2022 Federal Budget: A Plan to Grow Our Economy and Make Life More Affordable

The First Home Buyer's Tax Credit amount doubles from $5,000 to $10,000, increasing the maximum non-refundable federal tax credit to $1,500 (from $750). The credit is available to first-time home buyers on eligible homes acquired on or after January 1, 2022. Both members of a couple can claim the credit as long as neither owned a principal residence in the preceding four years.

Budget 2022 introduces the First Home Savings Account concept: a new registered account combining RRSP and TFSA features for first-time home buyers. Eligible Canadians will be able to contribute up to $8,000 per year (lifetime maximum $40,000), claim a tax deduction, and withdraw funds tax-free for a qualifying home purchase. The account is expected to launch in 2023 pending legislation.

A new Multigenerational Home Renovation Tax Credit is announced in Budget 2022 to support families creating secondary suites for senior relatives or adults with disabilities. The credit will provide 15% on eligible expenditures up to $50,000, for a maximum credit of $7,500. Implementation details and effective date are to follow in subsequent legislation.

Profits from the sale of residential properties owned for less than 12 months are treated as fully taxable business income, not capital gains. This eliminates any access to the capital gains exemption or the lower capital gains inclusion rate on quick flips. Certain life events such as divorce, disability, insolvency, or the death of an owner are exempt from the flipping rule.

Budget 2022 announces a two-year prohibition on foreign commercial enterprises and non-Canadians purchasing residential property in Canada. The ban targets housing speculation by non-resident foreign nationals and corporations controlled by foreign principals. Exceptions apply for international students, temporary workers on long-term visas, and legitimate commercial transactions.

A temporary Canada Recovery Dividend imposes a one-time 15% tax on bank and life insurer profits above $1 billion for the 2021 taxation year, payable over five years. Additionally, a permanent 1.5% increase in the corporate income tax rate applies to bank and life insurer taxable income above $100 million. The measures are estimated to raise approximately $6.1 billion over five years.

The Home Accessibility Tax Credit annual limit doubles from $10,000 to $20,000 in eligible expenses, increasing the maximum non-refundable credit to $3,000. The credit supports seniors and persons with disabilities making their home safer and more accessible through renovations such as wheelchair ramps, grab bars, and walk-in bathtubs. The higher limit applies to the 2022 and subsequent tax years.

An interim Canada Dental Benefit provides up to $650 per child per year for families with children under 12 who do not have dental insurance and have family net income under $90,000. The benefit is delivered as a direct payment application through the CRA and covers two six-month periods in 2022-2023. A permanent dental care plan is targeted for all Canadians by 2025.