2021
What you need to know about the 2021 Federal Budget
Although never the sexiest topic, the federal budget is something that affects all Canadians.
While you might not want to read the entire budget word-for-word, perhaps you'll want to tune into this 30-minute breakdown of what you need to know on the latest episode of the Wealth Wisdom Podcast.
I was joined by Cheryl Norton, CI Assante Private Client's Regional Vice-President of Wealth Planning and Bryan Hubbell, Manning Elliott's tax specialist, to break down the most interesting and impactful announcements from federal budget.
You can listen to the podcast through any of these platforms.
Here are some highlights and key points from the episode.
Notable Budget “No Shows”
Before getting into what actually showed up in this budget, it’s important to note that, despite this country’s debt ballooning over the past 12 months, there were many hotly-discussed items that weren’t included in this budget.
There were no changes to any of the primary personal or corporate tax rates. There were also no changes to the capital gains inclusion rate.
Also, based on the housing market boom, there were musings that there might be a tax hike on primary residences for homeowners. Alas, none of that transpired, which should come to the delight of taxpayers.
What does this mean for next year’s budget? Bryan and Cheryl share their thoughts here.
Pick me, pick me!
It’s always a bit of an odd situation when the government asks that[OC2] you “report on yourself,” but that’s essentially what they’re doing with their new plan to target aggressive tax planning.
The government is aiming to reduce the use of aggressive tax planning among corporations, and they plan on doing so by enhancing mandatory disclosure requirements.
“It’s pretty broad right now” Cheryl said about the mandatory disclosure requirement announcement in the budget.
While this is something that will likely be fleshed out and less broadly defined by the 2022 budget, it is a sticky situation when you’re asking businesses to report on themselves. The three of us highlight that sentiment here.
Why the Disability Tax Credit Changes are Important
As I mention in the clip below, those eligible for the current Disability Tax Credit (currently $1,299 per year), need to apply for more than just the one-time tax break.
This tax credit is an important gateway to accessing other tax credits like the Registered Disability Savings Plan, disability supplement to the Canada Workers Benefit, and the Child Disability Benefit.
In the 2021 budget, the federal government is increasing access to the Disability Tax Credit by expanding the qualifications for mental functions of everyday life and life sustaining therapy.
With some deeming the old qualifications as very limited, this is a welcome addition to the budget.
Living in Luxury
While a number of potential tax increases were absent from this budget, one new tax that is being implemented, as of January 1st, 2022, is a luxury tax.
The tax will apply for personal use on the retail sale of luxury cars and personal aircrafts with a retail price of over $100,000. It also applies to boats purchased for personal use over $250,000.
You can read the full breakdown of this luxury tax (and all other budget tidbits) on our website, but the basic breakdown of the luxury tax would be the lesser of:
a) 10% of the full value of the vehicle, aircraft, or boat, OR
b) 20% of the value above $100,000 ($250,000 for boats)
Whatever you do, just don’t follow this tax advice…
Next Guest
As promised (for the second time in a row…), Sleep Expert Glenn Landry from Elite Sleep will join us on the next episode of the Wealth Wisdom Podcast.
We’ve hosted some fantastic events with Glenn as the keynote speaker in the days before COVID-19…remember those? While we plan on hosting more in-person events once we can, we’re happy to have him on the next episode of the Wealth Wisdom podcast to discuss the science, and the importance, of a good night’s sleep.
Have any questions about for Glenn, or any inquiries about how the federal budget may affect you or your business? Please reach out to us by calling 604-372-3372 or by emailing us at sanafamilyoffice@assante.com
Until Next Time,
Assante Sana
John
