Highlights of the 2023 Federal budget

On March 28, Deputy Prime Minister and Minister of Finance Chrystia Freeland delivered the 2023 Federal Budget titled "A Made-in-Canada Plan." This budget includes proposals to address education, the rising cost of living, and changes to the current tax system.
The items in this budget do not take effect until they receive parliamentary approval. However, we anticipate that some of these proposals could directly impact investors and businesses if approved. Below are the highlights of those items.
To address the increasing cost of education, the budget proposes the following:
The budget proposes the following measures to address health care:
The budget proposes to help Canadians address the cost of living by:
AMT ensures that taxpayers in a high tax bracket who claim significant tax incentives, such as capital gains exclusions and dividend tax credits, still pay a minimum level of tax. The budget proposes several changes to current AMT rules:
RDSPs allow a qualifying family member to open an RDSP account on behalf of an individual adult with a mental disability (the RDSP beneficiary) in situations where they are incapable of doing so themselves. Currently, a "qualifying family member" is limited to a parent, spouse, or common law partner of the RDSP beneficiary. The budget proposes to expand this definition to include adult siblings.
The Office of the Superintendent of Financial Institutions (OSFI) will consult with federally regulated financial institutions on guidelines for publicly disclosing their exposure to crypto assets. Additionally, federally regulated pension funds will be required to disclose their crypto asset exposures to OSFI.
The budget proposes up to a 30% refundable tax credit for businesses that invest in various types of clean technology, and a tax credit ranging from 15% to 40% of equipment costs related to clean hydrogen production.
Proposal to double the maximum amount that Canadian tradespeople can deduct on the purchase of tools required to perform their trades, from $500 to $1,000 per year.
To support small businesses post-pandemic, Visa and Mastercard have committed to lowering interchange fees for small businesses by up to 27% while also protecting reward points for Canadians.
Bill C-208 previously introduced an exception to certain share transfers from parents to corporations owned by their children or grandchildren. This Bill allows for the intergenerational transfer of shares to be treated the same as the sale of shares to an arm’s length (unrelated) corporation. The budget proposes additional criteria for the transfer to qualify as a genuine intergenerational business transfer, including:
The budget also proposes a ten-year capital gains reserve for genuine transfers that satisfy the above conditions.
An Employee Ownership Trust (EOT) is a trust where shares of a corporation are held by a trust for the benefit of the corporation's employees. EOTs provide business owners with additional options for succession planning and for employees to facilitate the purchase of a business without having to pay directly for the shares.
Proposal to include several changes effective January 1, 2024:
The release of the Federal budget gives a nod to fiscal discipline, likely a reaction to the deficit spending that followed the pandemic. It does contain some targeted investments aimed at inflation relief and clean energy initiatives, but overall, we don't see any significant surprises or programs that materially alter our outlook for the economy, monetary policy, or the financial markets. Here are our key takeaways from 2023's budget:
This budget is in draft form and subject to parliamentary approval. If you have questions regarding how any aspects of it may impact your financial strategy, please contact your Edward Jones financial advisor.
The federal budget as released is in draft form and subject to parliamentary
approval. To read the government’s full proposed budget, go to the Government of Canada’s website.
Commentary from Edward Jones does not consider your specific situation but provides a general summary of the 2023 federal budget release. Commentary is provided in relation to the released information available on the date of publication.
Edward Jones, its employees, and financial advisors are not estate planners and cannot provide tax or legal advice. Please consult a qualified tax specialist or lawyer for professional advice regarding your specific situation.