The Liberals’ 2017 budget is designed to cool some of the anxiety and anger that many ordinary Canadians have been expressing over carbon tax, the ballooning deficit and all the money being sent overseas that would be better spent here in Canada. However, it does not offer much to Canadians at this time beyond an ever increasing budget deficit.
There’s no increase in personal or corporate tax rates or change to the capital gains inclusion rate. Basically, it is an austerity budget offering a wait and see approach, waiting to see what President Trump decides to do south of the border during this coming year.
These are a few of the highlights:
Canada Savings Bonds eliminated: They will be eliminated as of Nov. 2017 as they are no longer cost effective, but all outstanding bonds will be honoured.
Use of Private Corporations to Minimize Tax: Canada Revenue Agency (CRA) is launching a tax review of strategies and loopholes for the use of private corporations and other advantages for high income earners to minimize tax.
Billed-Based Accounting: Professionals such as doctors, lawyers and accountants will have to include the value of work in progress as income when filing their taxes.
Enhanced Student Loans & Grants: Adults wishing to return to school after working for several years will have expanded eligibility to apply for part-time grants and loans in 2018-19.
Tuition Tax Credit: Tuition fees paid for post-secondary occupational skills courses that are not at the post-secondary level are now eligible for a tax credit.
EI & Self-Funded Training: New flexibility in the Employment Insurance program will allow individuals to pursue self-funded training without losing their EI benefits. EI premiums will be going up 5 cents to $1.68 per every $100 of insurable earnings.
Parental Leave: Can now be extended to 18 months at a lower rate.
Expectant Mothers: Can now access EI maternity benefits at 12 weeks before their due date.
Caring for Adult Family Members: Caregivers will have access to a new EI benefit and be able to use a new 15 per cent non-refundable Canadian caregiver credit.
GST to be Collected on Ride Sharing Services: Uber or similar services will be taxed the same as taxis.
Public Transit Tax Credit: Which allows the cost of transit passes to be deducted will be eliminated effective July 1.
Increased Liquor Tax: By 1 cent on a bottle of wine, 7 cents on a bottle of spirits and 5 cents on a 24-pack of beer.
Home Relocation Loans: The interest on these will no longer be deductible after 2017.
It was also announced that more than half a billion dollars was set aside in the budget to hire more auditors to prevent tax evasion and improve tax compliance. To ensure that you are up to date with all the new changes, take time to sit down with a trusted adviser to ensure that all your current tax strategies comply with the new rules and regulations. Some of these new changes may require rethinking some existing tax planning you have in place, especially if you’re a high income earning taxpayer.