On Tuesday March 19, 2019 the Liberal government unveiled their 2019 budget. It’s important to us, as your financial advisors, to let you know about significant tax changes and developments that could affect you and your family’s financial health. Below is an overview of the budget’s key points.
First Time Home Buyers’
- Home Buyers’ Plan Update
- Effective Immediately, the limit on tax-free withdrawals from RRSPs for first-time buyers is now raised to $35,000 from $25,000.
- Effective 2020, the benefits of the First Time Buyers’ program will include individuals who experience the breakdown of a marriage or common-law partnership.
- First-Time Home Buyers’ Incentive (projected to begin September 2019)
- Under the new CMHC First Time Home Buyer Incentive, money would go to first time buyers to help lower the amount of their mortgage
- CMHC would offer loans of 5% for the purchase of an existing home or 10% for the purchase of a new home
- No ongoing payments are made because the buyer would repay the incentive when the property is sold
- Household income must be $120,000 or less per year and the buyers must have a down payment between 5% and 20%.
Post Secondary Education
- Interest rates on Canada Student Loans and Canada Apprentice Loans
- It’s been proposed to have floating rate loans reduced from Prime +2.5% to Prime, and fixed-rate loans reduced from Prime +5% to Prime +2%. This applies to current and new borrowers.
- It’s been proposed to eliminate the interest accumulated during the six-month grace period after graduation.
Canada Training Benefit
- Includes a proposed two key components Canada Training Credit and Employment Insurance (EI) Training Support Benefit
- Canada Training Credit
- Eligible individual accumulates $250 in a notional account
- Must be at least 25 years of age and less than 65 years
- Must be a resident of Canada and file a tax return with net income under $147,667
- Lifetime maximum is $5,000
- EI Training Support Benefit
- Eligible workers could receive up to 4 weeks of paid leave, at 55% of average weekly earnings, every four years while on training and without regular pay.
- Canada Training Credit
- They have proposed a new subsidy of $5,000 for the purchase of an electric battery or hydrogen fuel cell vehicle with a list price less than $45,000.
Canada Pension Plan
- It’s been proposed to have automatic enrollment for anyone not already enrolled in CPP at age 70.
- For purchases beginning in 2020 and running until 2025, there will be a 15% non-refundable tax credit on amounts paid for digital news subscriptions
- Maximum annual amount of $500 can be claimed, providing a credit of up to $75
Registered Disability Savings Plan (RDSP)
- They have proposed to eliminate the requirement to close an RDSP when a beneficiary no longer qualifies for the Disability Tax Credit (DTC)
- It has been proposed to permit a Tax deferred RRSP/RRIF rollover when DTC is lost
If you’d like to see the full budget details, click here
We hope you find these highlights useful. If you’d like to discuss these or other federal budget initiatives and how they could affect your financial plan, please don’t hesitate to contact us.