Chrystia-Freeland

Budget 2021: 20 ways it could affect your wallet

1. Extension of Canada Recovery Benefit and Canada Recovery Caregiving Benefit

Earlier this year, the government announced that both the Canada Recovery Benefit (CRB) and Canada Recovery Caregiving Benefit (CRCB) would be extended by 12 weeks to a maximum of 38 weeks. Budget 2021 proposes adding up to 12 more to CRB, to a maximum of 50 weeks. The first four of these additional 12 weeks will yield $500 a week, while the final eight will be paid at $300 per. CRCB will be extended by an additional four weeks to a maximum of 42, and will pay out $500 per week.

2. Sickness benefit extension

Carla Qualtrough, the minister of employment, workforce development and disability inclusion, announced in February the government’s intention to extend the sickness benefit under EI from 15 to 26 weeks. Budget 2021 proposes funding of $3 billion over five years to do that, starting in summer 2022.

3. Child care expansion

The 2021 budget earmarks $30 billion over five years with the aim of bringing average fees of early learning and child care down by 50 per cent. The ultimate goal is to lower the cost of child care to $10 per day on average within five years. This doesn’t apply to Quebec.

4. Minimum wage hike

The federal minimum wage will be raised to $15 per hour for federally-regulated private sector jobs.

5. Increased Old Age Security

OAS pensioners who will be 75 or over by June 2022 will receive a one-time payment of $500 in August 2021. Budget 2021 also proposes to boost regular OAS payments for pensioners 75 and over by 10 per cent as of July 2022.

6. Waiving Canada Student Loan interest

Budget 2021 indicates that the government “proposes to introduce legislation” that will extend the waiving of interest accrued on Canada Student Loans and Canada Apprentice Loans until March 31, 2023. This would benefit 1.5 million Canadians currently repaying student loans.

7. More low-income borrowers get loan repayment assistance

The 2021 federal budget will increase the income threshold to qualify for loan repayment assistance from $25,000 per year or less to $40,000, for borrowers living alone. This will help 121,000 additional Canadians with student loan debt each year. If you’re a student living in a larger household, the 2020-21 threshold for repayment assistance is $63,735, versus the current $59,508.

8. Two more years of doubled Canada Student Grants

The doubling of the CSG (a maximum of $6,000 for full-time students and $3,600 for part-time students) will be extended to the end of July 2023.

9. More supports for students with disabilities

Students and borrowers with permanent disabilities already receive support via the Canada Student Loans Program. Budget 2021 earmarks $428.9 million over four years starting in 2022-23 to extend support to those whose disabilities are “persistent and prolonged, but not necessarily permanent.” The change affects an estimated 40,000 students.

10. More money for adults returning to full-time school

The $1,600 adult learner top-up to the full-time Canada Student Grant will be extended until July 2023, an additional two years.

11. Canada Workers Benefit sees expansion

The CWB provides a tax refund to low-wage workers, up to almost $1,400 for single people with no kids and $2,400 for families. Budget 2021 proposes an expansion to another one million Canadians. The government is proposing to raise the income level where benefits begin to be reduced to $22,944 for single folks without kids, and to $26,177 for families.

As well, when income-testing for the CWB, new rules would allow secondary earners to exclude up to $14,000 of their income, so they can go back to work without disqualifying for the benefit.

12. A bit of tax relief for employees who are owed wages

The Wage Earner Protection Program supports Canadians who have lost their jobs and are still owed wages by an insolvent employer. Each payment is currently subject to a 6.82 per cent deduction. Budget 2021 proposes removing that deduction, which would put an average of $300 back into the wallets of recipients.

13. A more frequent Climate Action Incentive

Budget 2021 proposes the Climate Action Incentive be doled out in quarterly payments rather than an annual credit.

14. Interest-free loans for energy retrofits

Budget 2021 will provide $4.4 billion to the Canada Mortgage and Housing Corporation (CMHC) to help homeowners complete costlier energy retrofits through interest-free loans worth up to $40,000.

15. Northern Residents Deduction

At the moment, the Northern Residents Deduction serves only those who already receive travel benefits through work. An update would expand it to those who don’t have travel benefits provided by their employers. It would allow those eligible to claim up to $1,200 in travel expenses.

16. Disability tax credit expansion

An additional 45,000 people will qualify for the Disability Tax Credit thanks to expanded criteria for what counts as “mental functions necessary for everyday life.” Difficulty with memory, problem-solving, goal-setting and judgement as well as adaptive functioning qualify someone for the DTC. That’s being expanded to include attention, concentration, perception of reality, regulation of behaviour and emotions and verbal and non-verbal comprehension. This is an additional $376 million in support over five years, starting in 2021.

17. Tobacco tax

The tobacco excise duty will be hiked by $4 per carton of 200 cigarettes. That begins tomorrow.

18. Luxury items see a new tax

The federal budget includes a new tax on luxury cars and personal aircraft costing over $100,000, and boats costing over $250,000. It would be calculated on the lesser of 20 per cent of the value above those thresholds or 10 per cent of the full value of the luxury car, boat, or personal aircraft. This tax will come into play on Jan. 1, 2022.

19. Federal vacant home tax

Starting Jan. 1, 2022, the value of non-resident, non-Canadian owned residential real estate that is vacant or ‘underused’ will be taxed one per cent annually.

20. Post-docs get a RRSP boon

Postdoctoral fellowship income will be considered “earned income.” This will give post-docs additional RRSP contribution room.