Exploring The New Federal Budget!
Today we’re going to dive into one of my favourite annual traditions – the federal budget! This 700 page plus present covers a lot of content – some of which you’ve already likely heard about but there’s also a lot that you probably haven’t – stuff that’s tucked away and not found unless you go digging.
So join us as we explore the many corners of the 2021 Federal Budget!
Now before we jump into the content – it’s important to point out that all of these programs are proposed and nothing has been passed yet.
The federal government still has minority rule and a snap election could essentially throw out these new program proposals.
Investing In Affordable Childcare
So of all the budget, the biggest program policy in my opinion is the massive investment to reduce the cost of early childcare.
Under this plan, $30 billion will be invested over 5 years and will push down the costs over this time period.
The goals is to have childcare cost on average $10 a day by 2026. They are also aiming to cut costs by 50% by the end of 2022.
This investment will make care accessible to financially vulnerable Canadians and will increase the participation of females to enter the workforce.
Quebec implemented a similar program in 1997 and the outcomes were very positive. They found that labour force participation for females with young children drastically jumped and is now one of the highest in the world. The investment also bumped up the provincial GDP.
Other studies have shown that $1 dollar spent on childcare pays back $1.5 to $2.80 back in benefits. Which is obviously a strong investment.
Overall, this proposal is massive and will be life changing for Canadians across Canada.
Changes To The Disability Tax Credit
One of the other biggest changes and one that hasn’t been discussed as much is about changes to disabilities that the CRA will recognize.
The proposed changes will broaden their definition of what constitutes being disabled to include individuals that suffer from various issues that affect mental functions and simplify rules that apply to life sustaining therapies. It’s estimated that these changes will allow an additional 45,000 Canadians to access federal government benefits.
This change will allow qualifying Canadians to access the disability tax credit which helps reduce their taxes or that of an eligible caregiver. It also allows them to open and utilize registered disability savings accounts which can offer support income once they turn 60. Several other federal and provincial benefits will also be unlocked with the disability tax credit.
Changes for Employees
There are also lots of proposed changes for employees. The big one is that the federal minimum wage will be increased to $15 dollars an hour or the provincial/territorial rate – whichever is higher. This will also be adjusted frequently with inflation.
The tax credit called the Canada Workers Benefit will also be getting an update. They will be increasing the cut-off amount for individuals by about $10,000 which can offer over $1,000 in tax savings for certain individuals. The amount for households with families will also increase.
Reforms to Employment insurance will also simplify an often confusing process
Previously you would have to work for a number of hours based on your economic region – the update will introduce a uniform 420 hours for all of Canada over the next three years. The hours from gig jobs and other sources can also be included.
EI sickness benefits would also be extended from 15 weeks to 26 weeks which is expected to help an additional 169,000 Canadians a year.
Covid benefits are also going to be updated
It’s proposed that the Canada Recovery Benefit will be extended by another 12 weeks to 50 weeks. The amounts will however be reduced versus past payments. The first four weeks of payments would stay the same at $500 per week but the following 8 weeks would be $300 each.
Also, any new claimants after July 17th will only qualify for the $300 per week.
The government would also add a clause that would be able to allow them to extend the COVID-19 benefit period to November if they choose.
Students are also getting some breaks too!
Repayment assistance on their Canada student Loans will be easier to be approved for. Currently they would have to earn $25,000 or less. The proposed change would bump this up to $40,000.
The repayment assistance program allows student loan payments to be reduced if a student has financial hardship or has a low income.
It’s also proposed that there will be no interest charged on the Canada student loan portion until March 31st, 2023 and that the Canada student grant will be doubled by an additional $2,600 on average.
Other Announcements in Federal Budget 2021
Seniors that are 75 or older will also receive an additional $500 bonus later this year and will see their Old Age security increased by 10% per year or $766 for an individual receiving the full pension.
Some other random changes include a review of what is can be charged as interest under the criminal code – with a focus on Payday lenders.
A luxury tax that will be charged on cars and plans over $100,000 and boats over $250,000. A 1% annual tax on property values that are vacant or underutilized and owned by a non-resident.
Finally, the Canada wage subsidy and emergency rent subsidy will be extended for those that have a qualifying small business. An additional hiring subsidy and resources to help businesses become digital will also be added.
You can find the full budget here!