On March 19, 2019, the federal government tabled its budget, entitled

Investing in the Middle Class

. The big themes in this pre-election budget were making home ownership more affordable and investments in skills training.

This is clearly a

pre-election budget

. Nothing too controversial. No incentives to small businesses, professionals or high-income earners. Budget 2019 includes numerous spending initiatives--$22.8B in new spending over the next 6 years. The federal budget deficit is projected to be $14.9B in 2018-19, and $19.8B in the 2019-20 fiscal year.

The budget did

not

, however, include a commitment to undertake a comprehensive review of the tax system to make Canada’s personal and corporate income tax regime more competitive, as was recommended by numerous industry groups and

Highlights

Modernizing the Home Buyers’ Plan

 – Currently, the Plan allows first-time home buyers to withdraw up to $25,000 from their Registered Retirement Savings Plan (RRSP) to purchase or build a home, without having to pay tax on the withdrawal. The withdrawal must be repaid over a 15-year period or included in the individual’s income if not repaid. Budget 2019 proposes to increase the Plan withdrawal limit to $35,000.

First Time Home Buyer Incentive

 – The Incentive is a shared equity mortgage that would give eligible first-time homebuyers the ability to lower their borrowing costs by sharing the cost of buying a home with the Canada Mortgage and Housing Corporation. The Incentive would provide funding of 5% or 10% of the home purchase price if household income below $120,000 and the purchase price not more than 4x household income – the loan is to be repaid once the property is sold (no further details provided on repayment terms or conditions). This program is expected to be operational by September 2019, and more details will be released later this year.

Postsecondary students

– The budget provides a major break on interest costs for Canada Student Loans and Canada Apprentice Loans. Starting in 2019-2020, the interest rate on the overwhelmingly popular floating rate version of student loans falls from the prime rate plus 2.5 percentage points to prime. Fixed-rate loans fall to prime plus two percentage points from prime plus five points.

Canada Training Credit

 – This new non-taxable credit would help Canadians pay for training fees. Every year, eligible workers between the ages of 25 and 64 would accumulate a credit balance of $250 per year, up to a lifetime limit of $5,000.Starting in 2020, Canadians would be able to apply their accumulated Canada Training Credit balance against up to half the cost of training fees at colleges, universities and eligible institutions providing occupational skills training.

Registered Disability Savings Plan (RDSP) improvement

 – To open an RDSP, an individual must be eligible for the Disability Tax Credit (DTC). When a beneficiary no longer qualifies for the DTC, the RDSP rules can require that the plan be closed, and that grants, and bonds be repaid to the Government of Canada. Budget 2019 proposes to eliminate the requirement to close an RDSP when a beneficiary no longer qualifies for the DTC. Doing so will allow grants and bonds that otherwise would be required to be repaid to the Government to remain in the RDSP.

Of course, the highlights above are only some of the many measures contained in the budget. Please note that these changes are proposals until passed into law by the federal government.