Don’t lose all your hard-earned money to taxes

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Don’t lose all your hard-earned money to taxes

Tax planning is an essential part of managing your money – both while living and after your death. You want to maximize the amount of money to your beneficiaries, not the government. We have three tips to help you reduce taxes on your hard-earned money:

  1. Make the most of the lifetime capital gains exemption

  2. Decrease your end-of-life tax bill

  3. Look into Immediate Financing Arrangements

Lifetime capital gains exemption

The good news is that you can save a lot of money on taxes using the lifetime capital gains exemption. The bad news is that you could lose out on some of those savings unless you follow all the appropriate steps. Having a financial team to guide you through these steps is essential. When it comes to selling all or part of your business, your lawyer, accountant, and financial advisor must be all on the same page.

End-of-life tax bill

As with the lifetime capital gains exemption, working with your financial team to ensure your affairs are in order is crucial. Without the proper paperwork, your hard-earned money may not go to the family members, friends, or charities you want to support. Take the time to ensure that your wishes are properly documented and that you have filled out all essential paperwork.

Consider an Immediate Financing Arrangement

An Immediate Financing Arrangement (IFA) lets your business:

  • Get a life insurance premium on behalf of a shareholder

  • Create a tax deduction

  • Transfer assets tax-free from the business to a shareholder’s estate

Also, you can use an IFA to help increase your business’ cash flow by pledging the life insurance policy as collateral for a loan. The loan can be invested into the business or other investments if the company does not need the additional cash flow.

The Takeaway

While this can all seem overwhelming, it is essential to make sure you take the proper steps to protect your business and minimize your tax bill. But you don’t have to do this alone – contact us today for expert advice and guidance.

Understanding Registered Education Savings Plans (RESPs) in Canada

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What is an RESP?

A Registered Education Savings Plan (RESP) is a unique savings account available in Canada, designed to assist individuals, such as parents or guardians, in saving for a child’s post-secondary education. Notably, anyone can open an RESP for a child. There are two main types of RESPs: single and family plans. Single plans cater to one beneficiary who doesn’t necessarily have to be related to the contributor. In contrast, family plans can cater to multiple beneficiaries, who must be related to the contributor by blood or adoption. This special account type offers significant tax benefits and is structured explicitly to fund a child’s future educational needs.

What are the eligibility requirements to open an RESP?

Opening an RESP requires both the contributor and the beneficiary (the child for whom you’re saving) to be Canadian residents with a valid Social Insurance Number (SIN). The plan can be opened for up to 35 years, and the RESP has a lifetime contribution limit of $50,000. To qualify for the Canada Education Savings Grant (CESG), the beneficiary must be aged 17 or under.

How can my child access their RESP funds for school?

The beneficiary can start withdrawing funds from the RESP as Educational Assistance Payments (EAPs) once they enrol in an eligible post-secondary educational program. EAPs comprise the income earned in the RESP and any government grants. The original contributions made to the RESP can be withdrawn tax-free by the contributor or given to the beneficiary. Given the student’s income level and personal tax credits, they typically remain tax-free.

What are the benefits of an RESP?

RESPs offer numerous benefits. Key among them is tax-deferred growth, which means the investment income generated within the account isn’t taxed as long as it remains in the plan. Also, through programs like the CESG and the Canada Learning Bond (CLB), the Canadian government contributes to your RESP, thereby enhancing your savings. Lastly, RESPs provide a structured path to save for a child’s future education, encouraging consistent savings and financial planning.

How does the Canadian Education Savings Grant work?

The CESG is a government grant that matches a portion of your annual RESP contributions. The standard matching rate is 20% on the first $2,500 contributed each year, leading to a maximum annual grant of $500. However, low-income families may qualify for a higher matching rate. Unused CESG contribution room can be carried forward, allowing for a potential maximum grant payment of $1,000 in a single year. The CESG is available until the beneficiary turns 17, with a lifetime limit of $7,200 per beneficiary.

What is the Canada Learning Bond?

The Canada Learning Bond (CLB) is another program to promote long-term savings for a child’s post-secondary education. It targets children born after 2003 from low-income families. Eligible families receive an initial $500 from the government, directly deposited into the child’s RESP. An additional $100 is added annually until the child turns 15, for a potential total of $2,000. The CLB does not require any contributions to the RESP, making it accessible even for those in a tight financial position.

What are the BCTESG and QESI?

Provincial programs such as the British Columbia Training and Education Savings Grant (BCTESG) and the Quebec Education Savings Incentive (QESI) provide additional incentives for education savings. The BCTESG offers a one-time grant of $1,200 for eligible children, and the QESI provides a refundable tax credit paid directly into an RESP for qualifying Quebec residents.

How do I open an RESP?

Opening an RESP can be done through a financial advisor. You need to provide your SIN and the SIN of the beneficiary. Understanding the terms, conditions, and potential fees linked with the RESP offered by your chosen institution is crucial. You can make regular contributions or contribute lump sums as you see fit. Inquiring about the types of investments available within the RESP is vital, as they can significantly impact the growth of your savings.

In conclusion, while RESPs offer a structured and tax-efficient way of saving for a child’s post-secondary education, they also require careful planning and consistent contributions. Be sure to understand all aspects of an RESP and consider contacting us before starting one.

LET’S TALK

Understanding Tax-Free Savings Accounts (TFSAs)

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A Tax-Free Savings Account (TFSA) is an investment vehicle available to Canadian residents. It offers numerous benefits, including tax-free growth of your investments and tax-free withdrawals. Before you decide to open a TFSA, it’s essential to understand the eligibility requirements, contribution limits, eligible investments, and withdrawal rules. 


Eligibility Requirements

To open a TFSA, you must be a resident of Canada with a valid Social Insurance Number (SIN) and be at least 18 years old. However, in some provinces and territories, the legal age to enter a contract (which includes opening a TFSA) is 19. The TFSA contribution room for the year an individual turns 18 is carried over to the following year if the individual resides in a jurisdiction where the legal age is 19.


Benefits

One of the primary benefits of a TFSA is that it allows your investments to grow tax-free. Any income you earn from your investments within the TFSA is not taxed, even upon withdrawal. This includes interest, dividends, and capital gains. 

Additionally, you can withdraw any amount from your TFSA at any time, and the withdrawals are tax-free. It’s important to note that withdrawing funds from your TFSA does not reduce the total amount of contributions you have made for the year. The amount withdrawn in a year will be added back to your TFSA contribution room at the beginning of the following year.


Contribution Limit

The annual TFSA dollar limit has varied over the years. From 2009 to 2012, it was $5,000; in 2013 and 2014, it was $5,500; in 2015, it increased to $10,000; from 2016 to 2018, it was $5,500; from 2019 to 2022, it was $6,000, and in 2023, it is $6,500. This annual limit will be indexed to inflation and rounded to the nearest $500. 

The maximum amount you can contribute to a TFSA is determined by your TFSA contribution room. This room is the sum of the TFSA dollar limit of the current year, any unused TFSA contribution room from previous years, and any withdrawals made from the TFSA in the previous year. 

Let’s look at two examples to better understand this:

Example #1: Carry Forward Unused Room to Your Current Contribution

In 2020, the annual TFSA contribution limit is $6,000. If you only contribute $5,000, you would have $1,000 of unused room. This unused room gets carried over to the next year. So, in 2021, the annual contribution room is $6,000, but because of the unused room from 2020, you actually have a total contribution room of $7,000 ($6,000 for 2021 + $1,000 carried over from 2020).

Example #2: Reclaim Your Contribution Room in the Following Year When You Make a Withdrawal

In 2021, you have $7,000 in contribution room and decide to contribute the full amount. However, you also decide to make a withdrawal of $1,000 in 2021. In 2022, the annual contribution limit is $6,000, but because of the withdrawal made in 2021, you actually have a total contribution room of $7,000 ($6,000 for 2022 + $1,000 withdrawn in 2021).

Please note that if you exceed your available TFSA contribution room at any time in the year, you will have to pay a tax equal to 1% of the highest excess TFSA amount in the month, for each month that the excess amount stays in your account.


Eligible Investments

The types of investments that are permitted in a TFSA are generally the same as those allowed in a Registered Retirement Savings Plan (RRSP). These include cash, segregated funds, mutual funds, securities listed on a designated stock exchange, guaranteed investment certificates, and bonds.


Withdrawals

As mentioned earlier, you can generally withdraw any amount from the TFSA at any time, depending on the type of investment held in your TFSA. However, if you decide to replace or re-contribute all or a part of your withdrawals into your TFSA in the same year, you can only do so if you have available TFSA contribution room. 

For example, if in 2023 you withdraw $1,000 from your TFSA and later in the same year decide to re-contribute that amount, you can only do so if your contribution room for 2023 allows for it. If it doesn’t and you re-contribute the $1,000 anyway, you will be considered to have over-contributed to your TFSA in that year. This will result in a tax equal to 1% of the highest excess TFSA amount in the month, for each month that the excess amount stays in your account


Beneficiary

When establishing a Tax-Free Savings Account (TFSA), you are given the choice to designate a beneficiary. This person will be the recipient of the investments within your TFSA in the event of your death. The assets inherited by the beneficiary are not considered income, and as such, are received tax-free. It’s important to note, though, that while the inherited amount is tax-free, the beneficiary will be responsible for any tax on earnings that the TFSA generates after the original account holder’s death. 


Start Planning for Your Future Today!

Why A Buy-Sell Agreement Is Vital For Your Business

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Why A Buy-Sell Agreement Is Vital For Your Business

The purpose of a buy-sell agreement is to establish a set of rules or actions (that are legally binding) for what must happen to a business if one or more of the business owners is no longer involved.

Why does my business need a buy‐sell agreement?

A buy-sell agreement is vital for your business as it protects the shareholders and the business itself if one of the partners exits the business for any reason.

A buy-sell agreement offers so many benefits for your business. It:

  • Can help maintain the continuity of your business.
  • Minimize disputes between remaining co-owners and the family of the departing owner.
  • Decrease stress and uncertainty for all business owners.
  • Protect business assets and liquidity by including a solid financial and tax plan.

What are the different types of buy-sell agreements?

These are the most common types of buy-sell agreements:

  • A cross-purchase agreement. In this agreement, each remaining shareholder agrees to buy a percentage of the shares owned by the departing shareholder. The purchase can be funded by life insurance in case of the death of one of the shareholders.
  • A promissory note agreement. Each shareholder has corporate-owned life insurance in this agreement, and the corporation is the beneficiary. If a shareholder dies, the surviving shareholder(s) use a promissory note to purchase the deceased’s shares from their estate. The shareholders then use a capital dividend provided by the life insurance to pay off the promissory note.
  • A share redemption arrangement. This is similar to the promissory note agreement set up, but no promissory note is involved, and the capital dividend account pays for the deceased shareholder’s shares.

What do I need to cover in my buy‐sell agreement?

Your buy-sell agreement must address the following:

  • Valuation of the company.
  • Ownership interests.
  • Buyout clauses.
  • Terms of payment.
  • What will happen in the event of any “triggering events.”. These events can include a disagreement between business owners, a business owner getting divorced or retiring, a business owner going bankrupt or becoming disabled, or a business partner dying.

What is the best way to fund my buy-sell agreement?

This needs to be addressed when putting the buy-sell agreement together and can be challenging in the case of some “triggers,” such as a business owner getting a divorce or a disagreement between business owners.

In the case of the death of a business owner or a business owner becoming disabled, the buy-sell agreement can be funded by insurance. Insurance provides both immediate capital and significant tax benefits.

We Can Help!

Buy-sell agreements can be complex and challenging, but they are vital to protect your business and your personal interests. We can explain the best way to set one up – reach out to us today to get started!

What is Critical Illness Insurance?

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Nowadays, people survive serious medical issues such as cancer, a heart attack, or a stroke. And while this is good news if a critical
illness happens to you – your recovery may come with costs that you don’t have the money to cover.

This is where critical illness insurance can play a crucial role. In this article, we’ll explain:

  • What critical illness insurance is.

  • What you can use the money from a critical illness insurance payout for.

  • How you can get critical illness insurance.

What is critical illness insurance?

A critical illness policy is designed to help you pay the costs associated with a serious medical issue such as cancer, a stroke or a
heart attack.  With critical illness insurance, your insurance company will issue you a lump-sum payment once the waiting period has passed.

Critical illness insurance can help you pay for costs that aren’t covered by other health plans or disability insurance.

What can I use the money from critical illness insurance for?

With a critical illness lump-sum payment, there are no restrictions on what you can use the money for. You can choose to use the money
to:

  • Pay down debt or cover costs such as travel to and from your treatment.

  • Cover lost income for you if you cannot work. This is especially important if you are self-employed.

  • Pay for a caregiver or lost wages if your spouse takes time off work to be a caregiver.

  • Cover renovations on your house that are necessary due to your illness.

  • Cover medical treatments and medications not covered by a government or private health plan.

Being able to spend your critical illness insurance lump-sum payment freely takes a lot of stress off you and your family.

How do I get critical illness insurance?

We can help you get critical illness insurance.  If you’re interested in critical illness insurance, these are the steps you’ll need to follow:

  1. Think about why you want critical illness insurance and what kind of coverage you need.

  2. Book an appointment to speak to us. Apply for coverage.

  3. We’ll let you know when you’re approved and deliver your policy.

If you do get any of the illnesses listed in your policy, contact us, and we’ll guide you through the steps you need to file a claim. After your claim is approved, we’ll let you know when to expect your lump-sum payment.

Contact us!

It can be scary to think about getting ill, but critical illness insurance can help put your mind at ease that you’ll have the financial
resources you need. Reach out to us today to learn more!

First Home Savings Account (FHSA): What You Need to Know

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The First Home Savings Account (FHSA) is a savings plan designed for first-time home buyers in Canada, which allows them to save up to $40,000 tax-free. Contributions to an FHSA are tax-deductible, similar to Registered Retirement Savings Plans (RRSP). Additionally, income and gains earned inside the account and withdrawals are tax-free, like a Tax-Free Savings Account (TFSA).

In this article and accompanying infographic, we will provide you with the necessary information you need to know about FHSA, including eligibility requirements, contributions and deductions, income and gains, qualifying investments, withdrawals, and transfers.

Eligibility Requirements

To be able to open an FHSA, you need to meet all the following eligibility requirements:

  1. Residency: You must be an individual who is a resident of Canada.

  2. Age: You must be at least 18 and not reach 72 in the current year.

  3. First-time Home Buyer: You must be a first-time home buyer, which means that neither you nor your spouse had owned a qualifying home that was your principal residence at any point during the calendar year or the preceding four calendar years before the account was opened.

Contributions and Deductions

There are limits to the amount you can contribute to your FHSA.

  • The annual contribution limit is $8,000.

  • The lifetime contribution limit is $40,000.

If you do not contribute the full amount each year, the contribution room carries forward to the following year. However, carry-forward amounts only start accumulating after you open an FHSA for the first time, and they do not automatically begin when you turn 18.

Any excess contributions are subject to a penalty of 1% per month.

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Tax Deductions

By claiming contributions made to FHSA accounts as a deduction against all taxable income sources, the amount of taxable income for the year can be reduced, resulting in a decrease in the amount of taxes payable.

Suppose you choose not to claim the FHSA deduction in the year. In that case, you can carry forward the unused contribution amounts indefinitely and claim them as a deduction later, like RRSP deductions.

Qualifying Investments

Qualifying investments for an FHSA are like those allowed in RRSPs and TFSAs, including mutual funds, segregated funds, ETFs, stocks, bonds, and GICs.

Incomes and Gains

The income and capital gains earned in an FHSA are not included in your annual income for tax purposes and therefore are not deductible. This means that the investment can continue to grow and compound within the FHSA tax-free like a TFSA.

Qualifying Withdrawals

Withdrawals from an FHSA are subject to specific rules and conditions. Qualifying withdrawals made to purchase a home are tax-free but must meet specific criteria:

  • The person making the withdrawal must be a first-time home buyer and a Canadian resident.

  • They must also intend to use the property as their primary residence within one year of purchasing or building it.

  • The home being purchased must be in Canada, and a written agreement to buy or build the home must be in place before October 1st of the year following the withdrawal.

It is not possible to restore FHSA contribution limits by making withdrawals or transfers.

Transfers

Unused funds in an FHSA account following a qualifying withdrawal can be transferred tax-free to an RRSP or Registered Retirement Income Fund (RRIF) until the end of the following year from the year of the first withdrawal. Transfers do not affect the available RRSP contribution room, but the transferred funds will be taxable when withdrawn from the account.

It’s important to remember that there are limitations on how long you can keep your FHSA account. You must close your FHSA after you’ve held it for 15 years or by the end of the year in which you turn 71, whichever comes first.

If you’re considering opening an FHSA or saving for a home, we can help; contact us.

Tax Tips You Need To Know Before Filing Your 2022 Taxes

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Tax Tips You Need To Know Before Filing Your 2022 Taxes

This year’s tax deadline is May 1, 2023, as April 30 falls on a Sunday this year. It’s important to make sure you’re claiming all the credits and deductions you’re eligible for. In this article, we’ll provide you with tips to help you maximize your tax refund and ensure you’re taking advantage of all the available tax benefits.

Canada Workers Benefit

The Canada Workers Benefit (CWB) is a refundable tax credit designed to help low-income working families and individuals. The credit is made up of two parts:

  • The basic amount

  • A disability supplement (if you qualify).

To determine whether you qualify for the tax credit, you’ll need to consider your net income and where you live. The CRA website provides full details about the net income qualification amounts.

The maximum amounts you can qualify for are as follows:

  • The maximum basic amount is $1,428 for single individuals and $2,461 for families.

  • The maximum amount for the disability supplement is $737 for single individuals and $737 for families.

Claiming Home Office Expenses Due To COVID-19

You can still claim home office expenses if you’re not self-employed but worked from home due to the pandemic. You can:

  • Claim the temporary flat amount if you worked more than 50% of the time from home for at least four consecutive weeks in 2022. You can claim $2 for each day worked from home, up to a maximum of $500. No paperwork or forms are required!

  • Use the detailed method and claim the actual amounts. In this case, you’ll need supporting documentation, plus a completed and signed T2200S form from your employer. You can claim various applicable expenses, including home Internet access fees.

The Tax Deduction for Zero-Emissions Vehicles

A capital cost allowance (CCA) is a tax deduction that helps cover the cost of an asset’s depreciation over time. The CRA created two new capital cost allowances, which apply to zero-emission vehicles bought after March 18, 2019.

They are as follows:

  • Class 54. This class is for motor and passenger vehicles, excluding taxis or vehicles used for lease or rent. It has a CCA rate of 30%. For 2022, capital costs will be deductible up to $55,000, plus sales tax. This amount will be reassessed every year.

  • Class 55 is for leased and rented vehicles or taxis. The CCA rate is 40%.

Return Of Fuel Charge Proceeds To Farmers Tax Credit

You may be eligible for this tax credit if you are either self-employed or part of a farming partnership in Alberta, Manitoba, Ontario and Saskatchewan.

This tax credit aims to help farmers offset the high cost of the carbon tax.

Eligible Educator School Supply Tax Credit

You can claim up to $1,000 of eligible supplies and expenses if you qualify for the educator school supply tax credit.

The tax credit rate for the 2022 tax year is 25%, with a maximum credit of $250.

Need help?

Do you qualify for a credit or deduction? Call us – we’re here to save you money on your taxes!

Federal Budget 2023 Highlights

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On March 28, 2023, the Federal Government released their 2032 budget. This article highlights the following financial measures:

  • New transfer options associated with Bill C-208 for intergenerational transfer.

  • New rules for employee ownership trusts.

  • Changes to how the Alternative Minimum Tax is calculated.

  • Improvements to Registered Education Savings Plans.

  • Expanding access to Registered Disability Savings Plans.

  • Grocery rebate.

  • Deduction for tradespeople tool expenses.

  • Automatic tax filing.

  • New Canadian Dental Care Plan.

Amendments To Bill C-208 Intergenerational Transfer Introduces Two New Transfer Options

Budget 2023 introduces two transfer options associated with the intergenerational transfer of a business:

  1. An immediate intergenerational business transfer (three-year test) based on arm’s length sales terms.

  2. A gradual intergenerational business transfer (five-to-ten-year test) based on estate freeze characteristics.

For the three-year test, the parent must transfer both legal and factual control of the business, including an immediate transfer of a majority of voting shares and the balance, within 36 months. The parent must also transfer a majority of the common growth shares within the same time frame. Additionally, the parent must transfer management of the business to their child within a reasonable time, with a 36-month safe harbour. The child or children must retain legal control for 36 months following the share transfer, and at least one child must remain actively involved in the business during this period.

For the gradual transfer option, the conditions are similar to the immediate transfer, but with a few differences. The parent must transfer legal control, including an immediate transfer of a majority of voting shares and the balance, within 36 months. They must also transfer a majority of the common growth shares and the balance of common growth shares within the same time frame. As well, within 10 years of the initial sale, parents must reduce the economic value of their debt and equity interests in the business to 50% of the value of their interest in a farm or fishing corporation at the initial sale time, or 30% of the value of their interest in a small business corporation at the initial sale time. The child or children must retain legal control for the greater of 60 months or until the business transfer is completed, and at least one child must remain actively involved in the business during this period.

The extended intergenerational transfer now applies to children, grandchildren, stepchildren, children-in-law, nieces and nephews and grandnieces and grandnephews.

The changes apply to transactions that occur on or after January 1, 2024. If the election is made, the capital gain reserve period is extended to ten years, and the limitation period for assessing a return is extended to three years for an immediate transfer and ten years for a gradual business transfer.

New Rules for Employee Ownership Trusts

The employees of a business can use an employee ownership trust (EOT) to purchase the business without having to pay the owner directly to acquire shares. Business owners can use an EOT as part of their succession planning.

Budget 2023 introduces new rules for using ownership trusts (EOTs) as follows:

  • Extending the five-year capital gains reserve to ten years for qualifying business transfers to an EOT.

  • A new exception to the current shareholder loan rule which extends the repayment period from one to fifteen years for amounts loaned to the EOT from a qualifying business to purchase shares in a qualifying business transfer.

  • Exempts EOTs from the 21-year deemed disposition rule that applies to some trusts. This means that shares can be held indefinitely for the benefit of employees.

Clean Energy Credits

The upcoming Budget 2023 is set to introduce a series of measures aimed at encouraging the adoption of clean energy. These measures include several business tax incentives such as:

  1. Clean Electricity Investment Tax Credit: This is a refundable tax credit of 15% for investments in equipment and activities for generating electricity and transmitting it between provinces. The credit will be available to new and refurbished projects starting from March 28, 2023, and will end in 2034.

  2. Clean Technology Manufacturing Credit: This tax credit is worth 30% of the cost of investments in new machinery and equipment for processing or manufacturing clean technologies and critical minerals. It applies to property acquired and put into use after January 1, 2024. The credit will be phased out starting in 2032 and fully eliminated in 2034.

  3. Clean Hydrogen Investment Tax Credit: It offers a refundable tax credit ranging from 15% to 40% of eligible project expenses that produce clean hydrogen, as well as a 15% tax credit for certain equipment.

  4. Clean Technology Investment Tax Credit: This tax credit will be expanded to include geothermal systems that qualify for capital cost allowance under Classes 43.1 and 43.2. The phase-out will begin in 2034, and it will not be available after that date.

  5. Carbon Capture, Utilization and Storage Investment Tax Credit (CCUS): The budget broadens and adjusts specific criteria for the refundable Investment Tax Credit (ITC) for CCUS. Qualified equipment now includes dual-purpose machinery that generates heat and/or power or utilizes water for CCUS and an additional process, as long as it meets all other requirements for the credit. The expense of such equipment is eligible on a proportionate basis, based on the anticipated energy or material balance supporting the CCUS process during the project’s initial 20 years.

  6. Reduced rates for zero-emission technology manufacturers: The reduced tax rates of 4.5% and 7.5% for zero-emission technology manufacturers will be extended for three years until 2034, with phase-out starting in 2032. The eligibility will expand to include the manufacturing of nuclear energy equipment and processing and recycling of nuclear fuels and heavy water for taxation years starting after 2023.

  7. Lithium from brines: Allow producers of lithium from brines to issue flow-through shares and expand the Critical Mineral Exploration Tax Credit’s eligibility to include lithium from brines.

Changes To How Alternative Minimum Tax Is Calculated

Budget 2023 proposed several changes to calculating the Alternative Minimum Tax (AMT), including the following:

  • The capital gains inclusion rate will increase from 80 percent to 100 percent, while capital losses and allowable business investment losses will apply at a rate of 50 percent.

  • The inclusion rate for employee stock option benefits will be altered to 100 percent, and for capital gains resulting from the donation of publicly listed securities, it will be modified to 30 percent.

  • The 30 percent inclusion rate will also apply to employee stock option benefits if any deduction is available because underlying shares are also publicly listed securities that were donated.

  • Certain deductions and expenses will now be limited to 50 percent, and only 50 percent of non-refundable credits (excluding a special foreign tax credit) will be permitted to reduce the AMT.

  • The AMT tax rate will increase from 15 percent to 20.5 percent.

  • The AMT exemption will rise from the present allowable deduction of $40,000 for individuals to an amount indexed to the fourth tax bracket, expected to be $173,000 in 2024.

  • The AMT carryforward period will remain unaltered at seven years.

Improving Registered Education Savings Plans (RESPs)

Budget 2023 introduces the following changes to RESPs:

  • As of March 28, 2023, beneficiaries may withdraw Educational Assistance Payments (EAPs) up to $8,000 (from $5,000) for full-time programs and $4,000 (from $2,500) for part-time programs.

  • Individuals who withdrew EAPs before March 28, 2023, may be able to withdraw an additional EAP amount, subject to the new limits and the plan terms.

  • Divorced or separated parents can now open joint RESPs for one or more of their children.

Expanding Access to Registered Disability Savings Plans

Qualifying family members, such as a parent, a spouse, or a common-law partner, can open an RDSP and be the plan holder for an adult with mental disabilities whose ability to enter into an RDSP contract is in doubt and who does not have a legal representative.

Budget 2023 announces the government’s intention to extend the provision that allows this until December 31, 2026. To further increase access to RDSPs, the government also intends to expand the provision to include adult siblings of an RDSP beneficiary.

Grocery Rebate

The Budget 2023 will implement the Grocery Rebate, which will be a one-time payment managed through the Goods and Services Tax Credit (GSTC) system. The maximum amount that can be claimed under the Grocery Rebate is:

  • $153 for each adult

  • $81 for each child

  • $81 for a single supplement.

The implementation of the Grocery Rebate will be gradual and will follow the same income thresholds as the present GSTC regulations.

Deduction for Tradespeople’s Tool Expenses

Budget 2023 increases the employment deduction for tradespeople’s tools to $1,000 from $500. This is effective for 2023 and subsequent taxation years.

Automatic Tax Filing

The Canada Revenue Agency (CRA) will pilot a new automatic filing service for Canadians who currently do not file their taxes to help them receive certain benefits to which they are entitled.

The CRA also plans to expand taxpayer eligibility for the File My Return service, which allows taxpayers to file their tax returns by telephone.

Canadian Dental Care Plan

In Budget 2023, the federal government is investing in dental care for Canadians with the new Canadian Dental Care Plan. The plan will provide dental coverage for uninsured Canadians with annual family incomes of less than $90,000, with no co-pays for those under $70,000.

The budget allows the CRA to share taxpayer information for the Canadian Dental Care Plan with an official of Employment and Social Development Canada or Health Canada solely to administer or enforce the plan.

Wondering How This May Impact You?

If you have any questions or concerns about how the new federal budget may impact you, call us – we’d be happy to help you!

Saskatchewan 2023 Budget Highlights

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Saskatchewan 2023 Budget Highlights

On March 22, 2023, the Saskatchewan Minister of Finance announced Saskatchewan’s 2023 budget. This article covers the most important things you need to know.

No Changes To Corporate or Personal Tax Rates

There are no changes to Saskatchewan’s corporate or personal tax rates in Budget 2023.

Corporate Tax Incentives

Budget 2023 contains several measures that impact corporate tax incentives:

  • It extends the Saskatchewan Manufacturing and Processing Exporter Tax, which provides a non-refundable tax credit to eligible corporations, to December 31, 2023. This incentive offers non-refundable tax credits to qualifying corporations that recruit extra full-time employees in the manufacturing and processing sector, exceeding the number employed in 2014.

  • $4 million has been committed to expanding the Targeted Mineral Exploration Incentive, which provides a rebate on eligible drilling expenditures.

  • It increases funding for the Creative Saskatchewan Production Grant Program for film and television to $12 million.

Saskatchewan Mineral Exploration Tax Credit

The Saskatchewan Mineral Exploration Tax Credit (SMETC) is a non-refundable tax credit available to Saskatchewan taxpayers who invest in eligible flow-through shares issued by mining or exploration companies. The budget increases this tax credit to 30% (from 10%), effective the 2023 taxation year.

Provincial Sales Tax Changes

Budget 2023 introduced the following changes to exempt all of the following from the Provincial Sales Tax:

  • Labour costs and materials to repair and install exempt medical equipment into real property. This is effective as of April 1, 2023.

  • Various rigs, including commercial geothermal drilling rigs. This is retroactive to April 1, 2017.

  • Storage buildings used for storing commercially grown fruits and vegetables. Also, boats with attached harvesting equipment when primarily used in rice farming. This is retroactive to April 1, 2019.

Commitments to Healthcare, Education and Social Services

Budget 2023 contains a financial commitment to improving or expanding healthcare, education, and social services:

  • $7.1 billion is committed to healthcare services, focusing on strengthening the healthcare system, attracting more doctors and nurses, and providing support for mental health and addiction programs and services.

  • $3.1 billion for education, childcare and libraries.

  • $1.7 billion is committed to social services. Several types of benefits, including Saskatchewan Income Support, Saskatchewan Assured Income for Disability, the Seniors’ Income Benefit, and the Personal Care Home Benefit, will increase.

Infrastructure Spending

The government has budgeted almost $4 billion for capital projects this year. These are some of the highlights:

  • $98.6 million for the Victoria Hospital in Prince Albert.

  • $38 million for the Weyburn General Hospital.

  • $20 million for a La Ronge long-term care home.

  • $776 million on provincial roads and highways.

  • $152.3 million for education capital, for both renovating existing schools and constructing new ones.

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Alberta 2023 Budget Highlights

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On February 28, 2023, the Alberta Minister of Finance announced Alberta’s 2023 budget. We’ve highlighted the most important things you need to know about this budget.

No Changes To Corporate or Personal Tax Rates

Budget 2023 does not include any changes to the province’s corporate tax rates or personal tax rates.

Tax Credits

The budget confirms that the government will introduce a new Agri-Processing Investment Tax Credit. This provides a 12% non-refundable tax credit on eligible capital investments of at least $10 million made on or after February 7, 2023, and unused credits can be carried forward for ten years.

The maximum allowable expenses for the Adoption Expenses Tax Credit have been increased to $18,210.

Lowered Education Property Tax

The budget decreases the mill rates used to calculate the education property tax as follows:

• Residential or farmland — $2.56 (down from $2.65) per $1,000 of equalized assessment

• Non-residential — $3.76 (down from $3.90) per $1,000 of equalized assessment.

Investments In Education, Tourism and Infrastructure

Budget 2023 makes the following investments in education, tourism and infrastructure:

  • Post-secondary education will be more affordable for students as Budget 2023 introduces reduced loan rates (to prime from the current prime plus one percent and extended repayment grace periods (now extended from six months to one year). Tuition increases will be capped at two percent as of Fall 2024.

  • $10 million over two years is committed to promoting rural tourism.

  • An $800 million investment will be made to both reduce greenhouse gas emissions and support green technology.

  • Alberta’s road and bridge network, a crucial element of its expanding economy, will receive funding of $2.3 billion over a three-year period for vital projects and programs aimed at its enhancement and expansion.

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