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2019 Federal Budget

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Federal Budget -> 2019 Federal Budget

2019 Federal Budget - March 19, 2019

All budget measures are subject to legislative approval.  Not all budget measures are included below, just the main tax measures.  See the 2019 Federal Budget website for complete information.

Subsequent legislation:

April 4, 2019 Notice of Ways and Means Motion and Explanatory Notes

Bill C-97, Budget Implementation Act, 2019 , No. 1 (BIA 1) tabled April 8, 2019, Royal Assent June 21, 2019.

Draft Legislation Relating to the Excise Tax Act and Explanatory Notes released May 17, 2019.

Draft Legislation Supporting Conversion of Health and Welfare Trusts into Employee Life and Health Trusts released May 27, 2019 - comments may be provided until July 31, 2019.  This was a proposal from Budget 2018.

Notice of Ways and Means Motion to amend the Income Tax Act and Explanatory Notes released June 17, 2019 - re stock options. Interested parties have until September 16, 2019 to provide comments.

Draft legislation to implement tax and other related measures announced in Budget 2019 that have not yet been legislated released July 30, 2019.  Interested parties have until October 7, 2019 to provide comments.

Legislative proposal released August 29, 2019 re definition of shared-custody parent, and explanatory notes. This will change the definition of shared-custody parent to a parent who resides with the qualified dependant at least 40% of the time.  This measure will be retroactive to payments arising after June 2011.

All federal draft legislation, whether budget-related or not, can be found on the Department of Finance website Draft Legislation page.

Personal Income Tax Measures

Personal Income Tax Credit for Digital Subscriptions

    - new non-refundable 15% personal income tax credit for subscriptions to Canadian digital news provided by Qualified Canadian Journalism Organizations (QCJOs).  This credit will be available for eligible amounts paid after 2019 and before 2025 (i.e., paid in 2020 to 2024).  See Business Tax Measures below for information on QCJOs.

Taking Action to Enhance Tax Compliance in the Real Estate Sector

    - CRA audit teams, notably in BC and Ontario, will ensure tax provisions regarding real estate (including principal residences) are being followed.

Carrying on Business in a Tax-Free Savings Account

    - It is proposed that joint and several liability for tax owing on income from carrying on a business in a TFSA be extended to the TFSA holder, instead of just to the trustee of the TFSA (i.e., a financial institution).  Day-trading in a TFSA could be considered to be a business, with the income taxed at the highest personal tax rate.

Employee Stock Options

    - changes to limit the benefit of the employee stock option deduction for high income individuals employed at large, long-established, mature firms.  The changes do not affect employee stock options granted by Canadian-controlled private corporations (CCPCs).  See June 17, 2019 Notice of Ways and Means Motion above.  For analysis by BDO Canada of the tax implications, see Stock-Option Taxation - What Changes Have Been Proposed?

Cannabis as an Eligible Medical Expense

Income Tax Act s. 118.2(2)(u), Cannabis Regulations s. 264(1)

With the legalization of cannabis, as of October 17, 2018, eligible medical expenses include, for a patient who is the holder of an appropriate medical document, the cost of cannabis, cannabis oil, cannabis plant seeds or cannabis products purchased for medical purposes from a holder of a licence for sale of cannabis products.

This measure was included in Bill C-97 which received Royal Assent in June 2019.

Home Buyers' Plan (HBP)

The withdrawal limit for the RRSP Home Buyers' Plan is increased to $35,000 for withdrawals after March 19, 2019.  This is included in Bill C-97 which received Royal Assent in June 2019.

Changes will also be made to extend access to the HBP after the breakdown of a marriage or common-law partnership.  For more information see the above HBP link.

Registered Disability Savings Plans (RDSPs)

    - changes to circumstances requiring termination of RDSPs

Canada Training Benefit

Canada Training Credit - Refundable Tax Credit

Effective January 1, 2019, earnings from work, including maternity or parental leave benefits and taxable scholarships, will allow a Canadian resident taxpayer aged 25 to under 65, who does not have net income exceeding the top threshold of the 3rd tax bracket ($147,667 for 2019, indexed), to accumulate a training amount limit of $250 per year, if the total of those earnings in the year is at least $10,000 (indexed).  The lifetime limit of the training amount is $5,000 (not indexed).  Any unused balance will expire at the end of the year in which the taxpayer turns 65.

The accumulated training credit can be claimed on the tax return for a year in which the taxpayer incurs eligible tuition fees (including ancillary fees and charges and examination fees).  The claim is a maximum of the training credit accumulated to the end of the previous taxation year, and 50% of the eligible tuition fees paid.  Eligible tuition fees will be the same as under the existing rules for the Tuition Tax Credit, except that educational institutions outside of Canada will not be eligible.  If the amount of the training credit allowable exceeds tax otherwise payable, the balance will be refunded.

Eligible tuition fees for the Tuition Tax Credit will be reduced by the amount of the training tax credit deducted.

The first taxation year in which a Canada Training Credit can be claimed will be 2020, based on tuition fees incurred in 2020 and the accumulated training credit for 2019.

The Canada Training Benefit also includes an EI Training Support Benefit, expected to be available in late 2020, which would provide up to 4 weeks of income support every 4 years.  The government will also consult with provinces and territories re changes to labour legislation to support new Leave Provisions that would ensure that workers are entitled to leave and job protection while on training and receiving the EI Training Support Benefit.

See Canada Training Benefit on the budget website for more information on the Canada Training Credit, EI Training Support Benefit, and Leave Provisions.

Other Non-Income-Tax Measures

First-Time Home Buyer Incentive

CMHC will fund up to 10% of a first-time home buyer's purchase via a shared-equity mortgage (SEM).  The Incentive amount is up to $40,000 (10%) for a new home or $20,000 (5%) for an existing home.   The incentive would be repaid when the home is sold, or in 25 years, whichever is first, but could be repaid earlier if desired.  The Incentive program will launch on September 2, 2019.

Zero-Emission Vehicle (ZEV) Incentive Program

Student Loans

    - lower interest rates, new interest-free 6-month grace period after a student loan borrower leaves school

Guaranteed Income Supplement (GIS)

The Budget proposes to enhance the GIS earnings exemption, beginning with the July 2020-21 benefit year.  Bill C97 included the legislative provisions to amend the Old Age Security Act to provide a new exemption for purposes of calculating the GIS.  The new exemption excludes the first $5,000 of a person's employment and self-employment income as well as 50% of their employment and self-employment income greater than $5,000 but not exceeding $15,000.

Canada Pension Plan (CPP) Retirement Pension

    - automatic enrolment, extending opt-out period.

National Pharmacare

Business Income Tax Measures

Small Business Deduction - Farmers and Fishers

    - Relief to CCPCs carrying on a farming or fishing business, re rules designed to prevent the multiplication of the small business deduction:  proposal to extend that relief to sales of farming products and fishing catches to any arm's length corporation.  This applies to tax years that begin after March 21, 2016.

Capital Cost Allowance for Zero Emission Vehicles

    - new $55,000 capital cost limit for qualifying zero-emission vehicles which would otherwise be included in class 16.  The new CCA class will be class 55, and includes taxis, vehicles acquired for the purpose of short-term renting or leasing, and heavy trucks and tractors designed for hauling freight.  The new $55,000 limit will be reviewed annually for appropriateness.

    - the new CCA class for previous class 10 and 10.1 zero-emission vehicles will be class 54, for which the capital cost limit is still $30,000.

    - full tax write-off in the year qualifying zero-emission vehicles (fully electric, a plug-in hybrid with a battery capacity of at least 15 kWh or fully powered by hydrogen) are put to use.

    - immediate expensing (100% enhanced allowance) will apply to eligible vehicles purchased on or after March 19, 2019 and available for use before January 1, 2024.  The enhanced allowance rate will be 75% for vehicles available for use in 2024/25, and 55% for vehicles available for use in 2026/27.  CCA will be deductible on any remaining balances in the new classes on a declining-balance basis at a rate of 30% for class 54 and 40% for class 55.

    - Vehicles for which assistance is paid under the new federal purchase incentive announced in Budget 2019 will be ineligible for the first-year immediate expensing.

Canadian Journalism Support

Proposals

    - allowing  registered Qualified Canadian Journalism Organizations (QCJOs) to register as tax-exempt qualified donees, effective January 1, 2020.  Profits of these registered QCJOs will not be permitted to distribute their profits, if any, or allow their income to be available for the personal benefit of certain individuals connected with the organization.

    - new refundable 25% labour tax credit for Qualified Canadian Journalism Organizations (QCJOs), effective for salary or wages earned in respect of a period on or after January 1, 2019.

    - new non-refundable 15% personal income tax credit for subscriptions to Canadian digital news provided by QCJOs.  This credit will be available for eligible amounts paid after 2019 and before 2025 (i.e., paid in 2020 to 2024)

Sales Taxes

Adjusting the Rules for Cannabis Taxation

    - excise taxation changes regarding cannabis edibles

 

For information on all tax measures, see the Tax Measures Supplementary Information (pdf) on our website.  This pdf also contains the Notice of Ways and Means Motion.  We created this pdf because the Budget website did not provide this information in a separate file, but as part of the large Budget Plan pdf document.

Revised: September 27, 2019

   

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