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The federal government’s spring economic update includes a number of new measures intended to lower costs for Canadians that will also affect personal finances, mortgage rules and banking.
Among the measures proposed are changes to the Canadian Pension Plan contribution rate, clearing the air travel compensation dispute backlog, and measures tackling financial crimes and cryptocurrencies.
Here’s some of the ways the economic statement will be felt by your wallet.
The economic update says the Liberals will introduce legislative amendments to the Canada Pension Plan that would reduce the contribution rate in the base CPP from 9.9 per cent to 9.5 per cent.
The change, which would take effect Jan. 1, 2027, would translate into annual savings of about $133 for an employee earning $70,000 a year, with equivalent savings for their employer, the Liberals say.
Overall, the proposal says the reduction would reduce total contributions across about 16 million contributors by about $3 billion annually, but would not impact the sustainability of the CPP, according to the government.
“Importantly, this can be achieved without deteriorating governments’ fiscal positions as the CPP is financed entirely through its own source of revenues and assets and liabilities do not enter federal or provincial balance sheets,” the economic update says.
The update says the Liberals intend to engage a “neutral, third-party dispute resolution organization based on a proven model in the U.K. and E.U.” to clear the backlog of air travel passenger complaints submitted to the Canadian Transportation Agency.
The backlog is estimated to be more than 96,000 complaints, a record high. Past budgets have allocated millions of dollars to the CTA to try and reduce the backlog, but those funds have expired without much progress.
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“Beyond the backlog, the government also intends to develop a simpler and more effective regulatory regime, so that rules are clearer and passengers are fairly and more quickly compensated when air travel does not go as planned,” the update says.
The Liberals are seeking to make permanent a tax exemption for the Employment Ownership Trust, which allows employees to benefit from a corporation’s shares held by a trust.
That trust can be used to facilitate the purchase of a business by its employees and provide additional succession options.
The $10-million capital gains tax exemption was introduced in 2023 on a temporary basis for the next three tax years “to incentivize” the creation of such trusts, meaning it will expire after this year unless it’s extended.
The government says Employment Ownership Trusts “empower Canadian workers to buy into their businesses.”
The fiscal update seeks to extend Employment Insurance supports for seasonal workers in 13 economic regions, by providing them with up to five additional weeks of regular benefits for a maximum of 45 weeks.
The additional supports were first introduced in 2018 to address gaps faced by workers in between seasons, and are set to expire in October of this year. The new extension would last until October 2028.
The Liberals estimate the extension will cost $356.2 million over five years.
The Liberals are seeking to amend mortgage insurance rules to allow insurers to offer multi-unit loan packages on residential properties between five and eight units, which the government says will promote competition and choice for lenders.
Another proposed amendment would increase flexibilities for insurers to offer products to borrowers building three-unit and four-unit housing, which the Liberals say will address the “missing middle” of growing triplex and fourplex development and unlock financing for those properties.
The government plans to launch a 30-day consultation period for these amendments before moving ahead.
The economic update puts forward a series of measures to improve access to the Disability Tax Credit, which the government says will provide $345 million in tax relief over the next six years and $86 million per year ongoing.
The Liberals want to streamline the application process for individuals with a formal diagnosis of certain long-lasting medical conditions, including Alzheimer’s disease, legal blindness, autism, dementia, Down syndrome and intellectual disabilities.
The list of medical practitioners who can certify eligibility for the tax credit would also be expanded to include podiatrists for certain impairments, and broaden the types of impairment that can be certified by physiotherapists, speech-language pathologists and occupational therapists.
Provincial or territorial public guardians and trustees would also be qualified to certify the tax credit for adults in their care under certain rules.
The economic update proposes $42.5 million in new spending over five years to the Canada Revenue Agency to administer the changes.
The federal government plans to ban cryptocurrency ATMs as part of a suite of measures in its spring economic statement targeting financial crimes.
The government says scammers use the roughly 4,000 cryptocurrency ATMs across Canada to defraud victims, while criminals use them to convert the proceeds of crime.
The document says Canadians will still be able to buy cryptocurrencies from “brick-and-mortar” businesses.
The financial update outlined other measures to tackle criminal use of businesses that provide services like currency exchanges and digital payments. They include new powers around ministerial directives, stricter rules on registration and more criminal record checks for those businesses.
The government is allocating $352.7 million over five years, and $82.1 million in ongoing funding, to the previously announced Financial Crimes Agency.
The government introduced legislation to create the new specialized federal law enforcement agency Monday.
To support the new agency, the government is also allocating additional funding for the Public Prosecution Service of Canada, which will get $46.2 million over five years and $11.5 million in ongoing funding. The Department of Finance will receive $19.6 million over five yeas, with $1.5 million ongoing.
Canada’s financial intelligence agency will get $17.9 million over four years in new funding for “the detection, deterrence, and disruption of the illicit financing that supports and perpetuates extortion and fentanyl trafficking in Canada and to advance a technology and artificial intelligence roadmap,” the update says.
—with files from the Canadian Press
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