Legislative Costing Notes

Luxury goods sales tax

The introduction of a sales tax applied at the point of purchase of automobiles and aircraft valued over $100,000 and vessels valued over $250,000. The tax will only apply to new vehicles purchased for personal use. The tax rate will be the lesser of 10 per cent of the full value of the vehicle, or 20 per cent of the value above the threshold. 

This tax will come into effect on January 1, 2022.

The Collection of GST from Foreign-Based Sellers on Goods Sold to Canadian Residents from Canadian Fulfillment Warehouses

Certain foreign-based sellers store goods in warehouses within Canada in anticipation of the goods being sold to buyers located in Canada. Once an item is purchased, it is shipped from the warehouse to the buyer.

Tax on Unproductive Use of Canadian Housing by Foreign Non-resident Owners

In Budget 2021 the government of Canada proposed to introduce a national 1% tax on the value of non-resident, non-Canadian owned residential real estate considered to be vacant or underused. The tax is planned to take effect on January 2022 and will require all owners of residential property in Canada, other than Canadian citizens or permanent residents to file a declaration for the prior calendar year in respect of each Canadian residential property they own. Depending on circumstances, owners may be eligible to exemptions from the tax in respect of a property for the year. An exemption may be available, for instance, where a property is leased to one or more qualified tenants in relation to the owner for a minimum period in a calendar year.

Tobacco Taxation Increase

Increasing the tobacco excise duty rate by $4 per carton of 200 cigarettes, along with corresponding increases to the excise duty rates for other tobacco products.

Increasing the maximum number of EI regular weeks of benefits

The number of EI regular weeks of benefits will be increased to a maximum of 50 weeks for claims made between September 27, 2020 and September 25, 2021.

Canada Recovery Sickness Benefit (CRSB): 2-week extension

On February 19, 2021, the government announced the extension of the Canada Recovery Sickness Benefit (CRSB).  The extension will allow workers to take an additional two weeks of benefits, bringing the total maximum benefit to four weeks.

The CRSB provides $500 per week to those who are absent from at least 50% of their typical time at work in a given week because of being ill from COVID-19, self-isolating due to COVID-19, or having a medical condition that would cause them to be more vulnerable to contracting COVID-19.

This benefit is taxable. The CRSB program is in effect from September 27, 2020 to September 25, 2021.

Canada Recovery Caregiver Benefit (CRCB) – 12 Week Extension

On February 19, the Government announced it was extending the eligibility of the Canada Recovery Caregiver Benefit (CRCB) by an additional 12 weeks, bringing the maximum benefit period to 38 weeks.

The CRCB provides a $500 weekly taxable benefit per household for workers who miss at least 50% of their normal time at work during a week to care for someone for reasons related to COVID-19.  

Reasons that a worker could claim the CRCB include caring for a child under 12 or another family member 12 or over who cannot be left alone without supervision; whose school, childcare, or other type of care program is closed due to COVID-19; whose normal caregiver cannot provide care due to COVID-19; or who is staying home because they have an increased risk of severe health consequences if they become infected with COVID-19.

Eligible workers must have earned at least $5,000 in any of 2019, 2020, or the span of 12 months before they apply for the CRCB.  They are ineligible for the CRCB if they are receiving certain other benefits (for example, the Canada Recovery Benefit, the Canada Recovery Sickness Benefit, Employment Insurance). This program sunsets on September 25, 2021.

Eligible workers must have earned at least $5,000 in any of 2019, 2020, or the span of 12 months before they apply for the CRCB.  They are ineligible for the CRCB if they are receiving certain other benefits (for example, the Canada Recovery Benefit, the Canada Recovery Sickness Benefit, Employment Insurance ). This program sunsets on September 25, 2021.

Canada Recovery Benefit (CRB) – update and increase in the maximum number of weeks available

The CRB, introduced on September 27, 2020, provides $500 per week to workers who do not qualify for EI, who earned at least $5,000 in 2019 or 2020 and who are unable to return to work or had their income reduced by at least 50% due to COVID-19. The program will last for one year.

Claimants will need to repay $0.50 of the benefit for each dollar of their annual income above $38,000 in the calendar year, up to a maximum of the amount of benefit they received. The $38,000 threshold will not include amounts received under the benefit. The benefit will be taxable.

In February, the program was amended to increase the maximum number of weeks for which the CRB can be claimed from 26 to 38 weeks.

Cost Estimate of Bill C-246: Tuition for Persons with Disabilities

This private member’s bill would amend the Income Tax Act and the Canada Student Financial Assistance Act so that students enrolled in a designated educational institution with a Disability Tax Credit (DTC) certificate will receive a grant equal to their annual tuition fees. It is assumed that the bill will come into effect on August 2021, the start of the 2021-22 loan year.

The collection of GST from foreign-based sellers on the final price of goods sold to Canadian residents from Canadian fulfillment warehouses

Certain foreign-based sellers store goods in warehouses within Canada in anticipation of the goods being sold to buyers located in Canada. Once an item is purchased, it is shipped from the warehouse to the buyer. While GST is paid on the wholesale value of the good when it is imported into Canada, GST is not necessarily collected on the gap between the wholesale value and the final price of the good. The proposed measure would ensure that GST is collected on this price gap.

If a seller is registered to collect GST, the seller themselves would be responsible for collecting GST on the final price. If a seller is not registered but they sell through a distribution platform, the platform would be responsible for collecting GST on the final price on behalf of the seller.

This policy would come into effect on July 1, 2021.

Strengthening Tax Compliance

Starting in 2021–2022, the government will invest an additional $606 million over five years to allow the Canada Revenue Agency (CRA) to combat tax evasion and aggressive tax avoidance. Specifically, the CRA will hire additional offshore-focused auditors to focus on individuals who avoid taxes by hiding income and assets offshore. It will enhance the audit function targeting higher-risk tax filings, including those of high-net worth Canadians, and strengthen its ability to fight tax crimes such as money laundering and terrorist financing.

Taxing sales of digital products and services

This measure would require foreign-based vendors selling digital products or services to consumers in Canada and digital marketplace platforms to register for, collect and remit the GST/HST on their taxable sales to Canadian consumers.

Financial compensation for supply-managed sectors

Estimates the cost of the Government’s commitment to provide full and fair compensation to dairy, poultry and egg producers and processors for providing increased access to domestic markets under the Canada-United States-Mexico Agreement (CUSMA).

Fall Economic Statement 2020 reiterated the Government’s commitment to compensate the supply managed sector for CUSMA but did not provide a cost estimate.

Financial support for training 4,000 personal support workers

The Government of Canada proposes to spend $38.5 million over 2 years to train 4,000 personal support workers through a 6-week accelerated online program and an accompanying 4-month internship.

RCMP National Body-worn Camera (BWC) Program and Digital Evidence Management System (DEMS)

Introducing a National Body-worn Camera (BWC) Program for the RCMP’s front-line police officers and a Digital Evidence Management System (DEMS) to store and manage camera footage.

Simplifying the Home Office Expense Deduction

Due to the COVID-19 pandemic resulting in many Canadians working from home, the government introduced a simplified flat rate home office expense deduction for the 2020 tax year. This will allow Canadians to claim deductions up to $400, based on the length of time working from home, without the need to track detailed expenses.

Expansion of the Canada Emergency Business Account (CEBA)

Expanding the maximum amount of the CEBA loan from $40K to $60K and extending the CEBA eligibility to Canadian businesses who haven’t been operating from a commercial banking account.

Financial Support for Planting 2 Billion Trees

The Government of Canada proposes to provide up to $3.16 billion, over ten years, to partner with provinces, territories, non-governmental organizations, Indigenous communities and municipalities to plant 2 billion trees.

International corporate tax and digitalization

Implementation of a new corporate income tax for companies offering digital services. The tax will take effect January 1, 2022 and details will be revealed in the 2021 budget. 

Cost Estimate of Bill C-256, An Act to amend the Income Tax Act (donations involving private corporation shares or real estate)

This private member’s bill would amend the Income Tax Act so that charitable donations of the cash proceeds of the disposition of real estate and privately-held shares would not be subject to capital gains tax. The donations would have to be made to a qualified donee within 30 days of the disposition of the property to an arm’s length third-party.