What the Federal Budget Means for Your Finances


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Personal finance highlights from the 2023 Federal Budget

Yesterday, the federal government released its 2023 budget – titled A Made-in-Canada Plan: Strong Middle Class, Affordable Economy, Healthy Future.

Despite Canada’s strong recovery from the pandemic, many Canadians are struggling with the impact of global inflation combined with interest rates that have risen to their highest levels in more than 15 years.

So how will the budget impact your financial plan? Here are a few items that you may want to discuss with your financial advisor.


 

Inflation Support

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  • Grocery Rebate: Delivered through a one-time payment through the Goods and Services Tax Credit (GST Tax Credit) mechanism
  • Canada Child Benefit, Canada Pension Plan, OAS, Guaranteed Income Supplement: keep pace with inflation

Education Savings

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Financial Assistance:

  • $813.6 million in 2023-24 to enhance student financial assistance for the school year starting August 1, 2023 
    • Canada Student Grants: Increasing by 40 per cent – providing up to $4,200 for full-time students
    • Canada Student Loans: Raising the interest-free limit from $210 to $300 per week of study
    • Mature Students: Waiving the requirement for mature students, aged 22 years or older, to undergo credit screening in order to qualify for federal student grants and loans for the first time.

 

RESP Plans:

  • RESP Withdrawals: Increased limits on certain RESP withdrawals from $5,000 to $8,000 for full-time students, and from $2,500 to $4,000 for part-time students.
  • Joint RESPs: Changes to allow divorced or separated parents to open a joint RESP for their children, which will make it easier and more affordable for parents to save for their children's education.

Student Work Placement Program:

  • $197.7 million in 2024-25 to continue creating quality work-integrated learning opportunities for students through partnerships between employers and post-secondary education institutions.

Employment

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Canada Student Loan Forgiveness Program:

  • Additional $45.9 million to expand the reach for eligible doctors and nurses who choose to practice in rural and remote communities. 

Farmers:

  • Advance Payments Program: $13 million to increase the interest-free limit of loans to provide additional cash flow to farmers in need.

Temporary Employment:

  • Seasonal Workers: Additional funding for employment insurance
  • Gig Workers: Strengthening prohibitions against employee misclassification by amending the Canada Labour Code to improve job protections for gig workers. This will ensure that all federally regulated workers receive the protection and employer contributions they are entitled to, including Employment Insurance and the Canada Pension Plan.

 

Tradespeople:

  • Maximum employment deduction for their tools expenses will double from $500 to $1,000.

Work Sharing Program:

  • Funding over three years, through Employment and Social Development Canada to continue supporting Canadian workers and businesses.

 Work Stoppages:

  • Amending the Canada Labour Code to prohibit the use of replacement workers during a strike or lockout and improve the processes to support the health and safety of Canadians during a work stoppage.

Healthcare

Healthcare

 

Health Care Programs:

  • Canadian Drugs and Substance Strategy: Renewed funding, including community supports, prevention programs, supervised consumption sites, and action to tackle drug trafficking.
  • Implementation and operation of 988: Starting November 30, 2023, Canadians can contact 988 for access to suicide prevention and mental health crisis support.
  • Canadian Institute for Health Information and Canada Health Infoway: Funding for them and other federal data partners to improve safety and quality of health care.
  • Indigenous Health Equity Fund: Funding provided over 10 years to support Indigenous health priorities.

Advancing Inclusion of Disabled Canadians:

  • $10 million to help address the needs and barriers faced by persons with disabilities by investing in capacity building and community-level work of Canada’s disability organizations.
  • $21.5 million to continue work on the future delivery of the Canada Disability Benefit.

 

Dental Care:

  • Canadian Dental Care Plan:
    • Dental care for families with annual income of less than $90,000.
    • No co-pay for families with income under $70,000.
  • Oral Health Access Fund: Additional funding to Health Canada to address oral health gaps among vulnerable populations and provide greater access to dental care.

Leaves to Recover from Loss:

  • Pregnancy Loss: Amending Canada Labour Code to create a new stand-alone leave for workers in federally regulated sectors who experience a pregnancy loss.
  • Leave Related to the Death or Disappearance of a Child: Amending Canada Labour Code to improve eligibility for leave related to the death or disappearance of a child for workers in federally regulated sectors.

Real Estate

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First-time home buyers:

  • Tax-Free First Home Savings Account: financial institutions will be able to start offering the Tax-Free First Home Savings Account to Canadians as of April 1, 2023.*  

Existing Mortgages:

  • Guideline to protect Canadians with mortgages who are facing exceptional circumstances, ensures that federally regulated financial institutions provide Canadians with fair and equitable access to relief measures that are appropriate for the circumstances they are facing, including by extending amortizations, adjusting payment schedules, or authorizing lump-sum payments.

 

* Final details of the AGF FHSA to be confirmed, including when the plan will be available.

 

Fair Housing Market:

  • Removal of regulatory barriers for homebuyers from diverse communities seeking access to alternative financing products.
  • Development of the Home Buyers' Bill of Rights to help make the process of buying a home more open, transparent, and fair. It could include:
    • Ensuring the legal right to a home inspection
    • Requiring that real estate agents disclose whether they are representing both sides of a potential sale
    • Ensuring transparency on the history of sale prices

 Affordable Housing:

  • Construction of new affordable homes, through the reallocation of funding from the National Housing Co-Investment Fund's repair stream to its new construction stream, as needed, to boost the construction of new affordable homes for the Canadians who need them most.
  • Indigenous Housing Strategy, an additional $4 billion to implement a co-developed Urban, Rural, and Northern Indigenous Housing Strategy.

Targeting High Fees

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Junk Fees:

  • Unexpected, hidden and additional fees such as internet overage charges, roaming fees, event and concert fees.
  • Taking action to ensure businesses are transparent with prices.

 

Predatory Lending:

  • Target and take advantage of some of the most vulnerable people (low-income Canadians, newcomers, seniors) by extending very high interest rate loans.
  • Introducing changes to the Criminal Code to lower the criminal rate of interest from 47% APR to 35% APR and require payday lenders to charge no more than $14 per $100 borrowed.

Credit Card Fees:

  • The government has secured commitments from Visa and Mastercard to:
    • lower fees for small businesses
    • provide free access to online fraud and cyber security resources

To find out more, read the 2023 Federal Budget highlights and to understand how these may impact your finances, contact your financial advisor.


 

Source: Budget 2023 A Made-in-Canada Plan: Strong Middle Class, Affordable Economy, Healthy Future. https://www.budget.canada.ca/2023/home-accueil-en.html

This material is for informational and educational purposes only. It is not a recommendation of any specific investment product, strategy, or decision, and is not intended to suggest taking or refraining from any course of action. It is not intended to address the needs, circumstances, and objectives of any specific investor. This information is not meant as tax or legal advice. Investors should consult a financial advisor and/or tax professional before making investment, financial and/or tax-related decisions.

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March 29, 2023