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?

Is it reportable or not?  Many taxpayers are confused about the various government support programs they have been entitled to in 2022 and 2023.  As a general rule, if a support payment is taxable, there will be a T4A or T4E showing the amount to be reported as income.  But if any of the amounts itemized below -  inflation support measures – were received, they won’t be reportable. 

It’s true: nothing is as certain as death, taxes and tax change!  That’s perhaps why almost 60% of Canadians get someone else to do their tax return, according the CRA.  Do you know what this sounds like to us? OPPORTUNITY! 

Did you know as many as 1 in 10 Canadians don't file their taxes?  Canadians who don't file their income tax returns may be shocked to find out how much money they're owed by the federal government for years of missed benefits.  The tax benefits lost to working-age non-filers was about $1.7 billion, according to an award winning research paper[1].

President and CEO of Knowledge Bureau, Evelyn Jacks, joins Derek Notman and H. Adam Holt on their podcast, Rethink. Financial Advice, and discusses a variety of issues critical to the future of the tax and financial services industry: what's on the horizon for advisors and how to best prepare for the headwinds affecting us all. You’ll want to take this in.

The 2022 version of Form T777 Statement of Employment Expenses is available and worth a detailed look. Employees who have a T2200 form signed by their employer may use this form to claim their home office and other expenses. In addition there is a new section for the claiming of the new labour mobility deduction for an eligible tradesperson.  Following are tax tips you should take note of in 2022.

Last summer, suspected “high risk” tax preparers were under the microscope by the CRA for submitting fake CEWS and CERS claims on behalf of approximately 2000 business clients.  The gross negligence penalties alone amounted to $10 Million; this aside from the clawback of $25 Million in benefits paid. While these cases are in the minority – only 300 cases audited so far - they shed light on several things: once selected for audit, the burden of proof is always on the taxpayer, the penalties for dealing with high risk preparers will be huge, and from a client’s perspective, it pays to put your faith in a highly qualified tax professional.