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Are you thinking of buying a new sports car, yacht, or private jet in the near future? Better do it before December 31st
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April 19, 2021 • • 59 minutes ago • • Read 6 minutes • • Join the conversation 
A new tax will apply to the sale of luxury cars and private aircraft with retail prices above $ 100,000 and boats above $ 250,000. Photo by Bugatti
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The Liberals today unveiled their huge 724-page federal budget, the first in over two years, which included a multitude of tax measures that affect individual taxpayers. Here are some of the highlights.
Additional weeks of COVID benefits
When the Canada Emergency Response Benefit (CERB) ended last year, it was replaced with three new benefits: the Canada Recovery Benefit (CRB), the Canada Recovery Caregiving Benefit (CRCB), and the Canada Recovery Sickness Benefit (CRSB). As of March 2021, around 3.5 million Canadians received income support through the Restoration Benefits and EI.
In February 2021, the government increased the number of weeks available under the CRB and CRCB by 12 weeks to a total of 38 weeks and the number of weeks with regular EI services by 24 weeks to a maximum of 50 weeks. It also doubled the number of weeks available under the CRSB from two weeks to four weeks.
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In today’s budget, the government proposed providing up to 12 additional weeks of CRB, a maximum of 50 weeks, with the first four being paid at $ 500 per week and the remaining eight weeks at a lesser of $ 500 per week. The budget also included extending the CRCB for an additional four weeks to a maximum of 42 weeks at a cost of $ 500 per week in the event that childcare options, particularly those who support children, are not available.
Tax treatment of COVID benefit refunds
In late 2020, the CRA sent out 441,000 “educational letters” warning people that they might not be eligible for the CERB. The letters were sent to individuals who, according to the CRA, “have not been able to confirm … an employment and / or self-employment income of at least US $ 5,000 in 2019 or in the 12 months prior to the date of their application”.
Individuals who had to repay the CERB were asked to return it in 2020 (versus 2021) as the CERB amounts are taxable and will be shown on the T4A tax information slip for inclusion in the year in which they were received. If the CERB was not returned until 2021, the CERB recipients would have had to pay tax on the entire CERB amount received in 2020 and then request a deduction for that amount on their 2021 tax return. While for many this is just a cash flow or time difference, for others who may not have enough income to benefit from the withdrawal in 2021, it could have resulted in many Canadians effectively paying taxes on CERB funds they make ultimately had to give back.
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Fortunately, the government realized that this harsh treatment would be unfair for many Canadians, and as a result, today’s budget proposed a law change to allow individuals to claim a deduction for repayment of a COVID benefit amount for the year in The benefit amount was received and not the year in which the repayment was made. This option is available for repaid benefit amounts at any time before 2023.
For these purposes, the COVID-19 benefits include: the CERB, EI Emergency Response Services, Canadian Student Emergency Services, CRB, CRSB, and CRCB.
If you’ve recently made a refund but have already submitted your 2020 return for the year you received the benefit, you can ask the rating agency to adjust your return for that year.
Increase in OAS for Canadians 75+
Older seniors may get extra cash this summer based on Monday’s budget. The government announced it would make a one-time payment of $ 500 in August 2021 to OAS retirees who will be 75 years of age or older as of June 2022. She also suggests increasing the regular OAS payments for retirees aged 75 and over by $ 75 as of July 2022, 10 percent on an ongoing basis. This would increase benefits for around 3.3 million seniors, offer full retirees an additional $ 766 in benefits in the first year, and be inflation-linked in the future.
Improve access to tax credit for the disabled
The Disability Tax Credit (DTC) is a non-refundable tax credit that is designed to account for the effects of various undetectable disability-related costs. For 2021, the value of the federal loan is $ 1,299. Provincial and territorial loans are also available. To be eligible for the DTC, a person must have a certificate confirming that they have “severe and persistent impairment of physical or mental functions”.
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Earlier this month, the CRA’s Disability Advisory Committee published its second report, which included a series of recommendations to improve the eligibility criteria for the DTC in the areas of mental functioning and life sustaining therapy. In order to allow more families and people with disabilities to access the benefits of the DTC, including the ability to open a Registered Disabled Savings Plan (RDSP), the budget suggests updating the list of everyday mental functions for the one Evaluation is carried out by the DTC.
According to the applicable rules, the mental functions necessary for everyday life include: memory, problem solving, goal setting and judgment (taken together) and adaptive functioning. The budget suggests expanding this list to include a wider range of mental functions required for everyday life, including: attention, focus, memory, judgment, perception of reality, problem solving, goal setting, regulation of behavior and emotions, verbal and non-verbal Understanding and adaptive functioning.
In addition, the budget suggests recognizing more activities to determine the time spent on life sustaining therapy and reducing the minimum frequency of therapy required to qualify for the DTC.
New luxury taxes on cars, boats and planes
Are you thinking of buying a new sports car, yacht, or private jet in the near future? If so, it is best to shop by December 31, 2021 to avoid the new luxury tax.
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“If you were lucky enough, or smart enough, or hardworking enough, to spend $ 100,000 on a car or $ 250,000 on a boat, congratulations!” reads Monday’s budget document on the introduction of the new luxury tax. “Thank you for contributing a little of this happiness to healing the wounds of COVID and investing in our future collective prosperity. Those who can afford to buy luxury goods can afford to pay a little more . “
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The 2021 federal budget will maintain the COVID-19 benefits – but the CRB will be fewer in July
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The new tax will take effect January 1, 2022 and will apply to sales of luxury cars and private aircraft with retail prices above $ 100,000 and boats above $ 250,000. The tax is calculated at less than 20 percent of the value above these thresholds, or 10 percent of the full value of the luxury car, boat, or private plane.
When purchasing or leasing the car, boat, or airplane, the seller or rental company is responsible for transferring the full amount of federal tax owed, regardless of whether the merchandise was purchased, financed, or leased in full over a period of time.
Incidentally, the GST / HST applies to the total sales price including the new luxury tax.
Jamie.Golombek@cibc.com
Jamie Golombek, CPA, CA, CFP, CLU, TEP is the director of tax and estate planning at CIBC Private Wealth Management in Toronto.
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