Spoiler alert: the dividend to capital gain conversion survived
Here is an executive summary of Tuesday’s Budget:
- No Tax Rate Reductions – the 2019 Federal Budget contained no personal or corporate tax rate reductions.
- 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.
- 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.
- 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.
- 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.
- Expanded Annuity Choices for Registered Plans –effective 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”).
- 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).
- 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
