2019 Federal Budget – Tax Updates

By Team Clearline


federal budget(March 20, 2019)  The Minister of Finance, Bill Morneau, delivered the Federal government’s 2019 budget yesterday in Ottawa. To help you navigate the business and personal tax updates and changes, we have summarized some of the highlights below.


Business Tax


  • Tax Rates
No changes were made to corporate tax rates. The combined Federal and British Columbia corporate tax rate for the first $500,0000 of active business income remains at 11% for 2019 and years going forward. Income over $500,000 remains taxed at 27%.
  • Capital Gains Inclusion Rate
No changes were made to the capital gains inclusion rate.
  • Accelerated Capital Cost Allowance (CCA)
The budget confirms the previously announced accelerated CCA initiatives. Certain manufacturing and processing machinery and equipment, and clean energy equipment, acquired after November 20, 2018 is 100% deductible in the year of acquisition.
  • Zero-Emission Vehicles
The budget introduces a new temporary enhanced CCA rate of 100% for qualifying zero-emission vehicles acquired on or after March 19, 2019. Qualifying vehicles will include electric battery, plug-in hybrid or hydrogen fuel cell vehicles, including light-medium and heavy-duty vehicles purchased by a business. The 100% deduction will be available for vehicles purchased between March 19, 2019 and January 1, 2024.
  • Scientific Research and Experimental Development Program (SR&ED)
The use of taxable income as a factor in determining the amount of SR&ED credits is proposed to be eliminated. This will allow small Canadian Controlled Private Corporations to potentially benefit from the enhanced refundable SR&ED credit regardless of their taxable income.


Personal Tax


  • Home Buyers’ Plan (HBP)
The budget proposes to increase the HBP withdrawal limit from $25,000 to $35,000. The increase will apply to 2019 and subsequent years. The HBP allows first-time home buyers to withdraw from their registered retirement savings plan (RRSP) to purchase or build a home without having to pay tax on the withdrawal. First-time home buyers purchasing a home jointly may each withdraw up to $35,000 from their own RRSP under the HBP.
  • First Time Home Buyer Incentive
To improve affordability of home ownership for first-time home buyers, the 2019 Federal Budget proposes to introduce the First Time Home Buyer Incentive. This incentive is a shared equity mortgage offered to qualified home buyers and provides funding of either 5% or 10% of the home purchase price. No ongoing payments are required. The buyer would repay the incentive at re-sale.
  • Stock Options
The Budget proposes an annual cap of $200,000 on employee stock option grants that may receive tax-preferential treatment for employees of large, long-established, mature firms. Further details will be provided before the summer of 2019.
  • Canada Training Credit
The Budget introduces a new credit aimed at providing financial support to help individuals cover up to half of eligible tuition and fees associated with training. Individuals will accumulate $250 each year (maximum amount of $5,000 over a lifetime) in a notional account. A credit can be claimed for a taxation year equal to the lesser of half of the eligible tuition fees paid in the year and the individuals notional account balance. This balance will be communicated to individuals each year on their Notice of Assessment.


If you have any questions about how this impacts you or your business, please call us at 604.639.0909 or email we_are@clearlinecpa.ca.