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As most of you have probably heard or were anticipating, the Liberal government introduced a new budget just a few weeks ago, according to Justin Trudeau's campaign promises, focused on alleviating financial burden to Canada's middle class.
Here is the Budget 2016 on the Government of Canada's website which includes fancy tables and graphics.
Here are just some of the pertinent changes that may affect Generation Y Canadians. Seems to be a lot of changes for students. I kind of feel like governments just sort of rename things and move things from one pile to another pile but that's just my and my political cynicism. That's a lot of money wasted to rename things to change policy etc. (remember how the TFSA got pumped up to $10,000 only to be clawed back to $5500 a few months later?) but I guess governments can be inefficient.
Canada Child Benefit
The CCTB (Canada Child Tax Benefit) and the Universal Child Benefit (UCC) was replaced by the Canada Child Benefit (CCB)- Who comes up with these names anyways? It is a nontaxable benefit that is paid monthly and is based on your family income. If your family income is more than $200,000 you are not eligible to receive the Canada Child Benefit. The Government of Canada included a handy and fancy Canada Child Benefit calculator here. If you have a child under age 6, and your annual family income is $120,000, you will receive annually $4940 which is nothing to sneeze about.
There will be no more income splitting for children under the age of 18. This was a popular program under the Conservative government. It will be no more.
No more fitness or arts credits. That's right, your children don't need anymore extra curricular activities and you will not be rewarded for encouraging your children to be active. It won't be completely eliminated until 2017 though.
Middle Class Tax Reductions
The second personal income tax rate was reduced in December 2015 from 22% to 20.5% which represents a savings of $330 annually for a single individual in the tax bracket of $45,282 and $90,563. If you are a couple, it is just over $500 of savings annually. Personally I don't think this is very much, it represents two cups of take out coffee at $3 per week haha.
But I'll take it. I guess it's better than nothing.
Changes for Students
There seems to be tons of changes for students in this new Budget
- Student grants are pumped up, will provide access to education without students having to take on more debt. For low income families, students that would have received $2000 for a student grant will now receive $3000.
- Loan repayment threshold is loosened. If you make less than $25,000 you won't have to have the pressure of paying back your student loans. Previously it was just under $21,000.
- The education and textbook tax credit was awesome but it will be eliminated as of 2017. I liked the education and textbook tax credit, it helped a lot while i was working part-time and going to school full-time. Good thing I got my education in before the government made these changes!
- The government is pumping more money into Co-Op opportunities so that students will get more work experience instead of simply just being over-educated with textbook knowledge and low practical and application knowledge. Which sounds like a good thing and might help the overeducated and underemployed younger millennial population, like this unemployed millennial lawyer who lost her trial against her law school. She felt that she was mislead about the educational opportunities available after her schooling. I think that anyone who goes for further education are not guaranteed a great career or job afterwards, just like those who spend $30,000 to $100,000 on their MBA's.
Changes for People in Real Estate
Apparently, the government will crack down on loose mortgage lending practices. Moneysense explains that there is a new Bail in Regime where the banks will no longer be lax about foreclosures. The risk with this new budget will be shifted from taxpayers to the banks, which results in increased costs and increases costs to loan mortgage applicants mortgages.
For even more detailed review and assessment of the proposed changes with the new Budget, check out Moneysense's article on 25 Ways the Federal Budget Affects You.
Readers, what do you think of the new budget?
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