April 20, 2021
Yesterday the Federal Government of Canada presented the 2021 Federal Budget, which they titled “Budget 2021: A Recovery Plan for Jobs, Growth, and Resilience”.
We will be sending out a commentary on the budget later today, but wanted to provide some highlights in advance of that.
Both the CEWS and CERS programs will be extended for 4 more periods; with an end-date of September 25, 2021, and with gradual rate reductions over the last 3 periods.
Introduction of the Canada Recovery Hiring Program (CRHP), which is a 50% subsidy for eligible remuneration paid in excess of that paid during a baseline reference period. It is a 6 month program beginning June 6, 2021, and is an alternative program to the CEWS, where the greater of the CRHP or CEWS can be claimed, but not both.
There will be accelerated CCA claims, where a number of depreciable assets may be eligible for a 100% write-off if purchased on or after Budget Day and if available for use before January 1, 2024.
The federal corporate tax rate will be reduced by half for fiscal years starting 2022 for Zero-Emission Technology Manufacturers.
The Canada Recovery Benefit and related programs will be extended.
There will be expanded access to, and value of, some of the existing personal tax credits and benefits, such as the Disability Tax Credit, Canada Workers Benefit and Old Age Security.
Recipients of COVID-19 benefits which need to be repaid will have the option to claim a deduction of the repayment amount for the year in which the benefit was received, rather than the year the repayment was made, if they are different.
Beginning January 1, 2022 there will be a new tax on the retail sale of new luxury cars and personal aircraft priced over $100,000, and for boats priced over $250,000.
There will be additional disclosure requirements for tax strategies that the government may consider to be aggressive. Consultation on this is in process, and so more details on this to follow.
There will be a new national 1% tax on the value of vacant or underused real estate owned by non-resident non-Canadians, which will begin to be levied in 2022.
One other non-budget update that was mentioned was that the CRA will begin increasing electronic communications, such as sending electronic Notices Of Assessment to individuals who filed their tax returns electronically, sending online mail to businesses using My Business Account, and requiring more tax and information returns to be filed electronically. Additionally, electronic payments will be required for all payments of $10,000 or more. Stay tuned for a more comprehensive commentary of the 2021 Budget to follow later today. Sincerely, The Raincoast Team