Here are the top 5 components of the 2021 Federal Budget that may affect you or your business:
1. CEWS and CERS Extension
The budget proposed extending the Canada Emergency Wage Subsidy (CEWS) and the Canada Emergency Rent Subsidy (CERS) and its lockdown top-up to September 25, 2021. The budget also proposed adding additional qualifying periods for these supports until November 20, 2021 if required.
The subsidy rates for CEWS and CERS would gradually decrease over the July-to-September period. As of July 4, 2021 only employers with a decline in revenues of more than 10% would be eligible for the subsidies.
A special provision has been added to claw back claims of publicly listed entities whose executives’ earnings increased in 2021 as compared to 2019.
As for the CERS, applicants must have a business number with the CRA. The budget proposed that if an eligible entity buys business assets from a seller who met the business number requirement, the buyer is deemed to meet the requirement. This measure would apply as of the start of the rent subsidy.
2. Canada Recovery Hiring Program (CRHP)
As the wage subsidy winds down, the government plans to introduce the Canada Recovery Hiring Program to offset the cost of increasing worker hours or hiring additional staff as businesses reopen.
Eligible employers will be able to claim either the hiring subsidy or the current wage subsidy for a particular qualifying period, but not both. The hiring subsidy will not apply to furloughed employees, as the wage subsidy does.
3. Minimum Wage Increase
The government has proposed a $15 minimum wage for federally regulated employees that will rise with inflation. Provisions would ensure that where provincial or territorial minimum wages are higher, the higher wage would prevail.
The government said the measure will benefit more than 26,000 workers, 36% of them newcomers or immigrants, making less than $15 an hour.
4. Corporate Tax Changes
Large companies will be subject to limitations in interest deductions on loans. Beginning in 2023, this interest deduction will be limited to 40% of earnings in the first year of the measure and 30% thereafter.
Relief will be provided for small businesses and “other situations” that do not represent significant tax base erosion risks.
The government also said it will examine barriers to the creation of employee ownership trusts, and how workers and owners of private businesses in Canada could benefit from their use.
5. Other Notable Changes
- Accelerated CCA Claims: Many depreciable assets will be eligible for a 100% write-off if purchased on or after Budget Day, and if they become available for use before January 1, 2024. There is a $1.5 million limit per associated group. Certain long-term assets, like buildings, are not eligible.
- Zero-Emission Technology Manufacturers: The federal corporate tax rate would be cut in half starting with fiscal years commencing in 2022.
- The Canada Recovery Benefit and Related Programs will be extended.
- Expanded access to, and value of, a number of personal measures including the Disability Tax Credit, Canada Workers Benefit, Northern Residents Deductions, and Old Age Security.
- 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, rather than the year in which the repayment was made.
- A tax on the retail sale of new luxury cars and personal aircraft priced over $100,000, and boats priced over $250,000, will be introduced effective January 1, 2022.
- While past budgets have proposed specific anti-avoidance provisions, Budget 2021 proposes broad-based disclosure requirements for tax strategies considered aggressive by the government.
- A new national 1% tax on the value of vacant or underused real estate owned by non-resident, non-Canadians would be introduced. The tax would be levied annually beginning in 2022. Annual filings would be required as of 2023.
- Individuals will receive electronic Notices of Assessment where they (or their tax preparer) files their return electronically. Businesses using My Business Account will default to online mail. More tax, GST/HST, and information returns will be required to be filed electronically. Electronic payments will be required for all amounts of $10,000 or more.
The complete 2021 Federal Budget can be viewed here.
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Source: Video Tax News and Advisor’s Edge