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We’ll explore what is expected to be announced in the 2022 Federal Budget, so you can prepare now for it’s expected impact.
2022 Federal Budget Release
As businesses re-open business owners across the country are nervous as to what may be included in the 2022 Federal Budget. The Pandemic helped leapfrog innovation for businesses into a digital world. Canadian businesses rushed into e-commerce, virtual accounting and remote workforce. Canada has committed to connect 98% of Canadians to high-speed internet by 2026 and is primed at being a digital leader in a remote workforce around the Canadian technology landscape.
As we are in full swing of pre-budget speculation we can try and anticipate what may be included in the 2022 Federal Budget, we can look at the Liberal Party’s platform. The Government held a pre-budget consultation in February 2022, any of their promised tax measures have been implemented, but there are a few still outstanding that we expect could make their way in the 2022 Federal Budget. In fact, most of the yet-to-be implemented measures we’re included in a Mandate Letter to the Deputy Prime Minister and Minister of Finance, so this further suggests what may be included in the 2022 Federal Budget.
Expected announcements
For businesses
- Canada Recovery Dividend – Raising the tax rate on Banks and Insurance companies earning over $1 billion a year by 3%.
- Clean Technologies ITC
- Up to 30% ITC for clean technology companies
- 100% increase in the mineral exploration tax credit for minerals essential to the manufacture of clean technologies
- Elimination of flow-through shares for oil, gas and coal programs
- Revamping the SRED program to make it easier to apply and increasing benefits for high risk projects.
- Carbon ITC Program – Initiate a new ITC program for Carbon capture, utilization and storage (CCUS) projects.
- BEPS Tax – Base Erosion and Profit Shifting – Continuing progress on introducing OECD’s BEPS(Pillar 1 and 2), which will be a global minimum corporate tax of 15% and an allocation model that will distribute the tax dollars based on the company’s location of customers.
- Increased Taxation on Real estate investment trusts (REITs) – The government believes REITs are not effectively taxed and reform is needed.
For individuals
- Alternative Minimum Tax (AMT) Review – New minimum 15% tax on high income earners that find multitude of tax credits.
- Home Ownership
- First Home Savings Account – Tax free account to help new home buyers save for their first home.
- 2x the first-time home buyers’ tax credit and the home accessibility tax credit
- Multigenerational home renovation tax credit – This will help make it more affordable to those who wish to renovate their homes to accommodate their elder family members.
- Rent Increase Tax – Require landlords to pay a Rent Increase Tax when they raise their rents above a defined threshold, after a renovation.
- Anti-Flipping Tax – For residential properties bought and sold within 12 months
- Other
- Senior Workforce – A tax credit that encourages seniors who want to stay in the workforce.
- Home appliance repair tax credit – To help provide financial assistance when repairing your appliances
- Canada Caregiver Credit – Converting the credit from non-refundable to tax-free refundable tax-free benefit
- IVF Surrogacy – Allow for costs reimbursed to surrogate mothers for in vitro fertilization (IVF) expenses to be a medical expense for tax purposes.
- Rural health care professional tax deduction – This would be a one-time deduction to help offset the costs to set-up a practice in a rural area.
We expect the NDP government to be having important leverage in the 2022 budget process, which means a bit more progressive tax policies may be included.
Speculative changes
- Extended donation benefits to Hospitals – Extension of the capital gains exemption to Private Company Shares, when donated to Hospitals. This would help our health care system find the funding their need to deliver an improved health care service.
- Accelerated expensing of up to $1.5M in growth-enhancing investments into software, patents and machinery. This would encourage companies to invest in high risk internal investments that would help bring Canada to the forefront of innovation across the world.
Expected release date
April 7, 2022
Now what?
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