Last week, the federal Liberals tabled their last budget before the looming fall election. The budget has a little something for everyone from first-time homebuyers to seniors. Let’s take a closer look at what the federal budget means for Canadians.
First-time homebuyers are getting a helping hand from the government in a couple of ways.
The new shared equity mortgage offered by the Canada Mortgage and Housing Corporation will help lower the monthly mortgage payments of property virgins, making it easier to qualify for a mortgage.
The amount you’re able to withdraw from your Registered Retirement Savings Plan (RRSP) is also being increased. You’re now able to withdraw up to $35K from your RRSP towards the purchase of your first home, up from $25K.
Are you a student struggling with student debt? I have some good news. The federal government lowered the interest rate on Canada Student Loans to prime, down from its current prime plus 2.5%. This should provide some much needed financial relief and help students pay off their debts even sooner.
Employees looking to upgrade their skills
The federal government is looking to partner with workers looking to upgrade their skills. If you’re a worker 25 to 64 years old, you’ll be able to accumulate $250 annually, up to a lifetime amount of $5,000 as part of the new Canada Training Credit. The new training credit that can be applied to training costs, accompanies a change to employment insurance (EI) to let workers take leave for training. This new EI benefit will offer you up to 55 percent of your earnings when taking time off work to go to a training program.
Electric vehicle drivers
Looking to reduce your carbon footprint? Transport Canada is introducing a subsidy of up to $5,000 toward electric-battery or hydrogen-fuel-cell vehicles with a price tag under $45K.
But that’s not all. An electric vehicle is only useful if there are charging stations nearby to recharge your vehicle. To address the lack of charging stations, Natural Resources Canada will get $130 million over the next five years to install new recharging and refuelling stations.
For businesses, immediate expensing will be provided to a full-range of zero-emission vehicles. This will encourage and incentivize business owners to switch their entire fleet to zero-emission vehicles.
With the lack of workplace pension plans, many seniors are choosing to work past retirement age. However, for those in a lower tax bracket, this can mean losing out of means-tested government benefits like Guaranteed Income Supplement (GIC). The address this, the budget will enhance the earnings exemption of GIC. This will allow seniors to work part-time and still see some financial benefits.
The federal deficit
For those concerned about the deficit, the federal deficit currently sits at $19.8 billion (this includes a $3 billion risk adjustment). That’s an increase of $200 million from the prior year’s forecast. The Liberals are aiming to gradually reduce the deficit. In and around the next federal election in 2023-2024, the Grits are projecting a budget of $11.4 billion.
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Written by Sean Cooper
Sean Cooper is the bestselling author of the book, Burn Your Mortgage: The Simple, Powerful Path to Financial Freedom for Canadians. He bought his first house when he was only 27 in Toronto and paid off his mortgage in just 3 years by age 30. An in-demand Personal Finance Journalist, Money Coach and Speaker, his articles and blogs have been featured in publications such as the Toronto Star, Globe and Mail, Financial Post and MoneySense. Connect with Sean on LinkedIn, Twitter, Facebook and Instagram.