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I’m Jamie Golombek, the managing director of tax and estate planning with CIBC Financial Planning and Advice, reporting to you today from inside the budget lockup in Ottawa, on Tuesday March the 19th.
The budget contained no tax cuts. However, the government did provide a variety of tax goodies, incentives and credits. Let’s go over some of the items that may be of interest to you for 2019 and future years.
First, [there’s a] brand new tax credit called the Canada Training Credit [Benefit]. Thinking of going back to school and retraining? Well, this credit might be for you. The Canada Training Credit is aimed at providing financial support to help cover the cost of tuition associated with your retraining. Starting this year, 2019, you’re going to start to accumulate $250 annually in a notional government account. This can then be accessed in future years to pay for up to 50% of eligible tuition.
To be able to qualify, you have to file a tax return, have to be between the ages of 25 and 65, [must be] a resident of Canada and have income of at least $10,000 per year. It’s not available for high-income earners, so if your income is over $147,000 this year, you will not qualify. Each year, your balance is tracked by the CRA in a notional account, [and] you check it out online. The amount that you can claim is equal to 50% of your tuition and the balance in your account. This starts in 2020, although the room starts in 2019.
Second, the [First-Time] Home Buyers’ Plan is a plan that allows you to withdraw money from your RRSP to buy a first-time home. The limit has been $25,000 for at least a decade. That has now been increased to $35,000. So, do you want take money out of your RRSP today? You can take money out. […] For a couple, it’s $70,000. Again, this is something that will help you buy a first-time home if you qualify as a first-time home buyer.
Auto-enrolment: so Canada Pension Plan is available and you can start that as early as age 60. Most people start at 65, but you can delay it until age 70. Unfortunately, some Canadians delay it so much, they forget to apply. Starting next year, and once you reach the age of 70, the government is going to auto-enrol you in CPP—to make sure you’re not one of the thousands of Canadians each year that actually failed to collect CPP.
Donations: when it comes to donations of cultural property, and you’ve got that Picasso hanging in your living room and you want to donate it to the museum, there are very generous tax incentives. Not only do you get a donation credit, but if it’s cultural property and designated as of national importance, then particularly you can pay no capital gains tax on the increase in value. There was a recent case involving the Heffel Gallery and the export of an oil painting that went to court and that really questioned the interpretation of what national importance means. Does it have to be Canadian, or can it just be of national importance in relevance but not necessarily be Canadian?
That case has now led to some controversy over what types of artwork can be donated to Canadian cultural institutions. Today’s budget has addressed the situation and said starting for donations made today, going forward, the law will be changed. [That] removes the requirement of an item being of national importance and you can still qualify for the enhanced tax incentive.
Starting next year, we’ll have a new tax credit for digital subscriptions. So if you pay for your digital subscription, starting next year you get a 15% credit on up to $500 of your subscription costs. That’s worth $75.
Those are some of the changes announced today in the federal 2019 budget.