2019 Federal Budget – Personal Tax Measures

Derek Wagar • March 20, 2019
Derek Wagar

The Liberal government’s 2019 federal budget, tabled on March 19th, proposes a few personal tax measures that may impact certain taxpayers. Here are some of the most relevant measures to note.

Canada Training Credit

The 2019 budget introduces a new refundable Canada Training Credit (CTC), intended to provide financial support for professional development and training for Canadian workers.

The CTC will allow eligible individuals to accumulate $250 per year in a notional account which can be accessed to assist in financing future training costs. The individuals will be able to accumulate up to a maximum of $5,000 over a lifetime, however any unused balance will expire at the end of the year when the individual turns 65 years old.

In order to accumulate the annual $250 credit, the individual must meet the following conditions:

  • Be a resident in Canada for the entire year;
  • File a tax return for the year;
  • Be between the ages of 25 to 65 years old at the end of the year;
  • Have qualifying working income in the year of at least $10,000 which is subject to annual indexation; and
  • Have net income for tax purposes for that year that does not exceed the top of the third bracket for the year (2019 indexed is $147,667).

The amount of the credit that can be claimed for a taxation year is the lesser of half of:

  • the eligible tuition and fees paid during that taxation year, or
  • the individual’s notional account balance for that taxation year.

The eligible tuition fees are those eligible for the tuition credit except that the educational institution must be in Canada.

The annual accumulation of the notional account will start in the 2019 taxation year with 2020 being the first year that the refundable CTC can be claimed.

In addition, there will be a new employment insurance support benefit which provides workers with up to four weeks of paid leave every four years to help with living expenses when they leave work to undergo additional training. The amount of support available will be equal to 55% of an individual’s average weekly earnings. The benefit is expected to be available in 2020.  

Registered Disability Savings Plans

A Registered Disability Savings Plan (RDSP) is intended to assist families in providing long-term financial security of a family member who is eligible for the Disability Tax Credit (DTC).

Currently, once the individual beneficiary of a RDSP is no longer eligible for the DTC, no future contributions to the RDSP can be made and no future Canadian disability saving grants and bonds can be paid into the plan. The RDSP must be closed by the end of the year following the first full year that the individual is no longer eligible for the DTC unless a medical practitioner certifies in writing that the beneficiary will again become eligible for the DTC in the future. The closure of the plan will result in repayments of government grants and bonds that were paid into the plan within the preceding 10-year period.

The 2019 federal budget proposes the life of the RDSP be extended indefinitely when the individual is no longer eligible for the DTC and removes the requirement for medical practitioner certification.

A rollover of a deceased individual’s RRIF or RRSP to the RDSP for a financially dependent infirm child or grandchild will be allowed, if the rollover takes place by the end of the fourth calendar year following the first full year of DTC ineligibility.

The above changes will apply after the 2020 year, however, the RDSPs will not be required to be closed after March 19, 2019 just because the individual beneficiary is no longer eligible for the DTC.

Digital Subscription Tax Credit

The 2019 budget proposes a new 15% non-refundable tax credit up to $500 of costs for eligible digital subscriptions per year, which will result in a maximum $75 annual credit. In order to be eligible for the credit, the subscription must be paid to a Qualified Canadian Journalism Organization that is engaged primarily in written content. Therefore, a subscription with a broadcaster will not qualify, as the content is not written.

The credit will apply to payments made from January 1, 2020 to December 31, 2024.

Contact us today for more information on how these proposed personal tax measures from the 2019 federal budget may affect you.