How Canada’s federal budget affects benefits, taxes, and the minimum wage

From COVID-19 benefit extensions through new taxes to a bump in Old Age Security payments and a new pay floor for some minimum-wage workers, Canada’s 2021 federal budget outlines a slew of measures that will impact Canadians’ bottom lines.

READ MORE: Liberals focus on child care, e-commerce for growth after COVID-19 in new budget

The Trudeau government’s first budget since 2019 runs at whopping 724 pages and contains a number of proposals meant to both support Canadians in the ongoing COVID-19 and set the stage of what will come after.

Here are some of the highlights from the measures aimed directly at individuals:

The budget proposes to extend the maximum eligibility period for receiving the Canada Recovery Benefit (CRB) by 12 weeks, for a total of 50 weeks, up from the current cap of 38 weeks.

While the program is set to run until Sept. 25, Canadians who’ve been continuously receiving the benefit since the end of Ottawa’s first pandemic aid program, the Canada Emergency Response Benefit (CERB), would run out of financial support in June under the status quo. The CRB provides $1,000 ($900 after taxes) every two weeks to Canadians who have lost their jobs or seen their earnings decrease because of the COVID-19 pandemic and who do not qualify for Employment Insurance (EI).

For the first four of the 12 additional weeks, Canadians would continue to receive $500 per week worth of pre-tax benefits. For the last eight weeks, however, the benefit would be scaled back to a gross $300 a week, according to the budget document. And starting on July 17, 2021, all new claimants would receive the reduced $300-a-week payment.

Ottawa also wants to extend the Canada Recovery Caregiving Benefit (CRCB) by four weeks to a maximum of 42 weeks of eligibility.

Canadians who are unable to work because they must care for young children who can’t attend school or childcare centres would continue to receive payments at the current rate of $500 a week ($450 after tax) for the additional four weeks.

The budget also pledges new funds for long-term reforms to the EI system, including establishing a 420-hour qualifying threshold for regular and special benefits and establishing a 14-week minimum entitlement for regular benefits.

Ottawa is also hoping to earmark fresh funding to extend EI sickness benefits from 15 to 26 weeks, as previously announced by the federal employment ministry. The extension would take effect in the summer of 2022 and affect an estimated 169,000 Canadians, the government said.

As anticipated, the budget includes a luxury tax on new cars and private aircraft valued at more than $100,000 and boats worth over $250,000. The tax, which would come into force at the start of 2022, would be either the lesser of 20 per cent of the value exceeding the threshold of $100,000 for cars and personal aircraft and $250,000 for boats or 10 per cent of the full value of the luxury car, boat or plane.

Ottawa is following through on its promise to propose a Canada-wide speculation tax on foreign-owned residential properties.

Homeowners who are not Canadian citizens or permanent residents would have to pay an annual tax of one per cent of the value of residential real estate that is considered to be vacant or underused.

0:52 Budget 2021: Federal government introduces national vacant property tax for non-Canadians

The measure includes a requirement for foreign owners to file a declaration on the current use of their property with “significant penalties for failure to file,” the budget reads.

The tax is expected to yield $700 million in additional revenues over four years starting in 2022-23, money Ottawa says will be used to improve housing affordability for Canadians.

Ottawa is also eyeing excise duties on vapid products and a $4 increase on the tobacco excise duty for a carton of 200 cigarettes, with similar increases for other tobacco products. The tax increase on tobacco products would come into effect on Tuesday.

The budget also contains a benefit bump for seniors. Canadians on OAS who will be 75 or older as of June 2022 are in for a one-time $500 payment in August 2021, if the government gets its way.

The budget also proposed a permanent 10-per-cent increase to OAS payments for pensioners aged 75 and over starting in July of 2022. This would provide additional benefits of $766 to full pensioners in the first year and impact around 3.3 million seniors, the government said.

Ottawa is also ready to increase the minimum wage for workers in federally-regulated industries to $15 per hour. The measure will affect around 26,000 Canadians who currently make less than that in those sectors.

The policy, however, would not affect swathes of minimum-wage workers who are employed in provincially-regulated sectors.