Federal budget: What's in and what's out

Here are selected highlights of what’s in and what’s out now that the federal budget has been tabled.

What’s in

(Explanations of tax credits are courtesy of EY’s report on the budget.)

Tax evasion crackdown — Over five years, $523.9 million is allocated to prevent tax evasion and improve tax compliance, including more auditors, a crackdown on high-risk avoidance cases and better investigative efforts.
Tuition tax credit — Eligibility criteria for the tuition tax credit is extended to amounts paid for tuition to a post-secondary institution in Canada for occupational skills courses that aren’t at the post-secondary level.
Caregiver tax credits — The infirm dependant tax credit, the caregiver tax credit and the family caregiver tax credit will be replaced with a new 15% non-refundable Canada caregiver credit for 2017 and subsequent years. Amounts that can be claimed remain consistent, reports EY.
Disability tax credit — Nurse practitioners will be added to the list of medical practitioners allowed to certify eligibility for the 15% non-refundable disability tax credit. This applies to disability tax credit certifications made on or after March 22, 2017.
Medical expense tax credit — Those who incur costs related to reproductive technologies, such as in-vitro fertilization, but don’t have a medical infertility condition are now eligible to claim this credit. The measure applies to 2017 and subsequent year. But taxpayers can elect, in a year, to apply for any of the immediately preceding 10 taxation years.
Mineral exploration tax credit — As previously announced on March 5, 2017, this tax credit, equal to 15% of specified mineral exploration expenses incurred in Canada and renounced to flow-through share investors, will be extended to flow-through share agreements entered into on or before March 31, 2018. The credit was scheduled to expire on March 31, 2017.
Higher taxes for smokers and drinkers — The excise duty rate on cigarettes goes up to $21.56 per carton of smokes, from $21.03, while the rates on alcohol are going up $2. Both will be adjusted every April 1 starting next year, based on the consumer price index.
Increases on employment insurance premiums — EI’s now $1.68 per every $100 of insurable earnings, up from $1.63. This is the maximum allowable increase under the Employment Insurance Act.

What’s out

Canada Savings Bonds — First established in 1946, the bond program’s no longer cost effective and is being phased out. The decline in the program’s popularity “can be attributed to the proliferation of higher-yielding alternative retail investment instruments, such as government of Canada insured retail products,” budget documents say.
Public transit tax credit — Say goodbye to deducting the cost of transit passes, effective July 1.
Home relocation loan deduction — Effective 2018, relocating employees can no longer deduct these loans.

Spending for families, students and workers

Overall, the budget is light on spending and long on vision. Note that most of the new money it proposes doesn’t kick in until the next fiscal year, coincidentally the same year that precedes the next federal election.

Daycare, parental leave and maternity benefits — $7 billion in spending over 10 years is allocated for families, including 40,000 new subsidized daycare spaces across Canada by 2019, extended parental leave and allowing expectant mothers to claim maternity benefits 12 weeks before their due date.
Student loans — Over four year beginning 2018-19, $59.8 million is allocated to make student loans and grants more readily available for part-time students, and $107.4 million over the same period will assist students with dependent children. Starting in 2018-19, $287.2 million over three years is allocated for a pilot project to facilitate adult-student access to student loans and grants.
Skills development — Starting in 2018-19, $225 million over four years is allocated for a new organization to support skills development and measurement.
Youth employment — Over three year, $395.5 million is allocated for the youth employment strategy.
Training and jobs — Over six year, $2.7 billion is allocated for labour market transfer agreements with the provinces and territories to modernize training and job supports to help those looking for work upgrade their skills, gain experience, start a business or get employment counselling.

Other highlights

Down with the deficit, temporarily — The deficit is $23 billion, down from $25.1 billion in the last fiscal update, and is projected to reach $25.5 billion for 2017-18 — not including a $3-billion contingency fund — before declining to $15.8 billion in 2021-22.
Business development bank — Over three years, $400 million is allocated through the Business Development Bank of Canada for a “venture capital catalyst initiative” to make more venture capital available to Canadian entrepreneurs.
Tech support — An “innovation and skills plan” will foster high-tech growth in six sectors: advanced manufacturing, agri-food, clean technology, digital industries, health and bio-sciences, and clean resources.
Affordable housing — Over 10 years, $11.2 billion is allocated to cities and provinces for affordable housing as part of the second wave of the government’s infrastructure program, $5 billion of which is to encourage housing providers to pool their resources with private partners to pay for new projects.
Housing database — A national database of all housing properties in Canada will be established, known as the Housing Statistics Framework, to track details on purchases, sales, demographics and financing, as well as foreign ownership.
Efficiency review — A comprehensive spending review of “at least three federal departments,” to be named later, will be established to eliminate waste and inefficiencies. Also in the works: a three-year review of federal assets and an audit of existing innovation and clean-tech programs.
Gender recognition — For the first time, the budget includes a gender statement, which looks at how some of its measures will impact women and girls, described as the first step toward a deeper gender-based analysis in next year’s budget.