Budget 2023 and Your Bottom Line
As many of you know, the federal budget was released last week. They now give these budgets descriptive titles - this one is Making Life More Affordable and Supporting the Middle Class which is an interesting focus (I imagine they have a marketing department that comes up with these). Given that the biggest economic headline from the last year or so has been inflation, I suppose it is important that this budget is seen as an effort to help make life easier for Canadians. Unfortunately, the budget does not have much in the way of inflation targeting nor is there anything significant for small businesses. There are however (as always) some items of interest.
Canada Dental Benefit: For children under 12 years of age and available to families earning under $90,000 per year. To be rolled out within the next couple of years.
One Time Grocery Rebate: The amounts potentially receivable are $467 for eligible couples with children; an additional $234 for single Canadians without children; and an additional $225 for seniors, on average. Sadly, this is completely unrelated to your actual grocery bill and will simply be an add on to your GST credit (that will likely be based on the same levels of income for those that are eligible for the GST credit.)
Credit card charges: The federal government has received commitments from Visa and MasterCard to cut credit card processing fees charged to small business by up to 27 per cent from the current average which will apparently benefit 90% of businesses. The details of how this will work in practice are yet to be released.
Canada Student Grants: The government proposes to increase Canada Student Grants by 40 per cent—providing up to $4,200 for full-time students. They will also raise the interest-free Canada Student Loan limit from $210 to $300 per week of study. Finally, credit screening for mature students (22 years or older) will be waived.
Tradespeople Deduction: The tax deduction for tradespeople will increase from $500 to $1,000.
Common Chargers for Your Devices: An interesting provision in the budget is the establishment of a standard for chargers (which anyone with a smartphone knows can be frustrating) federal government will work with international partners and other stakeholders to explore implementing a standard charging port in Canada, with the aim of lowering costs for Canadians and reducing electronic waste. It should be noted that the EU has already implemented a common standard so this is simply an extension of a worldwide movement.
Automatic Tax Filing: A new automated system, primarily directed at low income Canadians who are entitled to benefits but don’t file their tax returns, that will allow them to receive the benefits by simply filing their taxes over the phone.
RESP Changes: The budget proposes to increase limits on certain RESP withdrawals from $5,000 to $8,000 for full-time students, and from $2,500 to $4,000 for part-time students. Additionally, it will allow divorced or separated parents to open a joint RESP for their children.
First Home Savings Account (FHSA): This savings account, similar to the RRSP home buyers plan, was introduced last year for people wanting to buy their first home. and will be available starting April 1, 2023. You can save up to $8k a year, tax free in this account up to a maximum of $40k and use it towards your home.
Additional Measures: There are a number of investment tax credits for clean energy, a change to the alternative minimum tax (AMT) calculations and some provisions for inter generational transfers. Read more about the personal and business tax measures.
For the complete budget, or provisions that you find useful or interesting (or simply require something to help you with your insomnia), here is the table of contents.
