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The 2019 Federal Budget – what’s in it for you

Spoiler alert: the dividend to capital gain conversion survived

Here is an executive summary of Tuesday’s Budget:

  1. No Tax Rate Reductions – the 2019 Federal Budget contained no personal or corporate tax rate reductions.
  2. Inter-generational Transfers – no legislative proposals were introduced in Budget 2019 to address inter-generational transfers of business interests. The government is continuing its outreach to affected parties to try to address and implement some solutions.
  3. Canada Training Credit– The Budget introduces a new refundable personal tax credit which allows adults to recover up to half of the eligible tuition costs based on a new “Training Amount Limit” notional account that accumulates by $250 per year.
  4. Incentives for First-Time Home Buyers – The Budget proposes to expand the RRSP Home Buyer Plan by increasing the withdrawal limit from $25,000 to $35,000 and by expanding access to separated spouses/common-law partners. The Budget also introduced a new CMHC shared equity mortgage program that may have important tax considerations.
  5. TFSA Amendments– under current rules, if a TFSA is “carrying on a business,” the trustee of a TFSA trust (normally a financial institution) is jointly and severally liable with the TFSA for income tax on income from the business or non-qualified investments. The Budget proposes that the joint and several liability for tax owed on income from carrying on a business in a TFSA be extended to the TFSA holder.
  6. Expanded Annuity Choices for Registered Planseffective 2020 and subsequent years, the Budget proposes to permit two new types of annuities for certain registered plans: advanced life deferred annuities (“ALDA”) and variable payment life annuities (“VPLA”).
  7. Accelerated Capital Cost Allowance for Zero-Emission Vehicles – The Budget proposes a 100% accelerated capital cost allowance rate for qualifying Zero-Emission Vehicles purchased before 2024 (with a phase-out afterwards).
  8. Change in use rules – The elections that enable deemed dispositions of property that occur on a change of use from personal use to income producing or vice versa will be expanded to be utilizable when a property’s use is partially changed.

Source: Moody’s Gartner tax lawyers

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