On today’s episode, Jason Pereira will be reviewing the federal budget for 2022, and the reason is that when it came out a couple of days ago, there was a lot to go through. There are 17 key personal, and corporate points that he thinks are worth accounting for.
- The first big change is the addition of the tax-free first home savings account. This new account will help Canadians over 18 who have not owned a home in the current or last four calendar years.
- You can also move money from an RRSP to a first home savings account, but you cannot combine this with the existing RRPS first-time home buyer’s plan.
- If you are buying your first home, you were entitled to a tax credit previously that is now increasing, so it used to be 5000, and now it is doubling to 10,000, giving you a total tax credit maximum value of $1500.
- Home accessibility credit has been doubled. It used to be 10,000, but now, it’s 20,000, and this helps pay for renovations and alterations such as wheelchair ramps, walk-in bathtubs, chairlifts, or anything to help you get around the house if you physically need to.
- There is a change in the alternative minimum tax credit. They haven’t announced what it is, but they have started setting the stage for taxing Canadians with the highest income. And to support this, they released a chart that showed that 28% of people earning 400,000 were paying less than 15% in taxes.
- Previously if you sold an assignment to someone else, GST would typically not apply, but now it does, and in addition to that, it’s not capital gains. It’s fully taxable income.
- There are many changes in corporate taxes, and the most impacted is the small business tax deduction. As a result, Canada’s first half-million in active business income is taxed at the lower small business rate, and then anything interactors taxed at the general rate.
- There are specific credits now available for those who are using carbon capture utilization in storage.
- Critical mining exploration tax credit is basically targeting shares that flow through exploration expenses down into your personal tax rate.
3 Key Points:
- In the new residential property flipping tax, if you hold a home by home as your principal residence and live in it for less than 12 months before selling it, the principal residence exemption does not apply and qualifies as full income.
- Surrogacy is becoming more of a need in Canada. If you are using a surrogate, you will now be able to cover and claim those expenses under the medical tax revenue in Canada.
- In the intergenerational shares transfers process, they are extending the consultation process to figure out how to fix this and hope to have a report by June 17th.
- “There is a system in Canada called the alternative minimum tax, which is there to test and prevent people from gaming the system too well.” - Jason
- “They are going to increase the capital tax from 10 to 15 million, and it will phase it out now over until it is 50 million.” - Jason
- “One of the things that got popular since the small business tax measures of a couple of years ago was what is known as non CCPC planning.” - Jason
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