On April 19, 2021, Finance Minister Chrystia Freeland tabled the 2021 Federal Budget. The federal budget aims to address three primary challenges. First, to overcome the economic and social challenges caused by the COVID-19 pandemic. Second, to end the current recession by stimulating the economy. The final challenge is to build a better, fairer, more prosperous, more innovative future. We have included some of the highlights from Budget 2021 below:
Affordable Child Care
The federal government plans to work with provincial, territorial, and Indigenous partners to build a Canada-wide, community-based system of child care. The government also plans to ensure that families in Canada are no longer burdened by high child care costs—with the goal of bringing fees for regulated child care down to $10 per day on average within the next five years. By the end of 2022, the government is aiming to achieve a 50 per cent reduction in average fees for regulated early learning and child care to make it more affordable for families. This means:
Canada Emergency Wage Subsidy
Budget 2021 proposes to extend the wage subsidy until September 25, 2021. It also proposes to gradually decrease the subsidy rate, beginning July 4, 2021, to ensure an orderly phase-out of the program as vaccinations are completed and the economy reopens.
Canada Emergency Rent Subsidy and Lockdown Support
Budget 2021 proposes to extend the rent subsidy and Lockdown Support until September 25, 2021. It also proposes to gradually decrease the rate of the rent subsidy, beginning July 4, 2021, to ensure an orderly phase-out of this program as vaccinations are completed and the economy reopens.
Canada Emergency Business Account
Budget 2021 proposes to extend the application deadline for support until June 30, 2021.
The government is proposing to introduce a tax on the sales, for personal use, of luxury cars and personal aircraft with a retail sales price over $100,000, and boats, for personal use, over $250,000. This measure would come into force on January 1, 2022.
It is estimated that this measure will increase federal revenues by $604 million over five years, starting in 2021-22.
Budget 2021 proposes to provide $5 billion over seven years, starting in 2021-22, to the Net Zero Accelerator.
The Net Zero Accelerator works to cut pollution, spur clean technology innovations, attract major investments, create good middle-class jobs, and foster the development of key supply chains to ensure Canadian industries and workers can use their low-carbon advantage to compete and win.
Transformative clean technology projects, particularly large ones, often require investment at a scale and time horizon outside of the scope of traditional project financing. To support large-scale clean technology projects the government is proposing to make up to $1 billion available to help draw in private sector investment for these projects.
These resources would fuel the growth of innovative Canadian companies, create jobs for highly skilled workers, and bring important environmental and climate solutions to the world.
Budget 2021 proposes to reduce—by 50 per cent—the general corporate and small business income tax rates for businesses that manufacture zero-emission technologies. The reductions would go into effect on January 1, 2022.
These proposed tax rate reductions are designed to enhance Canada's competitiveness in attracting investment in zero-emission technology manufacturing, while also supporting existing businesses in the sector.
To support the Government of Canada’s commitment to power federal buildings with 100 per cent clean electricity by 2022, Budget 2021 proposes to provide $14.9 million over 4 years, starting in 2022-23, with $77.9 million in future years, to Public Services and Procurement Canada for a Federal Clean Electricity Fund to purchase renewable energy certificates for all federal government buildings.
Increasing Old Age Security for Canadians 75 and Over
During the pandemic, many seniors have faced economic challenges as they took on extra costs to stay safe. Additionally, many seniors are living longer and relying on monthly benefits to afford retirement. After a lifetime of hard work, they deserve a secure and dignified retirement.
The government plans to implement this commitment in two steps.
In total, these two measures represent $12 billion over five years in additional financial support, beginning in 2021-22, and at least $3 billion per year ongoing, to be delivered by Employment and Social Development Canada.
Elite Accounting will continue to monitor updates on the federal budget and relay new information to our clients and community as they are released.
This information is accredited to the Government of Canada. More information can be found here.