Fall Federal Budget: Will Spending Be Cut?

Canada has historically presented an annual budget since Confederation in 1867, even through periods like World Wars and the Great Depression, but we have recently experienced the longest period without a full federal budget in our history. By the time the next one is brought down, expected in October 2025, it will have been 18 months since the controversial April 2024 budget which introduced the doomed capital gains inclusion rate hikes. What can we expect?

The December 14 Economic Update from the Federal Government primarily focused on pandemic recovery and healthcare sector as we’re entering a new wave of pandemic response. But there is some really good news to offset this reality. What was noticeably absent from the Update?  Investors and high-income earners will be pleased. But, will we see them addressed in the next federal budget?

Canada will create a new tax return to be filed by non-residents who own and under-use residential property in Canada, starting in 2022. Accompanying that return will be a payment of a new 1% tax on the value of the property, unless an exemption can be met. Here’s what you need to know.

According to a recent study by Philip Cross, the former chief analyst at Statistics Canada, economic growth in Canada over the past ten years has been the weakest since the 1930s, our competitiveness has faltered to such a degree that we can’t capitalize on trade deals, our productivity has stalled, and even more startling for a nation with such highly educated and tech-savvy people:  our lack of innovation and weak economic growth has persisted for decades.  In conversation with Dr. Jack Mintz, who co-authored a study on small business tax competitiveness, we discussed alternative tax strategies as a potential solution.       

On December 14, 2021, Deputy Prime Minister and Minister of Finance Chrystia Freeland, released an Economic and Fiscal Update 2021 with measures that will impact businesses throughout the Nation. The most relevant measures are listed as follows:

Will the federal government soon find a new revenue source for Employment Insurance?  Will gig economy workers soon qualify for EI?  The answer may be yes, based on upcoming consultations on the matter. 

Do you know someone who is a commissioned employee? Do they know that they have more deductions available to them than a non-commissioned employee?  Professionals from the tax accounting and financial services industries would add big value to the relationship with these clients before year end, in helping them decipher the difference in write-offs and making sure they gather documentation.  Here is what's important when discussing the deductions for employees.