With all the announcements the federal government made prior to the official presentation of its 2024-2025 budget, it was fair to wonder what was left to be revealed in the budget itself, which was tabled on April 16 by Finance Minister Chrystia Freeland. Still, a number of items were attention-worthy, including the big question that was still up in the air at that point: how big would the deficit be?  

The answer is now clear, for the fiscal year 2023-2024, the deficit will be $40 billion; a year from now it should be $39.8 billion and in five years, $20 billion. These figures should result in a debt to gross domestic product (GDP) ratio – a key indicator for the government – that will go from 42.1% in 2023-2024 to 41.9% next year and 39.0% by 2028-2029. 

Beyond just the size of the deficit, however, this latest budget includes a number of interesting changes. Here are the top ten. 

What we learned when the budget was tabled 

Among the measures that weren’t announced in the past few weeks, the following stand out:

1. Increase in capital gains tax  
   On June 25, 2024, the capital gains “inclusion rate”, i.e. the portion subject to income tax, will increase from 50% to 66.6%. For individuals, this new rate will apply to capital gains in excess of $250,000 realized within a single year; for a company, the new rate will apply to all capital gains. This announcement may cause some concern among entrepreneurs and individuals with substantial investments in assets that generate capital gains: equities, income properties, second homes, etc. If you are in this situation, you still have a few weeks to talk to your advisor and see if this future increase in your taxes should prompt you to contemplate certain decisions and define an action plan. Note, however, that investments held in registered accounts, such as registered retirement savings plans (RRSP), registered education savings plans (RESP), tax-free savings accounts (TFSA) or first home savings accounts (FHSP), are not affected by this change. 

2. Measures for SMBs  
   On the other hand, the budget introduces a new incentive for small and medium-size business (SMB) owners who, when selling their business, will benefit from a capital gains inclusion rate of about 33.3%, i.e., half the new rate of 66.6%. This incentive rate will apply up to a lifetime maximum of $2 million in capital gains per individual, and will be in addition to any available capital gains deduction. It will come into force on January 1, 2025. 

3. A helping hand for students  
   If you are in school, or have children who are, take note that the government is planning to enhance its student grant and interest-free loan programs, for an additional total of about $1.1 billion starting this year. This measure should make it possible to assist more than 1.2 million students. As well, there is a budget proposal to help students pay their rent by modernizing a formula used since the 1990s to calculate the cost of shelter, in order to reflect today’s costs. Under this new approach, additional housing assistance will be provided to about 79,000 people. 

4. An RESP without having to ask for it 
   The registered education savings plan (RESP) is a program to accumulate tax-sheltered capital for a child's post-secondary education. This program offers substantial subsidies, including the Canada Learning Bond paid to eligible families, even those who haven’t made any contributions, once they have opened an RESP account. Starting in 2028, the government will automatically open an RESP for every eligible child. 

5. EV purchasing incentives maintained  
   If you are concerned to see incentives for the purchase of electric or plug-in hybrid vehicles disappear – as is going to happen in Quebec, for instance – note that, at the federal level, these will be maintained for at least another two years. These incentives can amount to $5,000 per vehicle. 

6. Towards a national drug insurance plan  
   In its 2024-2025 budget, the government has announced an investment of $1.5 billion over five years to launch a national universal pharmacare plan, with the first phase covering contraceptives and diabetes medications. Draft legislation for this program was tabled last February. 

7. A new benefit for people who are disabled  
   The budget provides for the creation of a new benefit for people who are disabled, with an initial envelope of $6.1 billion over six years. The maximum amount of the benefit could total $2,400 per year for eligible low-income individuals aged 18 to 64. The measure, which will affect about 600,000 people, is slated to come into force in July 2025. As well, starting with the 2024 taxation year, the government plans to expand the list of eligible deductions for people with disabilities. 

What we already knew before the budget was tabled 

Of the $36 billion or so in new spending in the budget, almost half had already been announced by the government in recent weeks. So here is what we already knew: 

8. Measures for first-home buyers  
   Housing affordability has caught the government’s attention, and they are planning to: 

   • increase the Home Buyers’ Plan (HBP) withdrawal limit from $35,000 to $60,000 and extend the repayment grace period by three years for withdrawals made between January 1, 2022, and December 31, 2025; 

   • allow first-time home buyers to get mortgages amortized over 30 years, even if their down payment is less than 20% – the current limit is 25 years. 

9. For more child care spaces  
   The budget also provides $1 billion for low-cost loans and grants to develop child care services. As well, student loan forgiveness will be extended to early childhood educators in rural and remote areas. 

10. 2.4 billion for artificial intelligence  
    Finally, if you work or invest in the cutting-edge field of artificial intelligence, you will no doubt be interested to know that the government plans to invest no less than $2 billion to develop infrastructure, promote AI adoption in sectors such as health care, manufacturing and agriculture, and help SMBs increase their productivity by deploying artificial intelligence. 

To understand everything that could impact your personal finances, talk to your advisor, who will be able to give you some insight and make recommendations.