Any Gold in the Latest Federal Budget for Investors?

March 29, 2019

Title page of the Federal Budget 2019

Some would say that the suspect nature of the current economy has given the Liberals a license to spend. Others, more cynically may point to current political scandals that have prompted them to continue their deficit budgets. In either case, there is still a large projected deficit budget for 2019. While there are definitely some positives in the budget, unfortunately for the affluent in Canada, it was another attack on your wealth as small incentives were clearly outweighed by large retractions.

What’s the Positives?

New Home Buyer’s Plan Increased Limit

Most people will point to the new housing initiatives to help new home buyers to enter expensive real estate markets such as Toronto, Montreal and Vancouver that will allow up to $35,000 to be removed from RRSPs to put towards a down payment for a home as a positive move. The caveat is that the self-loan still needs to be paid back within the same amount of time.

Do You Own a Newspaper, Farm, Fishery or Film Production Company?

If so, there are some additional nominal tax deductions added to your arsenal of trying to stay afloat in these embattled industries.

Better Management of Funds in Retirement

This could be beneficial to many investors that want to extend disbursements, as the new regulations allow under specific conditions to an advanced life deferred annuity (ALDA) allowing you to defer withdrawals until the end of the year in which you turn 85.

Be Aware of the Negative Impacts

ETF Tax Loophole Closed

Enjoying this loophole has come to a close. Certain mutual fund trusts used a redemption allocation methodology that allowed an excess of capital gains that would not have otherwise been realized.

Employee Stock Options

Canadian businesses already compete for experts, technical expertise against the so-called brain drain to the U.S. and one of their most effective tools for supplementing salaries has just been wiped out. For those that received stock option compensation under preferred taxation rates, the deduction has been severely curtailed to allow for only $200,000 of stock option deductions at fair market value annually. The only exception is for “startups and rapidly growing Canadian business” which is yet to be defined.

Enhanced Budgets for Tax Compliance at CRA

Many of CRA’s changes could have a profound impact on high net worth families. Be sure to have your Investment Advisor and your tax specialist work in concert to protect your wealth.

Use Your Wealth Sense

While there were no new large income or corporate tax increases in this budget, most of the incentives were aimed at the middle class, while also targeting the affluent and high-net-worth in Canada with specific measures to transfer wealth.

Author Steve McBride, Investment Advisor, Echelon Wealth Partners looks forward to connecting with you about your future wealth management needs.

Disclaimers

This blog is solely the work of Steve McBride for the private information of his clients. Although this author is a registered Investment Advisor with Echelon Wealth Partners Inc. (“Echelon”) this is not an official publication of Echelon, and this author is not an Echelon research analyst. The views (including any recommendations) expressed in this newsletter are those of this author alone, and they have not been approved by, and are not necessarily those of, Echelon.

Echelon Wealth Partners Inc. is a member of the Investment Industry Regulatory Organization of Canada and the Canadian Investor Protection Fund.

Forward-looking statements are based on current expectations, estimates, forecasts and projections based on beliefs and assumptions made by authors. These statements involve risks and uncertainties and are not guarantees of future performance or results and no assurance can be given that these estimates and expectations will prove to have been correct, and actual outcomes and results may differ materially from what is expressed, implied or projected in such forward-looking statements.

The opinions expressed in this report are the opinions of this author and readers should not assume they reflect the opinions or recommendations of Echelon Wealth Partners Inc. or its affiliates. Assumptions, opinions and estimates constitute this author’s judgment as of the date of this material and are subject to change without notice. We do not warrant the completeness or accuracy of this material, and it should not be relied upon as such. Before acting on any recommendation, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. Past performance is not indicative of future results.

These estimates and expectations will prove to have been correct, and actual outcomes and results may differ materially from what is expressed, implied or projected in such forward-looking statements. Echelon Wealth Partners Inc., its divisions, subsidiaries, and affiliates, do not provide any income tax advice and does not supervise or review any income tax returns. Please consult your accountant.

Source: 

https://www.theglobeandmail.com/investing/article-what-the-new-budget-means-to-your-bottom-line-boyd-groups-stellar/#one

https://www.ey.com/Publication/vwLUAssets/Tax_Alert_2019_No_09/$FILE/TaxAlert2019No09.pdf