Budget 2022: highlights | Morning Star

Chrystia Freeland holding the budget

Earlier today, Finance Minister Chrystia Freeland presented the federal government budget for 2022. The government forecasts a deficit of $52.8 billion in fiscal year 2022-23, which is expected to shrink to $8.4 billion in fiscal year 2026-27.

tax the banks

The government plans to implement a “Canada Recovery Dividend,” under which banks and life insurers will pay a one-time 15% tax on taxable income in excess of $1 billion for fiscal year 2021. The recovery dividend Canada will be paid in equal installments over five years.

“The 2022 budget also proposes to permanently increase the corporate income tax rate by 1.5% on taxable income from banking and life insurance groups above $100 million, so that the general tax rate to federal corporate earnings above this income threshold will increase from 15% to 16.5%. %”, highlights the report.

The two measures could raise $6.1 billion over the next five years.

According to a Canadian Press report today, the CIBC CEO (CM) said a tax increase targeting major financial institutions could send the wrong signal to the world about investing in Canada. Executive Director Victor Dodig says he is an advocate of competitive tax policy, not industry-specific policy, and that he supports measures that drive more human capital and foreign direct investment in Canada.

Investment tax credit for carbon capture, utilization and storage (CCUS)

Budget 2022 proposes a refundable investment tax credit for businesses that incur eligible CCUS expenses, beginning in 2022. From 2022 through 2030, investment tax credit rates would be set at 60% for investment in equipment to capture CO2 in direct air capture projects, 50% for investment in CO2 capture equipment in all other CCUS projects, and 37.5% for investment in transportation, storage and use equipment.

“To encourage industry to move quickly to reduce emissions, these rates will be reduced by 50 percent for the period from 2031 to 2040. The proposed refundable tax credit is expected to cost $2.6 billion over five years from 2022-23, with an annual cost of about $1.5 billion in 2026-27,” the budget report says.

A TFSA for your first home

The good news for first-time homebuyers is that budgeting provides a means for Canadians to save for their first home.

“To help Canadians save for their first home, Budget 2022 proposes to introduce the Tax-Free First Home Savings Account that would give potential first-time homebuyers the ability to save up to $40,000. Like an RRSP, contributions would be tax-deductible and withdrawals to purchase a first home, including investment income, would not be taxed like a TFSA. Duty free entry, duty free exit. The government intends to work with financial institutions to ensure that a tax-free first home savings account can be opened and contributed to in 2023. It is estimated that the tax-free first home savings account would provide $725 million in support over five years,” the report says.

Help buying a Tesla?

To help make zero-emission vehicles more affordable for Canadians, Budget 2022 “proposes to provide $1.7 billion over five years, beginning in 2022-23, with $0.8 million of amortization remaining, to Transport Canada to extend zero-emission vehicle (iZEV) incentives through March 2025. Eligibility under the program will also be expanded to support the purchase of more vehicle models, including more vans, trucks and SUVs, helping to make ZEVs more affordable ”. More details are expected.

Charging stations are not far behind, as the Infrastructure Bank of Canada will invest $500 million in zero-emission large-scale urban and commercial vehicle refueling and charging infrastructure. The government is also proposing to provide $400 million over five years, beginning in 2022-23, to Natural Resources Canada to fund the deployment of zero-emission vehicle charging infrastructure in suburban and remote communities through the Vehicle Infrastructure Program. Zero Emissions.

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