The 2019 Federal Budget proposes a number of changes that will affect individual Canadians, and their tax strategies for the year ahead.
Many of the changes are focused on:
- Housing - The introduction of first-time home buyer’s incentive, tax deferral when converting multi-unit residential properties, and greater access to the RRSP Home Buyer’s Plan for first-time home buyers and separated individuals;
- Seniors - Added annuities to registered plans, changes to rules for specified multiemployer plans, automating enrollment in the CPP for those 70 or older, and the introduction of a guaranteed income supplement;
- As well as job and skill measures - The introduction of the Canada Training Credit and EI Training Support Benefit, preferential tax treatment of employee stock options to be limited to start-ups and growing companies and a new tax credit for Canadian journalists.
Koroll & Company will discuss all of these changes in greater detail throughout our blog during the coming weeks.
Other changes that individual Canadian may expect to see in the future include:
Making Enhanced Credit more accessible for donations of cultural property
Individuals donating cultural property to designated institutions and public authorities benefit from an enhanced tax incentive. This is done for the purpose of ensuring cultural property in Canada remains in Canada.
To qualify, however, the property must be of national importance - meaning that there would be a significant loss to national heritage if it were to be donated elsewhere.
The budget proposes to remove this eligibility criteria. Therefore, as of March 19, 2019, cultural property no longer has to be of national importance to qualify for the enhanced credit.
Indefinite Life for RDSPs
Currently, Registered Disability Savings Plans (RDSP) may only be created if the beneficiary is eligible for the Disability Tax Credit. If that individual becomes ineligible for the Disability Tax Credit, the RDSP needs to be collapsed by the end of the following year, unless a medical professional certifies that the individual will most likely become eligible for the Disability Tax Credit again in the foreseeable future. In which case, the life of the RDSP will be extended for four years.
The budget proposes to remove this time limitation, in the case of Disability Tax Credit ineligibility, and the need for certification by a medical practitioner, allowing the RDSP to remain open indefinitely.
New rollover rules from RRSPs and RRIFs of deceased to beneficiaries RDSP
Currently, amount a Registered Retirement Savings Plan (RRSP) or Registered Retirement Income Fund (RRIF) of a deceased individual can be rolled over into a beneficiary’s RDSP.
Under the new rules, a rollover from an RRSP or RRIF to a beneficiary’s RDSP will only be allowed if it occurs by the end of the fourth year following the year in which an RDSP beneficiary becomes eligible for the Disability Tax Credit.
Tax relief for kinship care providers
As an alternative to foster care, certain provinces and territories offer kinship care programs. Kinship care is day-to-day care of children by relatives or close relations, which helps increase the sense of belonging and safety for children who are in need of protection.
Currently, some provinces and territories provide financial assistance to care providers to help offset the additional costs of caring for the children.
To further assist these relatives and close relations, and to ensure they are eligible for the Canada Workers Benefit, the government proposes to exempt any assistance received under these programs from taxation and from being included in income when determining eligibility for income-tested benefits.
Incentives for the purchase of zero-emission vehicles
As is the case with businesses, the government is focused on promoting the use of zero-emission vehicles by individuals.
Proposed measures to assist in this objective include an incentive of up to $5,000 for the acquisition of electric battery and hydrogen fuel cell vehicles with an MSRP of less than $45,000.
In addition, the federal government proposes to the installation of a new recharging/refuelling station in various locations.
Stay tuned to our blog for more details to come on these programs. For more information on these proposals and how they could affect you, contact us today.
