Federal Budget Commentary 2019 - Introduction
Finance Minister Bill Morneau’s message with Budget 2019 is that, thanks to the Federal Government’s investments over the past three years, things are going well — especially for the middle class: more Canadians have full-time jobs, unemployment is at historic lows, wages are growing, consumers and businesses are confident, economic growth is good, and our debt is manageable.
Nonetheless, says Morneau, more needs to be done to ensure Canadians’ prosperity over the coming years. For the most part, that means: adding tax credits and other incentives, and enhancing existing ones; giving the Canada Revenue Agency more resources to recover unpaid taxes and to help businesses comply; measures to reduce tax evasion and aggressive tax avoidance; improving retirement and disability savings plans; and introducing the framework for a national prescription drug plan.
It does not mean making changes to personal and business tax rates, making substantive effort to improve the efficiency of the Income Tax Act, or making significant cuts intended to reduce the deficit.
Specific measures include:
- A new, non-taxable Canada Training Credit for eligible workers aged 25 to 64
- A new Employment Insurance Training Support Benefit
- Increasing the RRSP withdrawal limit under the First-Time Home Buyers’ Plan
- Preferred capital gains tax treatment for owners of multi-unit residential properties
- Increased access to the enhanced 35 per cent scientific research and experimental development tax credit
- Limits on the employee stock option deduction for large, long-established, mature companies
- Broadening the tax rules for certain registered plans to allow new types of annuities
- Changing the rules for Registered Disability Savings Plans to better protect the long-term savings of persons with disabilities
- Making zero-emission vehicles eligible for a 100 per cent capital cost allowance rate in the year they are put in use
- Reallocating the CRA’s resources to improve digital services, provide more timely resolution to taxpayers’ objections, and adding CRA auditors to help new unincorporated businesses understand their tax obligations and extending the program to incorporated businesses
- Making a permanent dedicated CRA telephone support line for technical questions from tax practitioners
- Increasing CRA staff to reduce the time it takes to process T1 post-filing adjustments
- New CRA audit teams to detect and pursue complex real estate transactions where parties have not paid the required taxes
- Making Tax-Free Savings Account holders jointly and severally liable with their financial institutions for tax owing when using those accounts to carry on business
In brief, the 2019 Budget includes $22.8 billion in new spending over the next five years. The government expects revenues to steadily increase by nearly $60 billion in 2023 and projects program spending to increase by $40 billion that year. Debt payments are projected to increase by $7 billion.
Based on these growth and spending assumptions, the government expects the federal deficit to increase to nearly $20 billion in 2019–2020 and 2020–21 and then decline to $9.8 billion at the end of the next five years.
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