Ads keep this website free for you.
TaxTips.ca does not research or endorse any product or service appearing in ads on this site.  Before making a major financial decision you  should consult a qualified professional.

2022 Federal Budget TaxTips.ca
Canadian Tax and
Financial Information

If you use an ad blocker, please consider a small contribution to help keep TaxTips.ca free for everyone.

Need an accounting, tax or financial advisor? Look in our Directory.  Use above search box to easily find your topic!   Stay Connected with TaxTips.ca!

 

Home   ->   Federal Budget -> 2022 Federal Budget

2022 Federal Budget - April 7, 2022

All budget measures are subject to legislative approval.  Not all budget measures are included below, just the main tax measures.  See the 2022 Federal Budget website for complete information.

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

Contents

Legislation Introduced Subsequent to the Tabling of the Budget

Personal Tax Measures

Business Income Tax Measures

Sales and Excise Tax Measures

Other Tax Measures

2022 Federal Budget - April 7, 2022

Legislation Introduced Subsequent to the Tabling of the Budget

August 9, 2022 News Release re draft legislation for consultation, which includes measures from Budget 2022, as well as from the 2021 Economic Update and Budget 2021. The proposals re Budget 2022 measures relate to:

bulletThe Tax-Free First Home Savings Account (FHSA)
bulletThe First-Time Home Buyers’ Tax Credit (HBTC)
bulletThe Multigenerational Home Renovation Tax Credit
bulletThe Residential Property Flipping Rule
bulletThe Medical Expense Tax Credit for Surrogacy and Other Expenses
bulletBorrowing by Defined Benefit Pension Plans
bulletAnnual Disbursement Quota for Registered Charities
bulletReporting Requirements for Registered Retirement Savings Plans (RRSPs) and Registered Retirement Income Funds (RRIFs)
bulletThe Canada Recovery Dividend and the Additional Tax on Banks and Life Insurers
bulletThe Investment Tax Credit for Carbon Capture, Utilization and Storage
bulletClean Technology Tax Incentives – Air-Source Heat Pumps
bulletThe Critical Mineral Exploration Tax Credit
bulletEliminating Flow-Through Shares for Oil, Gas and Coal Activities
bulletThe Small Business Deduction
bulletInternational Financial Reporting Standards (IFRS 17)
bulletHedging and Short Selling by Canadian Financial Institutions
bulletThe Application of the General Anti-Avoidance Rule to Tax Attributes
bulletSubstantive Canadian-Controlled Private Corporations
bulletInterest Coupon Stripping
bulletQuarterly Remittances and Technical Amendments to the Cannabis Taxation Framework

For a good summary of the legislative proposals, see Osler, Hoskin & Harcourt LLP Draft federal tax legislation package released.

April 7, 2022 Notice of Ways and Means Motion

April 28, 2022 News Release re Bill C-19

Bill C-19, Budget Implementation Act, 2022, No. 1 - Royal Assent June 23, 2022.

Jun 23, 2022 News Release listing key measures in Bill C-19

Personal Tax Measures

bulletTax-Free First Home Savings Account (FHSA) - registered account to help individuals save for their first home
bulletSee additional details in Design of the Tax-Free First Home Savings Account re draft legislation published for consultation on August 9, 2022.  Changes re draft legislation are noted in bold below.
bulletfor residents of Canada, at least 18 years of age, must not have lived in a home that they owned, either:
bulletat any time in the year the account is opened, or
bulletduring the preceding 4 calendar years.
bulletownership includes beneficial ownership, but excludes a right to acquire less than 10% of a qualifying home.
bulletcontributions of up to $8,000 are deductible annually: unlike RRSPs, only contributions made within the calendar year (not within the first 60 days of the following calendar year) can be claimed as a deduction for that calendar/tax year.
bulletcontributions made can be carried forward indefinitely and deducted in a later tax year instead of being deducted in the year the contribution is made.
bulletunused annual contribution room cannot be carried forward: draft legislation indicates that unused contribution room will be able to be carried forward.
bulletlifetime contribution limit of $40,000
bulletwithdrawals to purchase home are non-taxable
bulletbefore the withdrawal, an agreement must be in place to purchase or construct the qualifying home before October 1 of the year following the date of the withdrawal
bulletthe individual cannot have acquired the qualifying home more than 30 days before the withdrawal is made.
bulletother withdrawals are taxable: to the holder of the FHSA, with no attribution to a spouse or common-law partner who may have gifted the funds for the FHSA contributions.
bulletfunds not used for a qualifying first home purchase within 15 years of first opening an FHSA (by Dec 31 of the year in which the earlier of these events occurs: the15th anniversary of the individual first opening the FHSA, or the individual turning 71 years old) would have to be withdrawn (taxable) or transferred tax-free to an RRSP or RRIF: these transfers would not be reduced, or be limited by, an individual's RRSP contribution limit.
bulletalso cannot open an FHSA after Dec 31st of the year in which the earliest of the above events occurs.
bulletcan transfer funds tax-free from RRSP to FHSA subject to the annual and lifetime contribution limits: unless the RRSP is a spousal RRSP to which spousal contributions have been made in the current year or 2 preceding years.
bulletcannot make both an FHSA withdrawal and a Home Buyers' Plan withdrawal in respect of the same qualifying home purchase
bulletindividuals should be able to open an FHSA and start contributing sometime in 2023
bulletHome Buyers' Tax Credit (HBTC)
bulletincreased from $5,000 to $10,000, which would provide up to $1,500 tax credit.  See our Home Buyers' Tax Credit article for eligibility information.
bulletMultigenerational Home Renovation Tax Credit
bulletnon-refundable tax credit of 15% of the lesser of eligible expenses and $50,000, for a maximum credit of $7,500
bulletfor eligible expenses for a qualifying renovation that creates a secondary dwelling unit to permit an eligible person (a senior or a person with a disability) to live with a qualifying relation
bulletHome Accessibility Tax Credit
bulletincreased from $10,000 to $20,000
bulletfor expenses incurred in the 2022 and later taxation years
bulletsee our article on the Home Accessibility Tax Credit
bulletResidential Property Flipping Rule
bulletprofits are fully taxable as business income, not capital gains, and no principal residence exemption, for residential property owned for less than 12 months
bulletsee also our article on Taxation of Real Estate Sales
bulletexemptions for certain life events
bulletwill disallow non-capital loss for flipped residential properties - see Residential Property Flipping Rule explanation re draft legislation.
bulletfor properties sold on or after January 1, 2023
bulletLabour Mobility Deduction for Tradespeople
bulletfor tradespeople or apprentices making eligible temporary relocations to enable them to obtain or maintain employment
bulletdeduction of up to $4,000 in eligible expenses per year
bulletfor 2022 and later taxation years
bulletamounts claimed here would not be deductible under the existing Moving Expense Deduction
bulletMedical Expense Tax Credit for Surrogacy and Other Expenses
bulletexpansion of eligible medical expenses to include
bulletmedical expenses related to a surrogate mother or sperm, ova or embryo donor
bulletonly expenses incurred in Canada would be eligible
bulletfor 2022 and later taxation years

Business Income Tax Measures

bulletCanada Recovery Dividend and Additional Tax on Banks and Life Insurers
bulletCanada Recovery Dividend (CRD)
bulletone-time 15% tax for 2022 tax year, payable in equal amounts over 5 years
bulletapplies to banks and life insurer groups
bulletgroup would include a bank or life insurer and any other financial institution (for the purposes of Part VI (capital tax) of the Income Tax Act) that is related to the bank or life insurer
bulleteach group would be permitted to share a $1 billion taxable income exemption
bulletAdditional Tax on Banks and Life Insurers
bulletannual 1.5% tax on the taxable income for members of bank and life insurer groups, determined in the same manner as the CRD
bulleteach group would be permitted to share a $100 million taxable income exemption
bulletapplies to taxation years that end after April 7, 2022
bulletfor taxation year that includes April 7th, the additional tax would be prorated based on the number of days in the taxation year after April 7th.
bulletInvestment Tax Credit for Carbon Capture, Utilization, and Storage
bulletCredit rates of 37.5% to 60% for eligible expenses incurred from 2022 through 2030
bulletCredit rates of 18.75% to 30% for eligible expenses incurred from 2031 to 2040
bulletClean Technology Tax Incentives - Air-Source Heat Pumps
bulletexpansion of CCA Classes 43.1 and 43.2 for equipment that is part of an air-source heat pump system
bulletfor property that is acquired and that becomes available for use after April 7, 2022, where it has not been used or acquired for use for any purpose before that date
bulletaccelerated CCA rates of 30% and 50% for Classes 43.1 and 43.2
bulletRate Reduction for Zero-Emission Technology Manufacturers
bulletreduced tax rate of 4.5% for income that would otherwise be taxed at the 9% small business tax rate
bulletreduced tax rate of 7.5% for income that would otherwise be taxed at the 15% general corporate tax rate
bulletfirst proposed in the 2021 budget
bulleteligibility to be expanded to the manufacturing of air-source heat pumps used for space or water heating
bulletCritical Mineral Exploration Tax Credit (CMETC)
bulletfollowing rules in place for the Mineral Exploration Tax Credit (METC)
bulletMETC provides a tax credit of 15% of specified mineral exploration expenses incurred in Canada and renounced to flow-through share investors
bulletnew CMETC would provide a 30% tax credit for specified minerals used in the production of batteries and permanent magnets, or in the production and processing of advanced materials, clean technology, or semi-conductors
bulleteligible expenditures would not benefit from both the proposed CMETC and the METC
bulletwould apply to expenditures renounced under eligible flow-through share agreements entered into after April 7, 2022 and on or before March 31, 2027
bulletFlow-Through Shares for Oil, Gas, and Coal Activities
bulletto be eliminated by no longer allowing oil, gas and coal exploration or development expenditures to be renounced to a flow-through share investor
bulletwould apply to expenditures renounced under flow-through share agreements entered into after March 31, 2023
bulletSmall Business Deduction
bulletproposal to extend the range over which the business limit is reduced based on the combined taxable capital employed in Canada of the CCPC and its associated corporations.
bulletNew range for taxable capital would be $10 million to $50 million, to allow more medium-sized CCPCs to benefit from the small business deduction.
bulletApplies to taxation years that begin on or after April 7, 2022.
bulletApplication of the General Anti-Avoidance Rule (GAAR) to Tax Attributes
bulletproposal to amend the Income Tax Act to provide that the GAAR can apply to transactions that affect attributes that have not yet become relevant to the computation of tax
bulletdeterminations made before April 7, 2022, where the rights of object and appeal in respect of the determination were exhausted before April 7, 2022, would remain binding on taxpayers and the CRA
bulletwould apply to notices of determination issued on or after April 7, 2022
bulletGenuine Intergenerational Share Transfers
bulletBill C-208, which received Royal Assent in June 2021, may unintentionally permit surplus stripping
bulletBudget 2022 announces a consultation process for Canadians to share views on how the rules could be modified to facilitate genuine intergenerational business transfers
bulletsend your comments by email to intergenerational-transfers-transferts-intergenerationnels@fin.gc.ca by June 17, 2022
bulletSubstantive CCPCs
bullet Deferring Tax Using Foreign Entities
bulletmeasures proposed to prevent taxpayers from "manipulating" the status of their corporations to avoid qualifying as a CCPC to achieve a tax-deferral advantage on investment income earned in their corporations
bulletSubstantive CCPCs earning and distributing investment income would be subject to the same anti-deferral and integration mechanisms as CCPCs with respect to such income.
bulletwould apply to taxation years that end on or after April 7, 2022
bulletDeferring Tax Using Foreign Resident Corporations
bulletre Foreign Accrual Property Income (FAPI) rules, which provide a tax-deferral advantage for CCPS and their individual shareholders earning passive investment income through non-resident corporations
bulletmeasures are proposed to eliminate this tax-deferral advantage
bulletwould apply to taxation years that begin on or after April 7, 2022

Sales and Excise Tax Measures

bulletGST/HST on Assignment Sales of Residential Housing by Individuals
bulletcurrently these sales may be taxable or exempt, depending on certain criteria
bulletproposal for Excise Tax Act amendments to make all assignment sales in respect of newly constructed or substantially renovated residential housing taxable for GST/HST purposes
bulletGST/HST would apply to total amount paid for a new home by its first occupant
bulletthese changes may affect the amount of a GST New Housing Rebate or of a new housing rebate in respect of the provincial component of the HST that may be available in respect of a new home
bulletwould apply in respect of any assignment agreement entered into on or after the day that is one month after April 7, 2022
bullet See the CRA GST/HST Notice 323 re Proposed GST/HST Treatment of Assignment Sales.
bulletTaxation of Vaping Products
bulletnew excise duty on vaping products
bulletwould come into force on October 1, 2022
bulletretailers may continue to sell until January 1, 2023 unstamped products that are in inventory as of October 1, 2022
bulletexclusions for vaping products already subject to the cannabis excise duty framework and those produced by individuals for their personal use
bulletduty-free importations of unstamped vaping products for personal use for travellers returning to Canada, for an absence of 48 hours or more, for up to 12 vaping products with a total volume being imported of up to 120 ml.
bulletCannabis Taxation Framework and General Administration under the Excise Act, 2001
bulletproposal to allow licensed cannabis producers to remit excise duties on a quarterly rather than month basis, starting from the quarter that began on April 1, 2022, for licensees required to remit less than a total of $1M in excise duties during the four fiscal quarters immediately preceding that fiscal quarter
bulletproposals for other technical amendments; changes to penalties for lost excise stamps; changes to licences
bullet100% Canadian Wine Exemption from Excise Duties
bulletas per agreement with the World Trade Organization (WTO), the excise duty exemption for wine that is produced in Canada and composed wholly of agricultural or plant product grown in Canada
bulletwould come into force on June 30, 2022
bulletBeer Taxation
bulletproposal to eliminate excise duty for beer containing no more than 0.5% alcohol by volume (ABV), bringing the tax treatment of such beer into line with the treatment of wine and spirits with the same alcohol content
bulletwould come into force on July 1, 2022

Other Tax Measures

Amendments to the Nisga'a Final Agreement Act to Advance Tax Measures in the Nisga'a Nation Taxation Agreement

bulletproposal to amend the Nisga'a Final Agreement Act to provide force-of-law to all provisions of the Nisga'a Nation Taxation Agreement
bulletincludes a forthcoming amendment with respect to an income tax exemption for amounts received by citizens of the Nisga'a Nation from a registered pension plan to the extent that the employment on which the pension amounts are based was itself exempt from tax

For more complete information, see Tax Measures: Supplementary Information.  We've also saved a pdf of the Tax Measures Supplementary Information.

Revised: September 24, 2022

 

Copyright © 2002 Boat Harbour Investments Ltd. All Rights Reserved.  See Reproduction of information from TaxTips.ca

Facebook  | Twitter  |  See What’s New, stay connected with TaxTips.ca by RSS or Email
The information on this site is not intended to be a substitute for professional advice.  Each person's situation differs, and a professional advisor can assist you in using the information on this web site to your best advantage. 
Please see our legal disclaimer regarding the use of information on our site, and our Privacy Policy regarding information that may be collected from visitors to our site.