2022 federal budget
Highlights
Corporations
- Taxable capital phase out ceiling expanded to $50m from $15m. Phase out still starts at $10m
- Up to 30% investment tax credit for clean tech. Details to follow in fall 2022
- CCA class 43.1 and 43.2 expanded definition
- Discussion on Bill C-208 related to intergenerational transfers. Details to follow in fall 2022
- CCPC definition tightened up to prevent taxpayers avoiding CCPC status to get access to tax deferral on investment income (via usage of foreign entities)
- Introduction of “Substantial Canadian Controlled Private Corporation” definition o Investment income rate of 38 2/3% and refundable 30 2/3% and added to LRIP
- This will make SCCPC less attractive in earning dividend income
- Also not considered a CCPC for other tax purposes
- SRED program to be streamlined
- Patent box regime to be considered
Personal
- Tax free first home savings account – First time home buyer version of TFSA introduced to save up to $40,000 over their lifetime. Contributions will be tax-deductible and withdrawals used to purchase first home would not be taxable
- Annual contribution is $8,000 per year beginning 2023. Unused room does not roll forward
- Can move from RRSP to FHSA account on tax free basis and vice versa. RRSP withdrawals are still taxed
- Cannot make both FHSA withdrawal and Home Buyers’ Plan withdrawal on same home purchase
- Account only lasts 15 years, otherwise it comes out taxable
- First time home buyer credit expanded from $5000 to $10,000
- Home accessibility tax credit expanded from $5,000 to $10,000
- New multigenerational home renovation tax credit – up to $7,500 for building a secondary unit for seniors or disabled adults
- Residential property anti flipping rule – Full tax (no 50% capital gain inclusion rate or principal resident exemption) on residential properties sold under 12 months (with some exceptions)
- Two year ban on homes purchased by foreign interests with some exceptions
- Pertains only to non-recreation, residential property
- Does not necessarily apply to
- Refugees
- People authorized to come under emergency travel while fleeing international crisis
- International students working towards permanent residency
- Individuals on work permits obtaining permanent residency
- Non-resident, non-Canadians would still be subject to Underused Housing Tax (not yet in effect) for unused/vacant homes
- Labour mobility – up to $4k for relocation of tradespeople
- Minimum tax for high earners to be discussed in fall 2022
Other
- Expansion of GAAR definition
- GST will apply on all assignment sales for new constructions and heavily renovated homes