Contents
Last updated: Apr. 12, 2022
On April 7, 2022, Deputy Prime Minister and Federal Finance Minister, Chrystia Freeland, tabled the federal 2022-23 budget.
Budget 2022 entitled “A Plan to Grow Our Economy and Make Life More Affordable” focuses on three pillars:
- The Canadian People
- Budget 2022 outlines several actions aimed at stabilizing Canada’s turbulent housing market, addressing the housing shortage, and making it easier for Canadians to save and invest in housing.
- The budget looks at ways to grow Canada’s skilled workforce by attracting skilled foreign workers and making it more affordable for skilled Canadians to relocate for work.
- The budget delivers on its past promise for high-quality affordable childcare.
- Green transition
- Budget 2022 continues to look at making green investment more tax-efficient and making pollution more expensive.
- The budget reconfirms its commitment to achieving net zero by 2050.
- Productivity and Innovation
- Budget 2022 addresses Canada’s ongoing deficiency in economic productivity by cutting taxes for Canada’s growing small businesses and announcing two new initiatives to stimulate economic growth and innovation in Canada:
- The creation of a new Canadian Innovation and Investment Agency whose role will be to proactively work with new and established Canadian industries and businesses to help them make the investments they need to innovate, grow, create jobs, and be competitive in the changing global economy
- The creation of a Canada Growth Fund, a $15 billion public investment fund intended for investing in Canadian business and industry and attracting private sector investment.
The budget anticipates a deficit of $113.8 billion for 2021-22, $52.8 billion for 2022-23, and $39.9 billion for 2023-24.
Below are select highlights that may have an impact on you, your business, or your farm:
Supporting Small Business
Tax Cuts
Small businesses currently benefit from a reduced federal tax rate of 9% on their first $500,000 of taxable income, compared to the general federal corporate tax rate of 15%. A business loses access to this lower rate once its level of income reaches $15 million.
Requiring a small business to pay more in tax can discourage some businesses from continuing to grow and create jobs. To combat this, Budget 2022 proposes to phase out access to the small business tax rate more gradually, with access to be fully phased out when taxable capital reaches $50 million, rather than $15 million.
This measure would apply to taxation years that begin on or after April 7, 2022.
Supporting Vibrant Rural Communities & Agriculture
To support growth in rural communities, the federal government has announced a range of programs and initiatives for Canadians living and working in rural communities, including:
- $2.75 billion for the Universal Broadband Fund to improve high-speed Internet access in rural and remote areas.
- $2 billion for the Regional Relief and Recovery Fund, which has supported local businesses through Regional Development Agencies during the pandemic.
- $2.7 billion in compensation to farmers since 2016 for the Canada-European Union Comprehensive Economic and Trade Agreement, and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.
- $1 billion to revitalize the tourism industry.
- $392.5 million in compensation for dairy, poultry, and egg processors.
- Renewing the Canadian Agricultural Partnership under the next agricultural policy framework that begins in 2023.
Agriculture and Climate Change
Budget 2022 purposes:
- Tripling the size of the Agricultural Clean Technology Program with a top-up of $329 million.
- Providing $469.5 million over six years, with $0.5 million in remaining amortization, starting in 2022-23, to Agriculture and Agri-Food Canada to expand the Agricultural Climate Solutions program’s On-Farm Climate Action Fund.
- Allocating $150 million for a resilient agricultural landscape program to support carbon sequestration, adaptation, and address other environmental co-benefits.
- Allotting $100 million over six years, starting in 2022-23, to the federal granting councils to support post-secondary research in developing technologies and crop varieties that will allow for net-zero emission agriculture.
- Providing $100 million from the price on pollution directly to farmers in provinces where the federal system applies.
Supporting Economic Productivity & Innovation
Canada Growth Fund
The proposed Canada Growth Fund is intended to attract substantial private sector investment to help meet important national economic policy goals, including:
- Reducing emissions and contributing to achieving Canada’s climate goals.
- Diversifying our economy and bolstering our exports by investing in the growth of low-carbon industries and new technologies across new and traditional sectors of Canada’s industrial base.
- Supporting the restructuring of critical supply chains in areas important to Canada’s future prosperity—including our natural resources sector.
The fund will be capitalized at $15 billion over the next five years and will target three dollars of private capital for every one dollar that it invests.
Canadian Innovation and Investment Agency
Budget 2022 announces the government’s intention to create an operationally independent federal innovation and investment agency. It proposes $1 billion over five years, starting in 2022-23, to support its initial operations. Final details on the agency’s operating budget are to be determined following further consultation later this year.
Addressing Labour Shortages
Labour Mobility Deduction
Budget 2022 proposes to introduce a Labour Mobility Deduction, which provides tax recognition on up to $4,000 per year in eligible travel and temporary relocation expenses to eligible tradespersons and apprentices. This measure would apply to the 2022 and subsequent taxation years.
Union Training and Innovation Program
The proposed Union Training and Innovation Program will provide $84.2 million over four years to double funding for the Union Training and Innovation Program. Each year this program will help 3,500 apprentices from underrepresented groups begin and succeed in careers in the skilled trades.
Temporary Foreign Work Program
Several measures have been put forward to increase protections for workers, reduce administrative burdens for trusted repeat employers, and ensure employers can quickly bring in workers to fill short-term labour market gaps, including:
- $29.3 million over three years to introduce a Trusted Employer Model that reduces red tape for repeat employers.
- $48.2 million over three years to implement a new foreign labour program for agriculture and fish processing employers.
Addressing Housing Shortages and Soaring Prices
Housing Accelerator Fund
Budget 2022 allocates $4 billion over five years, starting in 2022-23, to launch a new Housing Accelerator Fund aimed at speeding up housing development. According to the budget, the new fund aims to create 100,000 new homes over the next five years.
Rapid Housing Initiative
To further ensure that more affordable housing can be built quickly, Budget 2022 proposes to provide $1.5 billion over two years, starting in 2022-23, to extend the Rapid Housing Initiative. This new funding is expected to create at least 6,000 new affordable housing units, with at least 25% of funding going towards women-focused housing projects.
Addressing Climate Change & the Green Transition
Zero-Emission Vehicles
Several measures have been put forward to reduce emissions from transportation by making zero-emission vehicles more affordable for Canadians and Canadian businesses:
- $1.7 billion over five years to extend the Incentives for the Zero-Emission Vehicles program until March 2025 to help more Canadians get behind the wheel of zero-emission vehicles.
- $547.5 million over four years to launch a new purchase incentive program for medium- and heavy-duty ZEVs to help businesses upgrade their fleets.
- Funding to build a national network of electric vehicle charging stations.
Clean Technology
- Budget 2022 announces that the Department of Finance Canada will engage with experts to establish an investment tax credit of up to 30%, focused on net-zero technologies, battery storage solutions, and clean hydrogen. The design details of the investment tax credit will be provided in the 2022 fall economic and fiscal update.
Making Life More Affordable
Budget 2022 presents measures that will help bring down the cost of living including:
- $5.3 billion to provide dental care for Canadians with family incomes of less than $90,000 annually, starting with under 12 years-olds in 2022, expanding to under 18 years-olds, seniors and persons living with a disability in 2023, with full implementation by 2025.
- Doubling support provided through the First Time Home Buyers’ Tax Credit from $750 to $1,500.
- Introducing a Multigenerational Home Renovation Tax Credit, which provides up to $7,500 in support for constructing a secondary suite.
- $475 million in 2022-23 to provide a one-time, $500 payment to those facing housing affordability challenge.
- Budget 2022 also includes a comprehensive plan to make housing more affordable, focused on doubling the rate of new builds over the next decade, while introducing measures to help Canadians buy their first home, protect buyers and renters, and curb foreign investment and speculation.
Read the full budget here: Canadian Federal Budget 2022
About FBC
With more than 70 years of Canadian tax experience, we offer unlimited tax preparation help, support and tax advice for one flat fee. Our tax experts will run the numbers to create a custom tax return that helps minimize headaches and maximize your tax savings.
Leave your unique tax situation to us. We’ll get you every dollar you deserve. Book online or call us at 1-800-265-1002.
