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Federal Budget 2021

Ken Proudman Executive
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   Edmonton, Alberta

The 2021 Federal Budget (Bill C-30) received Royal Assent on June 29, 2021. These are some of the changes that might be of most interest to family law lawyers:

  • The definition of "shared-custody parent" in relation to CCB payments has been amended to be either at least 40% of parenting time in a particular month, or "on an approximately equal basis". This amendment was in response to a Federal Court of Appeal decision which interpreted equal or near equal to mean 45%. I'm not sure why they added approximately equal though, maybe it's so that if the other parent has the child for a full month in the summer, but otherwise they have approximately equal time during the year, people won't lose their CCB payment.

  • Changes to the federal basic personal amount have now been codified. That's the initial portion of income that people aren't taxed on.
    • The amount will increase up to $15,000 by 2023. Since the Albertan amount is even higher, that generally means that by 2023 people won't have to pay tax until they earn over $15,000.
    • In 2024 and later years, the amount will be subject to inflation indexation, rather than waiting for the government to amend the Income Tax Act each year.
    • Another change is that part of that amount is made up of an "additional" amount (up to $1387 in 2021), which starts getting reduced once a person starts earning income in the fourth tax bracket ($151,978 in 2021) and is eliminated at the next tax bracket ($216,511 in 2021).
    • The spousal/common-law partner and eligible dependent (AED) amounts are also now tied to the basic personal amount. ‚ÄčIn other words, when someone claims a dependent these changes will also affect them (as will the inflation indexation).

  • In 2020 and 2021, EI and taxable pandemic benefits can reduce the annual child care expense deduction limit.

  • In 2020 and 2021, the disability support expense deduction will still be able to be claimed if a person received pandemic-benefits or EI.

  • You may recall that in 2018 the Working Income Tax Benefit (WITB) changed to the Canada Workers Benefit (CWB). This is essentially a refundable credit for low-income families. The amount has been increased, and there's also something called a "secondary earner exemption" where an eligible spouse will permit someone to exclude up to $14,000 of their working income from the calculation and thresholds. You might see ChildView and DivorceMate ask for additional information in the future.

  • Some low-emission equipment and vehicles is entitled to be amortized up to 50%, and zero-emission equipment and vehicles might even be amortized up to 100%. This means that rather than an expense being spread out over time, it might be deducted in a single year. Particularly where the acquisition is financed, this might mean an amortization expense that significantly exceeds the actual cost in the year of acquisition making undistributed income too low, and in subsequent years this means that they might be making payments that they can't deduct, making undistributed income look too high.

  • OAS is increasing by 10% for those over age 75, in addition to a $500 one-time pandemic payment.

  • Funding has been allocated to provinces for early learning and child care. Hopefully Alberta takes advantage of this.

  • There are of course many provisions for CERS, CEWS, EI, temporary one-time payments during the pandemic, and other pandemic-related measures.

  • While this might not affect practice, many of our younger cohorts will be happy to know that there won't be interest on guaranteed student loans between April 1, 2021 and March 31, 2023.

  • When the Budget was first tabled, there was talk about increasing the Disability Tax Credit and taxes on luxury vehicles, but those don't appear to have made it into the Budget. Maybe they'll resurface after the election.

2 2 years ago

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