2019 Federal Budget Summary

by | Mar 25, 2019

Every spring, the Federal Government comes out with their budget for the year – all the ways they’ll be putting our tax dollars to use and running this national operation. They often have a news release in fall that telegraphs some of the things they’re thinking about so those of us who pay attention to those things might feel somewhat prepared. However, the budget itself is the plan. It’s like a one-year financial plan, for the whole country.

Since we have a majority government, with most of the votes in parliament belonging to the group of folks who came up with the budget, there’s good reason to believe that all the plans in the budget will go through but it’s not officially Official until after all the votes are tallied.

The budget was released on Tuesday March 19. Since then we have been pawing through the government’s written release, the endless newsletters from all our professional friends and associations who write summaries about these things, and the media articles that may grab some or all of the salient points. About three days later, we are still reading. So many opinions. So little time before our newsletter goes out.

Last year, we learned that you might not be reading budget releases, and may actually have lives you’re trying to lead. Strange. You said you do want to know about it, and how it impacts you, but you’d rather we did the research.  Fair.

In that spirit, we’ve decided to chunk the information into categories, based on what might be of interest to you. We haven’t tried to list everything in the budget, so you may find that there are things we didn’t mention in this article because we decided not to make it one hundred pages long.

Feel free to dip in and out of these categories, getting to know how various changes might impact you, and reading more in the sources linked if you really want to dig in. If you suspect something might impact you but you’re not quite sure, feel free to reach out to your friendly neighbourhood planner, and ask a question. We love questions. Especially what you might think are “dumb” questions – they’re the easiest to answer.

Are my income taxes going up?

Right? Isn’t that the first question we always want the answer to? Nothing unexpected happened here, whether you’re a person or a company. Federal tax rates did not change for humans, and small businesses will pay 1% less federal tax on their qualified small business income – but you knew that already. Remember that your province has its own set of tax rates as well, so there could be increases (or decreases, if you’re lucky) in the overall rate you’re paying. If so, the blame currently lies somewhere other than Ottawa.

Internet! For everyone!

At Spring, where we conduct so much of our business online, we literally cannot imagine our lives without the benefit of high-speed internet. How would we communicate with you? With each other? How would we learn new things? How would we buy groceries or find out who is ringing the doorbell? The mind boggles.

For many in Canada, however, high-speed internet is not readily available. Budget 2019 brings a plan to deliver $5B to $6B in new investments in rural broadband over the next 10 years. That’s right, rural Canadians! You can watch Netflix with the rest of us!

Upgrade Your Skilllllzzzz

Shiny New Tax Credit: The Canada Training Benefit

If you’re at least 25 years old, and less than 65 years old – yes, you, Millennials and Gen-Xers – you could be eligible for a refundable tax credit¹. If you take part in a course or training program, you can claim up to half of the costs under this credit, to a maximum of $250 per year. The lifetime limit is $5,000. Therefore, if you spend $500 a year on training and course fees for 20 years, you’ll get half of it knocked off your taxes. You can accumulate your credit over time, so if 5 years from now you decide you’re going to spend some money on training you’ll have $1,250 in credits you can use ($250 X 5), or half of $2,500.

Shiny New Benefits: EI Training Support

The new EI training benefit is expected to launch next year, providing up to 4 weeks of income support every 4 years. The income support is the same that you’d get as an EI recipient – 55% of your average weekly earnings, up to annual maximum amounts. The maximum benefit as of January 1, 2019 is $562 per week (yes, it’s taxable).

This is all, of course, news for provincial and territorial employment lawmakers, and the Feds state that they’re planning on consulting with them on the design of these benefits with the intention that anyone taking advantage of them will have jobs to return to. Therefore, don’t start making plans until laws have changed that protect your job. Unless you don’t want to return to your job when you’re done learning, and have another one waiting for you or just happen to have become independently wealthy in four weeks.

Student Loans Interest

Your Canada Student Loans and Canada Apprentice Loans are going to get a nicer interest rate this year. The current interest on floating rate federal student loans falls from prime + 2.5% to prime. Fixed rate loans fall from prime + 5% to prime + 2%. On top of that, interest charges on student debt during the six months following graduation are to be eliminated entirely.

Digital Subscription Credit

A new temporary non-refundable personal tax credit for eligible new subscriptions offered by a “Qualified Canadian Journalism Organization” will provide a credit of 15% on subscriptions up to $500 between the years 2020 and 2024.

Stock Option Compensation

If you receive any of your income as stock options – with fun acronyms like RSU and PSU – the government just noticed how nice the tax treatment on that income can be. The new rules apply to “employees of large, long established, mature firms”, but will not change for “startups and rapidly growing Canadian businesses.” That’s right, tech firms, they still like you.

Big, established companies… banks, energy, and telecommunication companies perhaps?… are going to see their employees get hit a little harder with the tax stick if their stock options exceed $200,000 per year.

National Pharmacare

More actions may come in the future around pharmacare, but the budget states that the government intends to move forward on three foundational elements:

  1. Creation of the Canadian Drug Agency, which will assess effectiveness and negotiate prescription drug prices on behalf of Canadians.
  2. Development of a national formulary, an evidence-based list of prescribed drugs. The intention is to provide a basis for a consistent approach to formulary listings and patient access across the country.
  3. Development of a rare disease strategy, with the goal of ensuring patients with rare diseases have better and more consistent access for life-prolonging treatments.


Made you look. But wait! It’s relevant. Amounts paid for cannabis products may be eligible for the Medical Expense Tax Credit if purchased for medical purposes in accordance with regulations.

Everyone gets a car! (As long as it’s electric)

The Federal Government wants to give you $5,000 for purchasing a vehicle with an electric battery or hydrogen fuel cell – as long as that vehicle has an MSRP² of less than $45,000. Exact details on this are still in the works.

In the meantime, if you are interested in an electric vehicle and this incentive is prodding you along, check out the other provincial benefits you might receive here. Also, if you have a business, and that business might be interested in paying for your car, scroll down a little to check out the sweets you get on your corporate tax return for buying an electric vehicle.

Buy a Home

Even in Canada you say? Well, I suppose that depends (as we financial planners always like to say), on how much money you have, how much money you make, and how much you plan on spending on that home. The below new benefits apply if this is the first time you’ve bought a home. That’s right, Millennials, these incentives are for you.

Take More $ from your RRSP

This is one of those activities that comes with a lot of caveats. The RRSP Home Buyers Plan (HBP because why not more acronyms?) lets you withdraw some of the money from your RRSP for a down payment on your very first home. You don’t have to pay tax on the withdrawal, as long as you repay it over a 15 year period. The maximum withdrawal amount has been $25,000, with repayment therefore at around $1,667 per year for 15 years. Budget 2019 proposes an increase to $35,000, with repayment therefore at around $2,333 per year for 15 years.

Note that new “home buyers” are those who in the four year period did not occupy a home owned by you or your current spouse/common-law partner. A new twist with this budget is that you don’t have to wait that four year period if you’ve had a marriage breakdown.

If you have money somewhere else for a down payment on your home, it might make more sense to pull it from there. The math has definitely been done on the best place to pull cash for that down payment, providing you have equal amounts of money in all kinds of accounts, and your RRSP doesn’t win first prize in that calculation. The loss of potential tax-sheltered growth over that 15 year period is no small thing. At the same, roughly 50% of participants in the HBP don’t pay the money back so they end up being taxed on the amount they were supposed to pay each year that they didn’t, which may be a bad thing if your tax rate is high… or might not be if your tax rate is low. Oh, math.

However, you don’t live in some mathematical vacuum³ where all accounts hold the same amount of money and earn the same rate of return and you happen to retire at exactly 65 years of age, etc., etc, etc. You’re not a money dummy if you take this route. There are other routes though, so explore those before making a decision as to whether this is the right one for you.

First Time Home Buyer Incentive

Wait… what? The Canada Mortgage and Housing Corporation (CMHC) is going to receive $1.25mm to benefit first time home buyers. If you make $120,000 or less per year, and the amount of your mortgage is 4 x your income or less, you may qualify. You have to bring your own cash for the down payment, at a minimum of 5% of the purchase price.

The CMHC will kick in 5% of your purchase price on an existing home and 10% of your purchase price on a new build. When you sell the home at some point in the future, the CMHC gets their money back. It is not yet clear whether homeowners will pay back that original dollar amount, making the benefit an interest-free loan, or whether the government would receive their share (5% or 10%) of the equity. More details are to be released by September.

Rental Supply & Money Laundering

None of the above helping you? Well $10B is going into the Rental Construction Financing Initiative, intended to build 42,500 new rental housing units across Canada. Communities are invited to propose initiatives that break down barriers limiting new housing in the new $300mm Housing Supply Challenge, run through Impact Canada. The Expert Panel on the Future of Housing Supply and Affordability, jointly established by the Federal and BC provincial governments, will receive $4mm over two years to continue their work, and another $5mm over two years to create supply modeling and data collection.

Tax avoidance and money laundering is being investigated, with four new dedicated real estate audit teams at the Canada Revenue Agency (CRA) to monitor real estate transactions – particularly in BC. Statistics Canada will also receive $1mm to conduct a comprehensive federal data needs assessment to streamline government data sharing and real estate purchase monitoring.

Investing Your Money

Individual Pension Plans (IPPs)

An IPP is a teeny-tiny defined benefit pension plan, built for one. It’s often used as an alternative to RRSPs for business owners over the age of 40 (when it starts to make some good sense), and can be quite beneficial for high income earners who happen to own private corporations. They have lots of rules and require actuaries to manage the calculations. Budget 2019 brings a new rule, which prohibits transfers of assets from a former employer’s defined pension plan. That’s a thing financial planners and accountants worry about. You might not care all that much.

Special Annuities in RRSPs

Two types of annuities that were previously not considered for RRSPs are now available. If you’re nearing 71, or just a retirement planning nerd, this might be of specific interest to you.

Advanced Life Deferred Annuities (ALDAs)

  • Great. More acronyms. We liked MASH so we like this one. An ALDA is a life annuity where you can defer receipt of income until you reach 85 years old.

Variable Payment Life Annuities (VPLAs)

  • Would we say… Vooplas? These annuities are specific to PRPPs and RPPs because alphabet soup is tasty. Basically, they allow those types of retirement accounts that get sticky about the way you take income from them to choose annuities that provide payment amount that vary from year to year depending on the performance of the underlying investments. If you don’t have that kind of account, don’t worry about it for now.

RDSP Holders

Currently, when the beneficiary of an RDSP loses eligibility for the Disability Tax Credit (DTC, le sigh), contributions, grants, and bonds all cease. The account must be closed by the end of the year following the loss of eligibility. Under these rules, in most cases where you no longer qualify for the DTC, up to 10 years’ of grants and bonds would have to be repaid to the government unless a medical practitioner certifies that it’s likely the beneficiary may qualify again in the future.

The Budget removes the two year time limit that the account can remain open and eliminates any requirement for medical certification.

Your Business

EI Small Business Premium Rebate

Did you just imagine all your staff members leaving for 4 weeks every 4 years to go on training? Here’s a little bit of sugar to help the medicine go down: if your business is paying EI premiums at $20,000 or less per year, you’re going to benefit from a rebate that starts in 2020. The idea is that this is going to alleviate some of the strain on your business.

What will you do with all that money? Consider putting a bit of a fund in place to hire temporary staff or invest in training new staff now so you’ll be ready. Have we mentioned how much we love the procedure manuals our sister company Admin Slayer creates? Documenting your processes is never a bad idea and within the next 4 years, you’re going to want to have those documents in place.

Farmers and Fisherpeople

In last year’s budget there was a big brouhaha around some of the benefits enjoyed by small businesses in Canada, and some pretty big changes around the multiplication of the lifetime capital gains exemption (try saying that 5 times fast). Our farming and fishing folk get some relief from those rules and the budget has extended that relief to those business owners selling farming and fishing products.


The SR&ED (Scientific Research & Experimental Development) tax incentive program, which is obviously pronounced “shred” by tax nerds, provides a 15% tax credit for businesses conducting research and experimental development. The idea is to encourage business innovation by helping businesses spend as much as $3mm. Your business projects, even if you’re not running a Mad Scientist Lab, could qualify as long as it meets three criteria – read about them here. All of this has been limited if your taxable business income (profit!) exceeds $500,000 and eliminated altogether at $800,000 … but not anymore. Spend more! Create things! Innovate!

The Strategic Innovation Fund will be receiving $100mm over four years. The fund was introduced last year as an initiative to promote innovation through collaboration between academia, not-for-profits, and the private sector.

Futurpreneur Canada will be receiving $38mm over 5 years to further its support of young entrepreneurs with mentorship, learning resources, and startup funding.

$100mm has been promised over three years to develop a diversified strategy to stimulate economic growth in Western Canada, as well as incent innovation and attract investment.

Buying Company Cars – Zero Emissions Only, Please

If you’re considering buying a company car between 2019 and 2024, you can deduct 100% of the expense in the year of purchase if it is a qualified zero-emissions vehicle, rather than slowly deducting the cost over a long period of time. After 2024, that first year deduction amount reduces to 75%, then 55% in 2026. After 2028, you’re rolled back to deducting about 30% per year. Buy the car now, the government says.

The maximum limit will be $55,000 per vehicle, a significant improvement over the $30,000 that’s normally permitted.

That zero emission vehicle must be fully electric, fully hydrogen fuelled, or plug-in hybrid vehicles. It has to be new, and you aren’t allowed to double-dip and make use of the federal purchase incentive at the same time. Boo.


Canada Pension Plan (CPP)

Hey, did you forget to apply for Canada Pension Plan? Not to worry, the government will now automatically enroll you if you haven’t applied by age 70.

Guaranteed Income Supplement (GIS)

If you receive the GIS, you have to be very mindful of how much money you receive from other sources, lest it endanger your benefit. Previous to this Budget, if you earned more than $3,500, your GIS benefits would be reduced. That ceiling has now been raised to $5,000 per year. Additionally, if you earn another $10,000 on top of that, only 50% of that $10,000 will be applied to reduce your GIS benefit.

Protecting Pension Plan Benefits

New measures are proposed to make insolvency proceedings fairer, more transparent, and more accessible for pensioners and workers. Changes to corporate law will set higher expectations and better oversight of corporate behaviour to include the interest of pensioners and workers in corporate decision-making. Publicly traded, federally incorporated firms will also be required to disclose their policies around workers, pensioners, and executive compensation – or explain why such policies are not in place.

If a federally regulated pension plan is wound up, the proposed measures require that the plan must provide the same pension benefits as when it was ongoing. Defined benefit pension plans will be able to fully transfer the responsibility to provide pensions to a regulated life insurance company through the purchase of annuities. These measures are intended improve pension sustainability and better protect retirees from the risk of employer insolvency.


Honestly, there’s a lot of stuff going on in every budget and how we use it really depends on what is important to us, when the rules kick in, and when we actually get information about what the rules might be. The Budget is a plan but it hasn’t necessarily been implemented yet. In some cases, that can mean it might be difficult for your financial and tax advisory team to give you really great advice until the data comes in.

In the meantime, have patience with us as we check out the rules and start field testing them. Oh, and send your accountant your tax slips as soon as possible. I’ve already started seeing them loading up on sugar and caffeine as tax season begins in earnest.

¹ A “refundable tax credit” is one that, if you make use of it and your tax liability ends up being less than zero, you could get money back. For example, if you owe $800 in taxes and qualify for a $1,000 refundable credit, you’d get $200 back. With “non refundable tax credits” if you owe $800 in taxes and qualify for a $1,000 credit, you won’t pay tax, but you won’t get money back. Think of a refundable tax credit as a gift card and a non-refundable tax credit as a coupon.

² MSRP = Manufacturer’s Suggested Retail Price. The dealership can sell for a different price if they want. I bet they don’t mess with this much, since it’s public knowledge, unless it’s to advertise a deal.

³ I want to see a mathematical vacuum now. Does it suck up numbers? Parentheses? Does the canister multiply on its own?
⁴ If the maximum income is $120,000, the maximum mortgage is 4x your income, and you have to provide at least 5%, then the maximum potential house purchase for anybody is going to be between $500,000 and $600,000. That’s right: you might have a tough time finding a place in Vancouver or Toronto. But there are other cities in Canada. Plus, everyone is getting internet within 10 years so we can all work remotely…. You know, within 10 years. In the meantime, choose locations with existing high-speed internet. 


Govt: https://budget.gc.ca/2019/docs/plan/intro-en.html

CPA Canada: https://www.cpacanada.ca/en/the-cpa-profession/about-cpa-canada/key-activities/public-policy-government-relations/federal-budget

Grant Thornton Summary

RBC Wealth Management Summary

CALU Budget Summary

KPMG Budget Summary

Encompass CPA Summary

Manulife Budget Summary

Benefits Canada Summary

McCarthy Tetrault Summary


IE “Feds offer help to first time home buyers

IE “Feds crack down on commuted value IPPs

IE “Liberals offer relief to RDSP holders who lose DTC eligibility

IE “Liberals impose 200K threshold for tax treatment of stock options

IE “Federal budget introduces annuities deferred to age 85


GM: “8 Ways the Federal Budget will affect your personal finances

GM: “Federal budget 2019 highlights: 10 things you need to know

MS: “18 Ways the Federal Budget will affect your wallet in 2019

MS: “Millennial homebuyers and seniors among the winners of Budget 2019

FP: “Five new ways to save on your taxes in the Federal Budget

CBC: “Budget 2019: Highlights of Bill Morneau’s fourth federal budget

Julia Chung
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