On December 16, the Prime Minister released a mandate letter to Chrystia Freeland, the Minister of Finance, detailing the government’s priorities for the next few days, including any tax changes to be made. Think of them as New Year’s resolutions that the government intends to keep heading into 2022. The letter is quite long, so I decided to focus on the priorities that affect individuals and families. Some of these will sound familiar to you, as they were announced in the 2021 Federal Budget. Others will be new to readers. So let’s go. In 2022, the Ministry of Finance will focus on:
Taxes and pensions
- Establish a minimum tax rule of 15% for high incomes;
- Introduce a tax on the purchase of luxury cars, boats and planes;
- Address labor shortages by introducing a labor mobility tax credit of up to $ 600 per year for building and construction trades workers in travel and relocation costs temporary eligible;
- Introduce a career extension tax credit of up to $ 1,650 per year for seniors who wish to remain in the labor market;
- Introduce a one-time tax deduction for health professionals starting their careers to help them pay the costs of establishing their practice in a rural community;
- Expand the medical expense tax credit to include expenses reimbursed to surrogate mothers for in vitro fertilization expenses;
- Go ahead with a national tax on vaping products;
- Convert the Canada Caregiver Credit into a refundable, tax-free benefit, allowing caregivers to receive up to $ 1,250 per year;
- Increase the qualifying educator school supply tax credit to 25%, expand eligibility to include technological devices, and ensure that educational supplies purchased for job-related tasks are eligible regardless of the location where these tasks are performed;
- Invest in the Canada Revenue Agency (probably by adding more auditors) to fight aggressive tax planning and tax avoidance;
- Work with provinces and territories in the next review cycle to increase Canada and Quebec Pension Plan survivor benefits by 25%.
- Accelerate the adoption of zero-emission vehicles and other clean technologies (which probably means extending tax incentives to encourage the purchase of these vehicles and technologies);
- Eliminate flow-through shares for oil, gas and coal projects (flow-through shares are a common investment used in tax planning due to the current deduction provided for investing in them);
- Launch of an annual green bond issuance program with an initial issuance of $ 5 billion (the proceeds of the issuance will be used by the government to support green initiatives);
- Introduce a 15% tax credit of up to $ 500 to cover the cost of repairs made by technicians to extend the life of household appliances;
- Support first-time home buyers by introducing a law to double the tax credit for the purchase of a first home;
- Work with financial institutions to create a Tax Free First Home Home Ownership Savings Account; and
- As an option to the current shared participation mortgage, develop with the Canada Mortgage and Housing Corporation (CMHC) a loan program, repayable only at the time of sale;
- Support homeowners by tabling a bill to double the tax credit for housing accessibility;
- Introduce a new tax credit for multigenerational home renovations;
- Ensure that CMHC reviews its insurance policies to determine if the policies support the goal that by 2030 everyone in Canada should have a home they can afford and that meets their needs ;
- Make critical investments and make strategic decisions to expand the housing supply in Canada, and continue to advance investments in affordable housing and expand the co-op housing model to new communities;
- Require landlords to disclose in their income tax returns the rent they receive before and after renovations and to pay a proportional surtax if the rent increase is excessive;
- Introduce an anti-rollover tax on residential properties, requiring properties to be held for at least 12 months;
- Implement the Canadian tax on non-resident and non-Canadian owners of vacant and underutilized housing, and subsequently work to include vacant land owned by foreigners in large urban areas;
- Examine and consider possible reforms to the tax treatment of real estate investment trusts;
- Review the down payment requirements for investment properties and develop policies to limit excessive profits while protecting small independent owners;
- Considering measures aimed at increasing consumer protection and transparency in real estate transactions, including the prohibition of blind auctions;
- Ban on foreign capital investment in non-recreational residential real estate for the next two years.
Recovery in the event of a pandemic
- Extend Canada’s hiring program for the stimulus, introduce temporary rent and salary supports for the tourism and hospitality and arts and cultural industries, and provide emergency support to businesses and workers in the event of future public health lockdowns (this could help employees keep their jobs).
While many people may struggle to keep their New Year’s Resolutions, it’s safe to say that the ones listed above are high priorities for our government for 2022. Write down what could affect you and plan accordingly.
Tim Cestnick, FCPA, FCA, CPA (IL), CFP, TEP, is author, co-founder and CEO of Our Family Office Inc. He can be contacted at [email protected].
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