2023 April Update

by | Apr 14, 2023

The first quarter of 2023 brought with it the Federal Budget. If you’re like us, you’re on mailing lists for many, many accounting firms and have been avidly reading their takes ever since the budget was presented on March 28.

If you’re not like us in that particular way, you probably have more compelling interests.

Budget announcements and government activities – no matter how dull – do impact you, however, and we want you to be aware of the changes and updates that impact you. Here’s what we found in recent government activities that we think you might want to have on your radar:

No new taxes

Yippee! Personal and corporate federal income tax rates didn’t increase, GST and HST didn’t increase, there weren’t any new taxes on wealth or inheritance, and the capital gains inclusion rate remains at 50%.


If you earn a high income, or happen to have one in a specific year thanks to a one-time event, there’s this thing called the Alternative Minimum Tax. The budget proposes to increase that tax and change the computation. If you thought your accountant was busy already, this change means more learning, analysis, and modeling for those professionals. Consider sending them candy.

“Grocery Rebate” (GST increase)

If you or a family member benefits from the GST credit, Budget 2023 proposes a one-time increase to those low income individuals and families who receive the GST credit. It’s a great reason to file your income taxes. When is it coming? We don’t know yet. As with all things in the budget, these are proposals and we’re waiting for Royal Assent before they become law.

Tax Deductions for Tradespeople

Are you spending money on tools for your trade? The budget doubles the maximum deduction for tradespeople’s tools from $500 to $1,000. Apprentice vehicle mechanics got an adjustment as well, and their deductions for extraordinary tools now equals the greater of the costs of the Canada Employment Credit plus the new deduction, or 5% of the income earned as an apprentice mechanic.

RESPs (Registered Education Savings Plans)

If you’ve drawn funds from an RESP in the past, you may have found it a little confusing – many people do. At present, the “Educational Assistant Payments” (EAPs, which are taxable income to the student beneficiary) are limited to $5,000 for the first 13 weeks of enrollment in a full time program, or $2,500 for the first 13 weeks in part time programs. The budget proposes to increase this to $8,000 and $4,000 respectively.

Additionally, joint subscribers (usually parents) used to have to be married or common law to open an account. Plus, if those joint subscribers subsequently divorced or separated, they couldn’t move the account to another financial institution. With this budget, you can open up an RESP jointly with your co-parent regardless of your relationship to that co-parent, and you can move your account to whatever financial institution you like.

RDSPs (Registered Disability Savings Plans)

If you have a family member who could benefit from an RDSP but they happen to be an adult who was legally incapable of entering into a contract, the rules were that you could open an RDSP for that family member, but only until December 31, 2023. The budget extends this measure to December 31, 2026, and expands the definition of a “qualifying family member” – who can open the RDSP on behalf of the disabled family member – to include a sibling over the age of 18.

Retirement Compensation Arrangements (RCAs)

This type of plan is often referred to as “golden handcuffs” that provide additional retirement benefits for a key employee. You may not have come across an RCA personally. However, if an RCA is part of your total retirement package or you have one for an employee, Budget 2023 makes it easier for the employer to recover refundable tax, which was kind of an issue in the past.

Automatic Tax Filing Service

Individuals with simple tax circumstances, lower or fixed income, will be now able to file their tax return over the phone. CRA is also piloting an automatic filing service for vulnerable Canadians. Unfortunately, these don’t roll out this year but more details will follow in 2024.

The Canada Dental Benefit

This plan, which is already implemented, received a bump of $13B in the Federal Budget. The initial plan currently in place provides a tax-free payment to eligible families earning less than $90,000 annually with children under 12 years old. The budget proposes to extend dental benefits beyond children to uninsured Canadians with annual family income below $90,000. Funding will also be allocated to addressing gaps for vulnerable populations and reducing barriers to access.

Student Financial Assistance

Canada Student Loans Grants are proposed to increase by 40% and the interest-free Canada Student Loan weekly limit will increase to $300 from the current $210.

First Home Savings Account (FHSA)

The FHSA is officially a thing as of April 2023 and predated the budget, but we thought now was a good time to remind you about it anyway. Financial institutions are working to launch these accounts as quickly as they can, but you may have to wait a little bit depending on which one you’re working with.

Eligible contributors must be Canadian residents over age 18 and under age 71, qualify as a first time home buyer, and not have used the FHSA for a previous purchase (that last one will be relevant a few decades from now).

Individuals can contribute up to $8,000 per year starting in 2023, and there’s a lifetime contribution limit of $40,000. While you can open more than one FHSA, remember that the total contributions should not exceed your limits, and if they do, will be subject to penalties. Additionally, you’ll only earn your contribution room if you have an open account. Therefore, if you qualify and only have $100 to contribute, consider opening an account anyway.

Key points on FHSA tax treatment:

  • Contributions are tax-deductible, just like an RRSP.
  • Growth inside the account is tax-free, like an RRSP or TFSA.
  • Withdrawals – provided that the withdrawal is used for a qualifying home purchase – are tax free like a TFSA.
  • Withdrawals for other reasons are taxable, like an RRSP.
  • Transfer to RRSPs are tax-free.

Note that you can now use both an FHSA and the RRSP Home Buyers Plan to purchase a home. Initially, you had to choose one or the other.

Your FHSA can remain open until:

  • you use it to purchase a home,
  • the account has been open for 15 years, or
  • you turn 71, whichever comes first.

At that point, the account must be closed. You’ll be taxed on the value of the account unless you transfer the funds to an RRSP.

The ability to transfer funds to an RRSP is pretty cool. If you’re not otherwise buying a home, you’re effectively increasing your RRSP contribution room by that $40,000 FHSA lifetime limit. Therefore, if you’re eligible for an FHSA and asking yourself where to put your extra money, you may want to fund that FHSA first, and your RRSP second.

Make sure you’ve named your spouse (if you have one) as successor owner on your FHSA so that they can maintain that account if you pass away.

Intergenerational Business Transfers

Many of our clients have businesses that they’d like to pass on to family members. The tax complexities around those transfers can be hugely confusing and prior to 2021, taxes on inter-family sales differed from non-family sales.
This budget proposes to modify the rules introduced in Bill C-208 (enacted in 2021), which was created to equalize the taxes on family transitions of businesses.

The budget introduces two sets of tests which impose new restrictions that introduce timing requirements for selling owners to give up control of the business and purchasing owners to have active involvement. It also doubles the number of years that a selling owner can claim a capital gain reserve (that’s a good thing!).

Employee Ownership Trusts

If you’re selling your business to employees, the “EOT” (because we need more acronyms, right?) is intended to facilitate that transition, as well as provide the opportunity to share in profits. The rules are fairly stringent and this opinion piece contemplates a lower likelihood that business owners would consider this option versus sales to competitors or private equity investors on the basis of risk. However, some business owners wouldn’t consider anything other than a sale to employees, in which case, the EOT might be a great option.

And more…

There’s a lot more fun stuff in the budget like green tax credits for businesses, a tax on share buybacks by public corporations, expansion of the First Nations Goods and Services Tax, lowering of the maximum annual interest rate (a cap on predatory lending), mandatory board diversity disclosures, and reformation of the banking complaints system. If you want to read the whole budget you can download it right here.

Wondering what, if any of this, applies to you? Feel free to contact us at [email protected].


Spring Team



Practice Notes:

We will all be celebrating Queen Victoria’s birthday for some reason on May 22nd with a day off. Julia will be in Ottawa for the Family Enterprise Canada Symposium between May 29th and June 1st.

“Free” Fridays remain booked permanently in our calendars. These days are free to us at Spring in the sense that they are our opportunity to work on becoming better planners, whether through collaboration and discussion, education, research, or even a little down time. It’s been a regular practice since the summer of 2017, and we will continue to set aside the time to become better versions of ourselves every week. Even 1% better is solidly worth it, because we know that will be reflected in the work we do for you.


Julia will be co-presenting with Kathy Bright of Trella at the Vancouver Estate Planning Council on May 2nd. We’ll be talking about Governance and Succession Pain Points for private companies and family businesses. Read more (and register) here.

Julia will be the co-emcee for the upcoming Family Enterprise Canada Symposium in Ottawa between May 29 and 31. You can read about and register for the symposium here.

Spring in the News:

What is the best way to quantify risk, risk tolerance, and expected returns as a young investor? And how does inflation factor into that? Sandi gives Global News her thoughts on risk and uncertainty in their weekly newsletter spot “The Question”.

How do you preserve and grow wealth during times of uncertainty? Zoomer Magazine asked Julia to weigh in on how to strategize for rocky times in their Recession Toolkit.

If you’re a Globe and Mail subscriber (sorry about that paywall folks!), Julia also spoke to Deanne Gage about joint accounts, estate planning and multiple beneficiaries. You can read that right here.

You know those articles that are a collection of tweets about a particular subject? Somehow we ended up in one. Julia’s comments start after tweet #20, if you want to stick with it that long.

Miss some of our past appearances in the media? You can read them right here.


Planning News Digest:

  • Why do we do all this financial planning stuff? Because we want you to live as happy a life as possible. Find out some of the non-financial secrets to happiness from one of the longest running on studies on the subject right here.
  • Are you eligible to receive US Social Security? The latest update indicates that scheduled benefits are projected to stay on track until 2034, about one year earlier than previous reports. After that tipping point, the actuarial report indicates that benefit affordability will hit about 80%. Find out more here.
  • Grieving is hard enough already; Banks shouldn’t make it harder. Read one woman’s experience and her call to action for change when it comes to banking and the loss of a loved one. You can find the full article here.

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Julia Chung
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