Changes to credits, taxes and other rules in the federal budget will affect Canadians who take the bus, care for loved ones, smoke, or are trying to have a baby.
Overall, experts suggest the Liberals have taken a very cautious approach to their second fiscal roadmap, making tweaks and investing in many different areas, but not racking up huge spending or introducing dramatic changes that will hurt or help the average Canadian.
“This is just routine housekeeping,” said Ian Lee, a professor at the Sprott School of Business at Carleton University, of the measures announced Wednesday.
Still, that housekeeping won’t go unnoticed. Here’s a look at some of the key policy changes that could affect your wallet.
Public transit credit axed
Canadians who have claimed their public transit passes for a tax break will have to start looking elsewhere for refunds starting on June 30, 2017.
After that date, any transit pass purchased won’t be eligible to submit to the Canada Revenue Agency next spring.
“We found that it was not doing what it was intended to do,” explained Finance Minister Bill Morneau.
Specifically, the credit was supposed to encourage the use of public transit and reduce greenhouse gas emissions.
Instead of the individual “boutique” credit, the Liberals say they are investing on a broad scale – to the tune of $20 billion over 11 years – to improve transit systems and encourage usage across Canada.
“That was going to a lot of people who didn’t need it,” said Lee of the ill-fated credit, which dates back to the Harper government.
“Should you be subsidizing the user, or the machine?”
(Slightly) higher prices on alcohol and cigarettes
Indulging in your chosen vice may get slightly more expensive with increases to taxes levied on alcohol and cigarettes. The excise duties charged to manufacturers and importers of these products are going up, which means higher costs passed along to consumers.
According to officials within the department of finance, that will translate to a 53-cent increase on the cost of a carton of 200 cigarettes, a 5-cent increase on a 24 pack of beer, a 7-cent increase on a bottle of spirits and a 1-cent increase on each litre of wine.
“We believe that it’s important that we have a tax system that works, that’s fair,” said Morneau. “We are actually just ensuring that taxes stay consistent over time.”
HST/GST on UBER
Ride-sharing’s free ride when it comes to HST/GST rules is officially over. The definition of a taxi business is being amended under the Excise Tax Act so it will include ride-sharing services, including UBER and Lyft, as of July 1, 2017.
What that means is the average consumer is now going to see an HST and GST charge on their receipts after using a ride-sharing service, just like they would on a regular taxi ride.
The budget states that this will effectively “level the playing field” in a highly competitive and rapidly evolving industry.
Goodbye Canada Savings Bonds
The sale of Canada Savings Bonds peaked in the 1980s, but the federal government says the program simply doesn’t make sense anymore.
The bonds are no longer as popular, the budget argues, and therefore no longer a cost-effective or reliable source of funds for the government. Lee says their demise was a long time coming.
“That’s been discussed for literally years,” said Lee. “The financial markets have matured and there’s many other financial instruments available.”
Ottawa will discontinue new sales of the bonds this year, gradually phasing out the program and honouring “all outstanding retail debt.”
What that means for anyone holding Canada Savings Bonds is that their value will have to be transferred elsewhere – to a registered education savings plan, for example, or by moving it into a savings account.
“You can cash (remaining bonds) in without penalty at any time at any financial institution in Canada, without any penalty or special fees or charges of any kind,” said Lee.
All Canadians trying to have a baby who have relied on medical technology (artificial insemination, IVF, etc) to help them conceive may now qualify for the Medical Expense Tax Credit to offset costs not covered by insurance.
That will include people who struggle with medical infertility (who already qualify for this credit) as well as same-sex couples and single Canadians who may not have a medical issue, but need medical intervention in order to have a child.
The measure will come into effect immediately.
Simplified caregiver credit
The government is taking three different tax credits that currently apply to family caregivers in Canada (infirm dependent credit, caregiver credit and family caregiver credit) and mashing them into a single credit – dubbed the Canada Caregiver Credit.
The new version, which the government says will make caregiver credits heftier and accessible to more people, will apply to Canadians who care for their loved one – whether or not they live with that person.
The credit will provide tax relief of up to $6,883 for expenses linked to the care of dependent relatives with infirmities like brothers, sisters, parents and adult children. For people caring for minor children or their spouse/common-law partner, the amount tops out at $2,150.
“These particular credits are non-refundable, so you have to pay tax to get value from them,” noted David Macdonald of the Canadian Centre for Policy Alternatives.
“The bottom third of the income spectrum doesn’t pay tax. Providing care means you’re probably going to be making less money. So the more care you provide, the less this becomes useful.”
Easier access to disability credit
Until now, you needed a doctor’s approval to apply to the government for the disability tax credit.
Effective tomorrow, however, Canadians with impairments that make them eligible to receive the credit can ask a nurse to provide that same approval.
This, according to the government, will allow people living in areas where access to a doctor may not be readily available to get their applications off to Ottawa more quickly.