Highlights From the New Federal Budget - Translated Into a Language You Can Understand

The government has released their new federal budget! To help you and your family, we’ve translated the important parts (aka the programs and benefits that affect holistic practitioners) into a language you can understand. Wellness pro’s, read on for a budget that’s finally relatable! 

For soon-to-be home owners: 

The First-Time Home Buyer Incentive

If you’re a first-time home buyer looking to leap into the housing market, the new First-Time Buyer Incentive can be very lucrative. Eligible households can get a “shared equity mortgage” of 5% of an existing home or 10% for a newly constructed home. What does that mean? On a $400,000 preexisting home, the government will loan you $20,000 (5% of $400K) interest-free and the loan won’t be repayable until, for example, you sell that home in the future.

What’s the fine print? Your household income needs to be less than $120K annually to qualify, and your mortgage must be less than 4x your household income. In addition, your down payment needs to be between 5-20% While details are currently scare, the program is expected to launch in September 2019.

HBA insight: This is basically interest-free money from the government. If you qualify, this can substantially reduce your monthly mortgage payments.

Expanded Home Buyers’ Plan

Keeping in line with the push for an increase in home ownership, the withdrawal limit for the Home Buyers’ Plan (HBP) is increasing from $25,000 to $35,000 per person. With the HBP, you can withdraw amounts tax-free from your RRSP to finance the purchase of your first home. The eligibility criteria are also expanding for those who have a breakdown in their marriage.

For students:

Lower student loan payments

Get ready for lower student loan payments! The federal government is reducing the student loan interest rate by 2.5 - 3.0%. Plus, interest will no longer accumulate during the six-month grace period after leaving school, meaning this grace period is a true period of reprieve from your loans. 

Higher deduction for tuition and skills training

The Canada Training Credit is a new program that gives you a $250 credit each year that you can apply towards eligible training fees (think programs at Canadian colleges and universities and occupational-skills courses). You can redeem the credit, up to $5,000 lifetime, on your tax return each year. You accumulate this annual credit if you’re aged 25-65 and make $10,000 to about $150,000.

HBA insight: This is great news for older students pursuing their post-graduate degree in naturopathy, acupuncture, chiropractic, etc. For example, if you pay $1,000 in tuition, you’d get a tuition credit worth $75 and a refund of $500. In the old system, you only would’ve received a tuition credit worth $150 – that’s a $425 savings.

For those of you purchasing a zero-emissions vehicle:

Reducing your environmental impact will be more accessible than ever! You’ll now be eligible for a $5,000 incentive for buying an electric vehicle, as long as the suggested retail price is under $45,000.

If you plan to buy a new electric vehicle for use in your business, you can now deduct the entire capital cost immediately, up to $55,000, instead of deducting it over several years. This helps lower your tax bill immediately.

HBA insight: Most practitioners will use their car for business only a fraction of the time, and the immediate write off needs to be pro rated based on that business use. If you can, buy your car late in the year and use it for business as much as possible to maximize this tax break.

You can only take advantage of one of these incentives, so be sure to check with your accountant to see which is best for you.

Other news of note:

GST/HST exemption on multidisciplinary health care services

A technical change was made to make it explicit that multidisciplinary health care services are GST/HST exempt.

HBA insight: In our discussions with the Department of Finance, we learned this is a technical amendment to make it clear that otherwise-exempt practitioners working together – at a physical rehabilitation clinic, for example – remains an HST-exempt service. At first glance, this is unlikely to affect most holistic healthcare practitioners. 

Digital news subscriptions

Canadian digital news is getting a promotional plug too! If you’re a news buff and like your digital subscriptions, you’ll be able to get a tax credit of up to $500 starting in 2020 for Canadian digital news subscriptions.