April 13, 2022
Highlights from Budget 2022
The federal government released Budget 2022: A Plan to Grow our Economy and Make Life More Affordable on April 7, 2022. We have reviewed the budget, and summarized some of the changes that we feel would be most relevant to our clients and their families in the areas of housing and taxation.
Tax-Free First Home Savings Account (“FHSA”)
Budget 2022 proposes a new tax-free savings account intended to help Canadians purchase their first home. Canadian residents over the age of 18 qualify. Details include:
$8,000 maximum annual contribution, up to a lifetime limit of $40,000.
Contributions to the account are tax deductible, like an RRSP.
Investments within the FHSA grow tax-free and can be withdrawn tax-free (provided the funds are used for a qualifying home purchase), like a TFSA.
Home Accessibility Credit
The Home Accessibility Tax Credit is an existing tax credit that provides support to seniors and persons with disabilities with the cost for accessibility home renovations. Budget 2022 proposes increasing the qualifying expense limit to $20,000 from $10,000. This results in a potential tax credit up to $3,000, instead of the $1,500 previously available.
Multigenerational Home Renovation Credit
Budget 2022 proposes a new refundable credit for families looking to construct a secondary suite for a senior or adult with a disability. Starting 2023, families can claim 15% of qualifying renovation expenses for the suite, up to a maximum of $7,500.
Real estate flipping – Taxation of profits
Budget 2022 proposes a new rule to ensure profits from selling properties held for less than 12 months (defined as “flipping”) are subject to full taxation. This new rule is effective for properties sold as of January 1, 2023, and there are a wide range of exceptions to this rule such as death, disability, divorce, and bankruptcy.
First-time Home Buyers’ Tax Credit
Budget 2022 proposes to double the existing First-Time Home Buyers’ Tax Credit from $750 to $1,500.
Alternative Minimum Tax (“AMT”)
The AMT has been in place since 1986 and was designed to ensure that the wealthiest Canadians cannot take advantage of tax benefits to lower their income below a minimum level. Budget 2022 indicated that the government plans to review the AMT and design a new minimum tax regime for high income earners. More details will be released in late 2022.
Capital gains inclusion rate
Budget 2022 leaves the capital gains inclusion rate unchanged at 50%.
Budget 2022 proposes new funding to Heath Canada with the goal of providing dental care to Canadians. The program starts in 2022 with children under 12 years old and is expected to expand to children under 18 years old, seniors, and persons with disabilities in 2023, with full implementation in 2025. The program is restricted to families with an income of less then $90,000 annually.
You can read the full budget here.
About Northfront Financial
Northfront Financial, based in Calgary, Alberta is a boutique full-service financial planning firm serving professionals and business owners. We pride ourselves on being a different kind of investment firm. This stems from our humble roots, entrepreneurial spirit, and a culture of integrity and professionalism. Our goal is to offer the best investment products, services, advice, and ideas the financial industry has to offer from our experienced team, which includes individuals with the Chartered Financial Analyst® (CFA®), Chartered Investment Manager (CIM®), and CERTIFIED FINANCIAL PLANNER™ designations.