The Liberal government recently released its 2019-20 federal budget, which projects spending $22.8 billion in the next five fiscal years. The budget also sets a deficit of $19.8 billion for the 2019-20 fiscal year—roughly $200 million larger than what was forecast in the fall of 2018. The budget aims to focus primarily on training for jobs, housing affordability, retirement for seniors and national pharmacare.
Businesses and individuals should be aware of major budgetary items, as some changes could have a significant impact moving forward. Major takeaways include the following:
The budget includes a new Canada Training Benefit to assist individuals with the cost of training fees. It also includes a new Employment Insurance Training Support Benefit, which grants eligible workers up to four weeks of income support (at 55 per cent of average weekly earnings) every four years while training without regular pay.
- The Canada Training Benefit credits $250 a year that can accumulate up to $5,000 to pay for future training.
The budget includes the First-time Home Buyer Incentive, which will allow buyers to finance a portion of their purchase through a shared equity mortgage with the Canadian Mortgage and Housing Corporation, with no monthly interest required on the shared equity mortgage.
- Eligible buyers would be offered a 10 per cent shared equity mortgage on a new home or five per cent on an existing home.
- Buyers must have a combined household income of under $120,000 and meet several conditions, which have yet to be made known.
To counter the approximately 40,000 people aged 70 or older who are not currently enrolled in the Canada Pension Plan, the budget calls for a proactive enrolling of eligible seniors to receive their CPP benefits. Additionally, the government is proposing an increase from $3,500 to $5,000 to the guaranteed income supplement earnings exemption for low-income seniors.
The budget takes steps toward a national pharmacare program by proposing a new department called the Canadian Drug Agency to manage federal pharmacare. This budget also includes funding for developing a national strategy to make drugs for rare diseases more affordable.
The budget proposes a $200,000 limit in employee stock option deductibles for high-income individuals in large and mature companies in an effort to align employee stock option tax treatment with that of the United States.
The budget provides $300 million over three years for incentives up to $5,000 for individuals who purchase new electric vehicles—those with an electric battery or hydrogen fuel cell—retailing less than $45,000.
$1.7 billion is being put toward lowering interest rates on Canada Student Loans and Canada Apprentice Loans from the floating rate to the prime lending rate.
$1.2 billion would be spent to allow indigenous children to access health, social and educational services, and $1 billion to improve essential services on reserves, such as eliminating all drinking water advisories in First Nation communities.
The budget proposes amendments to the Cannabis Act to allow medical cannabis to qualify for the medical expense tax credit.
In general, the 2019-20 budget continues the government’s focus on building the middle class. To learn more about the federal budget, click here.