Fall Economic Statement ⋆ fdp Private Wealth Management

On November 3, the federal government published its Fall Economic Statement 2022. This Statement sets out the Canadian government’s commitments on certain issues to help Canadians get through the difficult period we are currently experiencing in terms of inflation and high costs of different products and services. We can expect the bills relating to these measures to be tabled in the coming months, or even to be included in the 2023 budget.

Our tax specialist, Anik Bougie, has analyzed the various measures announced and selected those which, in his view, are most likely to interest professionals.

Here are these measures, grouped according to the stages of life where they could have a positive impact on your finances. Note that these measures are currently intentions and do not yet have the force of law.

For young professionals

Eliminate interest on federal student loans.Since half of post-secondary students in Canada rely on student loans to pay for their tuition and essential items they need during their studies, the government is proposing to permanently eliminate interest on all student loans, including those currently being repaid, beginning on April 1, 2023.

Double the First-Time Home Buyers’ Tax CreditThis measure would provide up to $1,500 in direct support to home buyers, starting in 2022, to offset the increasing closing costs involved in buying a home.

Create a registered account (FHSA) for the purchase of a first home.This tax-free savings account would allow prospective first-time home buyers to save up to $40,000 tax-free toward their first home. Like a Registered Retirement Savings Plan (RRSP), contributions would be tax-deductible, and withdrawals to purchase a first home—including investment income—would be non-taxable.

Double the GST credit for six months.An additional payment will be made in the coming weeks to low and modest-income families in order to lessen the impact of inflation. Current GST Credit recipients will automatically receive this support.

For families

Reimburse dental expenses for low-income children and families.Tabled in September 2022, this Canada Dental Benefit bill will provide eligible parents or guardians (annual income of less than $90,000) with direct, up-front tax-free payments to cover dental expenses for their children under 12-years-old.

Introduce a Multigenerational Home Renovation Tax CreditStarting January 1, 2023, this measure would provide up to $7,500 in support for constructing a secondary suite for an aging grandparent or an adult child with a disability.

For the elderly

Double the GST credit for six months.An additional payment will be made in the coming weeks to low and modest-income persons in order to lessen the impact of inflation. Current GST Credit recipients will automatically receive this support.

For investors

Tax share buybacks from existing shareholders.A new 2 per cent tax would apply on the net value of all types of share buybacks by public corporations in Canada. The purpose of this tax is to encourage corporations to reinvest their profits in their workers and business rather than maximizing shareholder return. The tax would come into force on January 1, 2024.

In the current environment, these various measures will provide much appreciated assistance, particularly for our young professionals who are studying or at the start of their careers. We will keep you informed of developments that are of particular interest to our clients.