On April 19, Deputy Prime Minister and Minister of Finance, the Honourable Chrystia Freeland, released Budget 2021: A Recovery Plan for Jobs, Growth, and Resilience, the Government of Canada’s plan to finish the fight against COVID-19 and ensure a robust economic recovery that brings all Canadians along.
“The COVID-19 recession is the steepest and fastest economic contraction since the Great Depression. It has disproportionately affected low-wage workers, young people, women, and racialized Canadians. For businesses, it has been a two-speed recession, with some finding ways to prosper and grow, but many businesses-especially small businesses-fighting to survive.” The government stated the 2021 budget is an investment in healing the economy from the COVID-19 recession.
No changes were made to personal or corporate tax rates (other than a temporary measure for zero-emission technology manufacturers), nor to the inclusion rate on taxable capital gains.
Highlights of the 2021 federal budget include:
- The Canada Recovery Benefit and related programs will be extended.
- Individuals will have the option to claim a deduction in respect of the repayment of a COVID-19 benefit amount for the year when the benefit was received.
- Access to the disability tax credit will be broadened.
- The Canada Emergency Wage and Rent Subsidies (CEWS and CERS) will be extended.
- The Canada Recovery Hiring Program was introduced.
- The ability to immediately expense 100% of many capital asset purchases was introduced.
- The corporate tax rate on zero-emission technology manufacturing will be halved.
- The disclosure requirements for aggressive tax planning and filing positions will be expanded.
- A 1% tax on the value of vacant or underused real estate owned by non-residents will be implemented.
Sales and Excise Tax
- Access to the GST/HST New Housing Rebate will be broadened for co-owners.
- A new tax of up to 10% will apply to the purchase of luxury vehicles, aircrafts or boats.
Electronic Filing, Payments and Certification
- Some CRA communications will be undertaken electronically without the taxpayer’s authorization.
- Certain levels of payments will be required to be made electronically.
Previously Announced Measures
- Intention to proceed with a number of previously announced measures, such as the accelerated CCA changes for zero-emission vehicles, and expanded disclosure requirements for trusts.
Read McCay Duff’s summary of the personal, business, and international measures proposed in the 2021 budget.
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