2019 Federal Budget at a Glance
April 2, 2019
The liberal government introduced the 2019 federal budget on March 20, 2019. This is to be their last budget before October elections. While some expected the liberals to incentivize voters for the upcoming election with big tax cuts, none were included in this year’s budget. Perhaps unsurprisingly, two new housing measures were introduced under the impetus of helping first time home buyers enter the property market. Time will tell whether these measures will ease affordability or have any impact at all.
Here is a brief summary of some of the highlights:
1. First Time Home Buyer’s Incentive: This measure has probably received the most media attention. The federal government will assist first-time homebuyer’s by loaning up to 10% of the value of a newly built home (or up to 5% for a resale) to put towards the purchase price. The loan will not require interest payments and is intended to ease affordability by lowering the size of the mortgage. It is unclear whether this is truly an interest-free loan or an equity sharing program whereby the government participates in the future value of the home. The loan will need to eventually be repaid. Household income must be below $120,000 to qualify and the insured mortgage is capped at $480,000, meaning the maximum eligible home price is $600,000.
2. The First Time Home Buyer’s Plan (FTHB): Another housing measure. The maximum tax-free withdrawal under the FTHB program has been increased from $25,000 to $35,000 per person.
3. Canada Training Benefit: A new $250 annual credit aimed at providing financial support for tuition costs associated with job re-training. If you don’t use it in a year, the credit rolls over to future years and accumulates.
4. Canada Pension Plan Auto-enrollment: If you forgot to claim your CPP pension by age 70, the government will automatically enroll you.
5. Guaranteed Income Supplement Threshold: Seniors who work and qualify for GIS will see their income threshold increased to $5,000 from $3,500 before their benefit is subject to clawback.
Registered Disability Savings Plan (RDSP): This one is very good news to holders of an RDSP.If an individual with an RDSP loses their Disability Tax Credit Status, they will no longer be forced to collapse the plan.They can leave the plan open and continue to benefit from tax-deferred growth into the future.They can also keep the grants they’ve earned since the plan was
Lorenzo Pederzani, CFA, CFP®, FCSI® | Portfolio Manager
HollisWealth®, a division of Industrial Alliance Securities Inc.
This information has been prepared by Lorenzo Pederzani who is a Portfolio Manager for HollisWealth®. Opinions expressed in this article are those of the Portfolio Manager only and do not necessarily reflect those of HollisWealth. HollisWealth® is a division of Industrial Alliance Securities Inc., a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada.