The Parliament Hill Peace Tower in Ottawa on Nov. 1. After talk of financial sacrifice, Prime Minister Mark Carney’s first federal budget made no major benefits cuts or tax hikes.Keito Newman/The Globe and Mail
Most Canadians can draw a sigh of relief. While the Carney government had warned of cost-cutting and financial sacrifice in the lead-up to the federal budget, its first fiscal blueprint contains no major tax increases or benefits cuts.
Instead, the budget outlines only a few small curbs on tax breaks and financial assistance, including new limits on eligibility for federal student loans and grants.
The government also refrained from making good on promises that would have put additional pressure on public coffers. There was no mention, for example, of reducing minimum withdrawals from a registered retirement income fund (RRIF) and temporarily boosting the Guaranteed Income Supplement for low-income seniors, two proposals the Carney Liberals had put forward in their election platform.
The brunt of the financial sacrifice foreshadowed by Ottawa will come from federal public service. The budget contains a slew of mentions of future job cuts across the government, with early retirement incentives offered to older workers.
At the same time, the budget carves out limited resources to provide more help for vulnerable Canadians and those with disabilities. The government is also proposing to eliminate a controversial tax on foreign-owned underused housing and nix the luxury tax on private planes and boats.
And there are a handful of consumer protection measures, including new measures to ensure Canadians can more quickly access money deposited by cheque.
Here are some of the highlights on the key measures that will affect Canadians’ wallets.
A temporary top-up to non-refundable tax credits
The budget proposes a temporary top-up of non-refundable tax credits in cases in which a taxpayer might lose out from Prime Minister Mark Carney’s recent middle-class tax cut.
The cut, announced earlier this year and currently included in legislation before Parliament, would lower the lowest federal personal income tax rate from 15 per cent to 14 per cent by 2026. The measure would save money for 22 million Canadians, according to government estimates.
But the cut had also been criticized for lowering the rate used to calculate non-refundable tax credits, said Doug Carroll, a tax and estate specialist at Aviso Wealth. In rare circumstances – for example, when an individual claims large one-off amounts for expenses such as tuition or medical costs – the decrease in the value of the tax breaks could exceed the savings from the recent tax cut.
The budget proposes using the current 15-per-cent rate to calculate tax credits in those cases. The measure would be in effect from the 2025 to the 2030 tax years.
A one-off boost to the Canada Disability Benefit
The budget introduces a one-time $150 payment for recipients of the new Canada Disability Benefit, which eligible Canadians began receiving for the first time in July.
The program provides $2,400 a year to Canadians between the ages of 18 and 64. But eligibility for the benefit is tied to being approved for the Disability Tax Credit, an often-costly process that can require applicants to pay doctors or other medical professionals to fill out complex forms.
The $150 supplement is meant to help offset some of those costs. The payment will be available to anyone receiving the federal disability benefit sometime before the end of the 2026-2027 fiscal year, according to the budget. Canadians who are required to re-apply for the disability tax credit would be eligible to receive the supplement again.
“It can be costly to apply to the Disability Tax Credit, so some relief is welcome,” said Mr. Carroll.
A temporary tax credit for personal support workers
As previously announced, the budget also proposed to introduce a refundable tax credit worth up to $1,100 a year for eligible personal support workers. The measure would be in force from the 2026 to the 2030 taxation years.
The tax break would not be available in British Columbia, Newfoundland and Labrador, and the Northwest Territories, jurisdictions that have signed bilateral agreements with Ottawa to boost personal support workers’ wages.
Curbs on student financial assistance
The government intends to propose legislative and regulatory changes to limit access to Canada Student Grants for full-time students to those attending public schools or not-for-profit private institutions within Canada.
The change would make students attending for-profit educational institutions ineligible for the grants.
For Canadians studying abroad, the budget proposes limiting eligibility for both Canada Student Grants and Canada Student Loans to those attending public institutions, thus excluding students in private institutions.
The limits are meant to ensure student financial assistance doesn’t flow to for-profit schools of dubious quality that may not equip students with the skills they need to succeed in the labour market.
No more Underused Housing Tax
The budget would eliminate the controversial Underused Housing Tax (UHT) as of the 2025 calendar year.
The tax, introduced by the Trudeau government, imposes a 1-per-cent annual tax on the value of foreign-owned residential property deemed vacant or underused. The measure was meant to deter foreign real estate investors from leaving Canadian homes empty but ended up becoming a headache for swaths of Canadian homeowners who had to file a special tax return just to prove they should be exempt from the tax.
While the Carney government is proposing to end the tax, taxpayers are still required to comply with the UHT for the years 2022, 2023 and 2024.
Ending the luxury tax on fancy planes and boats
The Carney government is also wielding the axe on another much-criticized Trudeau-era levy: a tax on private planes and boats.
The measure has been criticized for yielding very little revenue for the federal government while adding administrative costs.
The budget proposes doing away with those measures effective after budget day (Nov. 4). However, the government would preserve the current levy on high-end vehicles worth more than $100,000, which was also part of the Trudeau luxury tax.
Faster access to money deposited by cheque
The budget pledges to raise the amount that Canadians could immediately access after depositing a cheque from the current $100 to $150. The government would also introduce changes to ensure customers can more quickly access the funds and remove timing distinctions for cheques deposited in person or in other ways, such as through a mobile app.
Automatic tax filing for lower-income Canadians
As previously announced, the government plans to start to automatically file returns for certain low-income Canadians starting in the 2026 tax year to ensure they receive federal support they’re entitled to, such as GST/HST credits and the Canada Child Benefit.
The government also proposes to make prefilled tax returns that Canadians would be able to review prior to filing for up to 5.5 million low-income taxpayers by the 2028 tax year.
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