News
Tax Minute – The 2021 Federal Budget
It used to be every year the federal government would deliver a budget, until last year. Yes, on April 19th, for those of you that missed it, the Federal government delivered their first budget in over two years.
Some were in disbelief when it was announced there was going to be a budget: some were caught off guard while many were weary of what might come. After all, the government (or should I say the taxpayer) has to eventually pay for all the COVID relief programs and spending.
I could speculate that the minority government was fearful of too much change at this time and that they are leaving the big tax increases for after the next election but will try not to digress. Regardless, many taxpayers were relieved that there were not any personal or corporate tax increases.
So, what was in the Budget?
Just to list a few highlights:
- Immediate expensing of capital property of up to $1.5M per year for Canadian-controlled private corporations;
- A 50% corporate rate reduction for certain “green businesses”;
- A rehashing and fine tuning of CEWS/CERS programs including adding the Canada Recovery Hiring Program. Under the hiring program Employers eligible for the CEWS are also generally eligible for the hiring subsidy. However, an eligible employer is only permitted to claim either the hiring subsidy or the CEWS in any particular qualifying period, not both. An employer will want to analyze both options to determine which would be most beneficial for any given period (and the government is allegedly trying to make it easier to do business!).
- A 3% digital Services Tax;
- A 1% tax on the value of non-resident, non-Canadian owned, under-utilized or vacant real estate (with no information on what under-utilized means or how value is determined);
- Proposals to restrict interest deductibility as a percentage (initially at 40% and phasing down to 30%) of tax EBITDA; and,
- A new tax on luxury vehicles, personal aircraft and boats (with no reference to indexing this to inflation), which is technically not a tax as the “tax” will be subject to GST. The luxury “tax” applies to vehicles and aircraft priced over $100,000 and boats over $250,000. The tax is the lesser of 10% on the purchase price or 20% on the value in excess of the threshold.
And, of course, a lot more spending to the tune of a $154 billion dollar deficit for 2021/2022 ($354 billion for 2020/2021).
If you want more information on anything specific in the Budget, we are here to help. Please contact our office and we will assist you in navigating these troubled waters.
All Posts