How the 2017 federal budget will affect your personal finances

The Ritcey Report

Written by Lynn Healy-Goulet
March 30, 2017

Both Rob Carrick in The Globe and Mail and Andrea Gunn in The Chronicle Herald delivered insightful commentary about the recent federal budget. We have analyzed their respective interpretations carefully and offer the following as a digest of them both:

National implications

    1. Canada Savings Bonds (CSB), the public transit tax credit and the first-time donor’s super credit are toast. CSB sales will be discontinued this year and all outstanding bonds will be honored. You won’t be able to claim a credit for transit use after June 30. The super credit, which offered a larger-than-usual tax credit for people making their first charitable donation, expires as planned this year.

  1. Capital gains taxes are untouched. There are no changes to the capital gains exemption for principal residences. The crackdown on tax evasion continues. Almost $524-million will be invested over five years to prevent tax evasion and improve tax compliance. Be more diligent than ever about holding on to your tax receipts in case you’re asked for verification by the Canada Revenue Agency.
  2. The government will review the use of private corporations by high earners to minimize taxes. They could target situations where, for example, an individual at a high tax rate transfers money to a family member who is at a lower tax rate. Any resulting measures could affect incorporated small business owners.
  3. Electronic T4 slips are going mainstream. Employers will be able to provide T4 slips to employees electronically without their consent starting in the 2017 tax year. Employers will still have to provide paper slips to people who request them.
  4. A new Canada Caregiver Credit has been introduced. This program will help people looking after loved ones and replaces three previous measures: the caregiver credit, infirm dependent credit and family caregiver credit.
  5. There is help for adults who return to school after years in the workforce. A three
    year pilot program, starting in 2018-19, will make it easier for adults to qualify for Canada Student Loans and grants.

Implications for Nova Scotians

  1. Through bilateral agreements, $9.2 billion will be provided to provinces and territories over the next 11 years to support priority projects like clean water, wastewater management, public transit, rural infrastructure, challenges resulting from climate change and better-connected electricity systems.
  2. Budget 2017 includes new measures in both regular benefits, and special benefits for those with specific family and life circumstances. Transfers will be increased to provinces for skills training and job coaching through employment insurance by $1.8 billion over six years. The government is also proposing measures that will make it easier to take training while on Employment Insurance.
  3. Healthcare. Though provinces like Nova Scotia with rapidly aging populations were hoping for additional targeted funding for seniors care, it’s not there. The budget simply reiterates existing deals with the provinces. For Nova Scotia, this means $157 million for home care over the next decade and $130.8 million for mental health as well as a 3.5% health transfer increase over the first two years, then a base of 3%, or funding based on GDP.
  4. Budget 2017 includes a number of initiatives aimed at increasing tourism. The budget proposes to make permanent the $37.5-million per year in temporary funding previously provided to Destination Canada, starting in 2018–19 for tourism marketing.
  5. Defence. There are no updates on cost of timing for the National Shipbuilding Strategy, specifically progress on the Arctic Offshore Patrol Vessels being built in Halifax by Irving Shipbuilding Inc.
  6. Fisheries and Oceans Canada will get $43.8 million over five years, starting in 2017–18, to continue and expand aquatic invasive species programming to ‘prevent the introduction of aquatic invasive species, respond rapidly to the detection of new species, and manage the spread of already established aquatic invasive species.’

As Andrea Gunn wrote:

‘The federal Liberals were elected on the promise of strengthening the middle class, growing jobs and the economy and investing in clean technology and infrastructure.’

They have made good on this undertaking with budget 2017, but only just.

Dave Ritcey, The Ritcey Team, Scotia Wealth Management

For further information and advice, please contact Dave Ritcey, Portfolio Manager at The Ritcey Team of ScotiaMcLeod®, a division of Scotia Capital Inc. , Tel.: 902.678.0048