On November 3, 2022 the federal government provided their 2022 Fall Economic Statement. We have summarized key announcements for your benefit.

 Family

 Doubling the Goods and Services Tax (GST) Credit

• The GST Credit is a tax-free quarterly payment that offsets GST for low and modest-income families and individuals. Effective immediately, they will receive double these credits for the next six months.

Canada Dental Benefit

• Legislation implemented Canada Dental Benefit in September of this year: up-front tax-free payments to cover dental expenses for children under 12 years old. Canadian families with no dental coverage and annual family income under $90,000 are eligible to receive $1,300 per child over the next two years.

Housing

The government recognizes the housing crisis in Canada and is committed to making housing more affordable for Canadians. The government has announced a long list of intended initiatives to help curb some barriers to entry. Some of the key initiatives include, but are not limited to:

• One time top-up to the Canada Housing Benefit program – a tax-free payment of $500 to low-income renters.
• Foreign Investors / Non-Canadians:

1. Introduce a two-year ban on purchasing residential property in Canada effective January 1, 2023 and
2. 1% annual ‘underused housing tax’ on value of property that is vacant or underused.

• New Tax-Free First Home Saving Account to give first-time home buyers ability to save up to $40,000 tax free.
• Double the First-Time Home Buyers Tax Credit which would provide up to $1,500 of additional tax credits.
• New refundable Multigenerational Home Renovation Tax Credit to provide up to $7,500 for construction on secondary suite for senior or disabled family member.

Small Businesses, Jobs, and Youth

The government is committed to growing Canada’s economy and creating good middle class jobs that Canadians will count on for generations to come. To enable this growth, the government proposes to implement support through initiatives such as:

• Lowering Credit Card Transaction Fees for Small Businesses
• A New, Quarterly Canada Workers Benefit – Tax Credit
• Eliminating Interest on Student and Apprentice Loans
• Investing in Skills for a Net-Zero Economy
• Investing in Jobs for Young Canadians

Economic and Tax

Launching the Canada Growth Fund

• To unlock the trillions of private capital that is available to fund a net-zero economy and meet Canada’s economic policy goals, Canada plans to incentivize companies to invest in cutting edge technology and create jobs and prosperity launching in late 2022 early 2023.

Immigration

• Canada sets out to significantly increase immigration levels, expecting to welcome more than 430,000 this year and upwards of 500,000 in 2025. This builds on the Express Entry System which aims to bring in skilled workers to help solve labour shortages.

An Investment Tax Credit for Clean Technologies

• The government proposes a refundable tax credit equal to 30% of the capital cost of investments in certain clean technologies when the companies adhere to specific labour conditions while those that do not will be eligible for a 20% credit. Further details on labour conditions and eligible technologies will be announced in Budget 2023. The credit would be available as of the day of Budget 2023 and no longer in effect at the start of 2035, subject to a phase-out starting in 2032.

An Investment Tax Credit for Clean Hydrogen

• Proceeding with its commitment, announced in Budget 2022, Canada is looking to establish an investment tax credit to support investments in clean hydrogen production. The proposed credit will be refundable, and available for eligible investments made as of the day of Budget 2023. The credit will be phased out after 2030. The lowest carbon intensity tier that meets all eligibility requirements is proposed to receive an investment tax credit of at least 40 per cent.

A Tax on Share Buybacks

• The government intends to introduce a corporate-level 2% tax that would apply on the net value of all types of share buybacks by public corporations in Canada. Details will be announced in Budget 2023 and tax would come into effect on January 1, 2024.

International Tax Reform

• Outlined in Budget 2022, the government confirmed their commitment to the international tax reform by updating a two-pillar plan. Pillar One will ensure that the largest and most profitable global corporations, including large digital corporations, pay their fair share of tax in the jurisdictions where their users and customers are located. Pillar Two, a global minimum tax regime, would ensure that multinational corporations are subject to a minimum effective tax rate of 15 per cent on profits in every jurisdiction in which they operate.

High Net Worth Tax

• The government is re-examining The Alternative Minimum Tax which ensures wealthy Canadians cannot disproportionately lower their tax bill. A detailed proposal and path for implementation will be released in Budget 2023.

Disclosure

The strategies, advice and technical content in this publication are provided for the general guidance and benefit of our clients, based on information believed to be accurate and complete, but we cannot guarantee its accuracy or completeness. This publication is not intended as, nor does it constitute tax or legal advice. Readers should consult a qualified legal, tax or other professional advisor when planning to implement a strategy. This will ensure that their individual circumstances have been considered properly and that action is taken on the latest available information. Interest rates, market conditions, tax rules, and other investment factors are subject to change. This information is not investment advice and should only be used in conjunction with a discussion with your investment advisor. First Avenue or any other person do not accept any liability whatsoever for any direct or consequential loss arising from any use of this report or the information contained herein.