23 Ways The Federal Budget 2019 Could Affect Your Wallet

The Liberals’ 2019 election budget features plenty of tax credits, incentives and tweaks meant to please the young and the old—but not many Canadians in between. The federal government is highlighting new measures to help make home ownership into a more affordable dream for first-time buyers, reduce student loan payments and help low-income seniors keep more money in their pockets in retirement. Here are 23 ways the federal budget could affect your wallet.

1. A new First-Time Home Buyer Incentive introduced in Budget 2019 aims to reduce the amount first-time buyers have to pay for a mortgage without increasing the required down payment. Canadian Mortgage and Housing Corporation (CMHC) is participating in “shared equity mortgages,” meaning it is sharing in the cost of qualifying Canadians for their mortgages. CMHC is offering 10 per cent of the total house price of newly constructed homes and five per cent for an existing home. While this lowers the monthly cost of the mortgage for home buyers, it’s important to note that the incentive is paid back to the CMHC when the owner sells the house.

2. The Home Buyers’ Plan (HBP) withdrawal limit will increase from $25,000 to $35,000 starting March 19, 2019. As well, individuals who get a divorce or break up with a common-law spouse with whom they already bought a home will now still be eligible for the HBP.

3. The Canada Training Credit will let Canadians aged 25 to 64 accumulate $250 a year (to a maximum of $5,000, meaning $1,000 every four years) to put towards training fees, college, university, and other eligible institutions providing occupational skills, starting in 2020. You need to have earned at least $10,000 (including self-employment income, maternal and paternal leave benefits) to be eligible for this taxable credit.

4. The EI Training Support benefit provides four weeks of income support (55 per cent of a person’s average weekly earnings) every four years so that workers can take time off to go to school or train in some way. The four weeks can be spread out over the four years, in whatever way employees determine best suits their needs. This measure will launch in late 2020. Another measure will allow workers to take time off to study without losing their jobs.

5. The federal government is lowering the interest rates on Canada Student Loans and Canada Apprentice Loans. The floating interest rate will be lowered to prime (rather than prime plus 2.5 percentage points). The lower fixed interest rate will be lowered to prime plus two percentage points (down from prime plus five percentage points).

6. There will no longer be interest charged during the six-month grace period that students receive before they must start repaying their Canada Student Loans. This change combined with the lowering of interest rates is said to save the average student borrower $2,000 over the lifetime of their entire loan.

7. The cap on the Canada Student Grant for Services and Equipment for Students with Permanent Disabilities will increase from $8,000 to $20,000 per year, to help students with permanent disabilities.

8. The eligibility for the Severe Permanent Disability Benefit will expand to allow more student borrowers with severe permanent disabilities to qualify for loan forgiveness.

9. It will soon be easier for students with permanent disabilities using the Repayment Assistance Plan for Borrowers with a Permanent Disability to return to school after a long absence. They will be able to receive further loans and grants, even if there is a remaining balance on their outstanding loans.

10. Borrowers taking temporary leave from their studies for medical, parental or mental health reasons will not be required to make student loan payments, nor will they be charged interest during six-month ‘stackable’ periods (to a maximum of 18 months).

11. Parental leave for research students and postdoctoral fellows who receive granting council funding will expand from six months to 12 months.

12. GIS income exemptions will be boosted, meaning low-income seniors can earn more employment income with fewer clawbacks. Currently, the GIS earnings exemption allows low-income seniors and spouses to earn $3,500 per year in employment income without it triggering a reduction in GIS benefits. Budget 2019 extends that exemption to self-employment income and increases the full exemption to $5,000 per year. These changes also apply to allowance recipients.

There will also be a partial exemption of 50 per cent that could be applied to $10,000 of annual employment or self-employment income beyond the $5,000 for each GIS applicant and their spouse.

13. Proposed legislative changes will make it so seniors who will be aged 70 or older as of 2020 who contributed to the Canada Pension Plan but who haven’t applied for the program and are missing out on benefits will be “proactively” enrolled.

14. Proposed measures protect Canadians’ pension benefits by clarifying in federal law that if a pension plan is shut down, it must still provide the same benefits as it was when it was in place. Defined Benefit plans must transfer responsibility to a life insurance company via purchase of annuities to protect pensioners’ income if an employer becomes insolvent.

15. There will be an incentive of up to $5,000 for electric battery or hydrogen fuel cell vehicles that retail for less than $45,000. Businesses (including individual contractors) will be eligible for a full tax write-off of electric vehicles.

16. The government will soon set a $200,000 cap on employee stock option grants that receive preferential tax treatment (i.e. are taxed in the same way as capital gains). This is mostly so the wealthiest Canadians don’t receive big tax breaks thanks to their stock options. Stock options from start-up companies will be exempt from this cap.

17. Cannabis product taxes will be adjusted based on the amount of THC in each product. Most items, like fresh and dried cannabis, won’t be affected, but edibles, extracts and cannabis oils, which will be legal later this year, will be taxed based on the products’ THC levels. That means low-THC products (like cannabis oils) will be subject to slightly lower taxes.

18. There will be a non-refundable, 15 per cent tax credit for digital news subscriptions. Individuals can claim up to $500 per tax year paid towards subscriptions for a maximum annual credit of $75.

19. Starting in the 2019 tax year, TFSA holders will be on the hook for tax owing on income from carrying on a business within the investment account. Currently, the financial institution backing the TFSA is liable for paying taxes owing if there are insufficient funds in the TFSA.

20. Multi-unit residential property owners (for example, duplex owners) that decide to change the use of part of the property (for instance, if the owner moves into one of the units, making it their principal residence) can elect that a deemed disposition doesn’t apply. The ability to elect out of a deemed disposition was only available to full property-use conversions until now.

21. The advanced life deferred annuity will be permitted under RRSPs, RRIFs, DPSP, PRPPs and RPPS. Variable payment life annuities will be permitted under a PRPP and defined contribution RPP.

22. Canadians facing infertility (including single people and same-sex couples) will no longer face GST/HST on human ova and in vitro embryos. There will be no GST/HST on multidisciplinary health, nor will you have to pay GST/HST on certain foot care devices. All of this is effective AS OF March 20, 2019.

23. Currently, RDSP rules call for the account to be closed if the person no longer qualifies for the Disability Tax Credit, meaning all grants have to be repaid to the government. Budget 2019 eliminates that requirement.