2019 man in the street budget

BY FAZAAD BACCHUS

It was on March 19^th, 2019 that the recent Canadian budget was tabled, and it’s the last one before the upcoming elections in October of 2019. The budget has to balance out or we run the risk of too much debt. Think of simply your household budget, if you spend more than you make, soon there will be a deficit and you may have to borrow money to survive. Let’s examine the budget to see how we did.

Income tax: The one thing that every Canadian dreads is the word tax and it’s been a fact that in Canada, taxes are a way of the government raising revenue. Well, we can rest assured that there has been no change to the personal and corporate income taxes in the budget, neither an increase nor a decrease in either.

Home buyers’ plan: When one owns a Registered Retirement Savings Plan (RRSP) you are allowed to withdraw as much as $25,000 from the plan without having to pay taxes on the withdrawal. However, you need to repay the amount withdrawn over the next fifteen after withdrawing or tax penalties will apply. The new budget proposes that this amount will now increase to $35,000 per person. Therefore, a husband and wife who wish to make a withdrawal from their RRSP can take up to $70,000 without being taxed. This can go a long way towards the down payment of a couple’s first new home. The budget will also make accommodations for the breakdown in marriages following the withdrawal period.

Long term disability: Any Canadian who is suffering from a long-term disability, who is eligible for the disability tax credit and is less than 60 years old, can apply for a Registered Disability Savings Plan (RDSP). The current rules dictate that a person who has such a plan must close it in a short time period if the beneficiary is no longer eligible for the disability tax credit. The plan holder can keep the plan open for four years but only if a medical doctor certifies that the beneficiary will again qualify for the credit. The new budget proposes to eliminate this time period where the plan must be closed meaning that the plan will be kept open indefinitely and does not need a medical doctor to certify it.

Canada student loans interest: When a student graduates from university or college it is not always guaranteed that they will find a job immediately. As a result, there is a six-month grace given before payments are made. However, interest is being charged on the six-month grace period. The new budget proposes that there will be no interest accruing on the loan balance in respect of the six-month grace period, making it easier on the new graduate.

Real estate tax compliance: The budget proposes to provide 50 million dollars to the CRA to create four audit teams to go strongly behind the real estate sector to ensure that they report all sales of all properties, money made via flipping is reported as income and commissions are reported as income.

This list is not exhaustive and there are of course many more items but as it applies to the man in the street, these are the ones that will affect you directly.