travel and temporary relocation costs for those in the construction industry.
5) Small Business Deduction – Access to the small business deduction will be enhanced for corporations with taxable capital between $10 million and $50 million. The business limit will be reduced by $1 for every $80 of taxable capital in excess of $10 million, such that the limit will be more gradually reduced, and only eliminated where taxable capital equals or exceeds $50 million.
6) Anti-Avoidance Measures – Corporate Investment Income – Private corporations which are not CCPCs, but are factually controlled by one or more Canadian persons, would be subject to the same investment income rules as a CCPC.
7) Intergenerational Business Transfers (Bill C-208)– The government reiterated its intention to amend the legislation to restrict these transactions to genuine intergenerational business transfers, while continuing to facilitate legitimate business successions. A consultation was announced, with amending legislation expected to be tabled in the Fall of 2022.
8) Flow-through shares – Tax benefits for flow-through shares will be enhanced for critical mineral exploration and removed for oil, gas and coal.
9) Digital platform operators will be required to disclose details of the activities of Canadian participants in the digital economy.
10) Charities – Modifications to the disbursement quota and the rules for working with organizations that are not qualified donees.
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Federal Budget Commentary
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