Implications of Budget 2021 for Our Private Clients

Implications of Budget 2021 for Our Private Clients

On April 19, 2021 Chrystia Freeland, Canada’s Deputy Prime Minister and first female Finance Minister, presented the first federal budget in two years. The 2021 budget projects a deficit of over $350 billion as it focuses on spending to continue the fight against COVID-19, while improving child care options and positioning the economy to fight climate change. At the bottom of this article, we’ve included links out to analyses by prominent tax advisors, who do a good job of distilling the salient detail of the 700-plus page document into something digestible. They offer some advice in there as well. Our focus here is to provide a summary of the issues most relevant to the Private Clients of Leith Wheeler.

The most notable takeaway from this week’s budget was the absence of potential tax policies that were actively being considered. Specifically, the federal budget introduced*:

  • No change in personal or corporate federal income tax rates
  • No change in capital gains inclusion rates
  • No change in person residence exemptions
  • No change in GST or HST rates
  • No mention of a Wealth or Inheritance tax

* Note: Provincial budgets may still alter provincial income or sales tax rates.

Seniors that qualify for Old Age Security (OAS) will see some benefit increases:

  • A one-time benefit payment of $500 will be made this August for those pensioners aged 75 or over as of June 2022
  • An increase of 10% of OAS payments will be extended “on an ongoing basis” for those over 75, starting July 2022

Business owners are impacted by some adjustments:

  • Lower child care costs will increase female workforce participation
  • The Canada Recovery Hiring Program (or CRHP, yet another acronym to learn!) will provide wage subsidies from June to Nov 2021
  • Minimum wage is increased to $15

Big spenders are impacted:

Ottawa has introduced a luxury tax on automobiles and airplanes over $100,000 and boats over $250,000. Effective Jan 1, 2022, the tax will be calculated as the lesser of 10% of the purchase price or 20% of the amount of the luxury threshold.

The big potential changes appeared to have been deferred to future years. With that said, we are happy to discuss this update further with you or your tax advisors.

Analysis of Budget 2021 by Various Accounting and Legal Firms: