On April 7, 2022, the Deputy Prime Minister and Finance Minister, the Honourable Chrystia Freeland, presented “Budget 2022: A Plan to Grow Our Economy and Make Life More Affordable”, to the House of Commons.

No changes were made to personal or corporate tax rates, nor to the inclusion rate on taxable capital gains. There is no new wealth tax.

Some highlights include:

  • $6 billion over five years to increase the capabilities of the Canadian Armed Forces, and $500 million this year in military aid to Ukraine. 
  • $5.3 billion in funding over five years, to expand access to dental care, as part of the new Liberal-NDP pact
  • $7.5 billion in green initiatives as part of Canada’s goal of reaching net-zero emissions by 2050, though many were extensions of existing initiatives.
  • $3 billion for infrastructure to grow the “critical mineral” industry, including extracting nickel, lithium, and cobalt (used in batteries and electronics).


A.   Personal Measures

  • Several proposals target housing affordability. A Tax-Free First Home Savings Account and a refundable Multigenerational Home Renovation Tax Credit will be introduced. Existing home-related tax credits will also be enhanced.
  • Residential real estate sales within a year of purchase will generally be fully taxable, no capital gains and not eligible for the principal residence exemption.

B.   Business Measures

  • Access to the small business deduction will be enhanced for corporations with taxable capital between $10 million and $50 million.
  • Anti-avoidance measures targeting private corporations attempting to avoid the refundable tax regime for investment income will be introduced.
  • Tax benefits for flow-through shares will be enhanced for critical mineral exploration and removed for oil, gas and coal.

C.   International Measures

  • Digital platform operators will be required to disclose details of the activities of Canadian participants in the digital economy.

D.   Sales and Excise Tax (GST/HST)

  • All new residential property assignment sales will be subject to GST/HST.
  • A sales tax will be introduced for vaping products.

E.   Retirement Plans

  • The fair market value of RRSP and RRIF assets will be provided to CRA annually.

F.    Charitable Measures

  • The disbursement quota will be increased for many charities.
  • New rules will be introduced to allow charities to work with other organizations to fulfill their charitable objectives.

G.   Previously Announced Measures

  • Intention to proceed with previously announced measures, such as the immediate expensing CCA provisions, the luxury items tax, requirements for electronic interaction with CRA and a full review of the employment insurance system.


A. Personal Measures

(New) Tax-Free First Home Savings Account (FHSA)

  • Have to be age 18 to open account (starting in 2023)
  • Can contribute up to $8,000/year which is deductible – does not carry over
  • $40,000 max for lifetime
  • Has to be used to purchase a home within 15 years of opening account
  • There are mechanisms in place to transfer from an RRSP to FHSA or from the FHSA to an RRSP if the amount is not used to purchase a home

Home Buyers’ Plan

  • Still available up to $35,000 but it has to be repaid within 15 years
  • Cannot use both the HBP and the FHSA to buy a home

Home Buyers’ Tax Credit

  • Credit to increase to $1,500 (previously $750)
  • Applies to acquisitions of a qualifying home made on or after January 1, 2022.

Home Accessibility Tax Credit

  • A non-refundable tax credit that provides relief of up to $3,000 on eligible home renovations (15% of expenses of up to $20,000).
  • Applies to expenses incurred in the 2022 and subsequent taxation years.

(New) Multigenerational Home Renovation Tax Credit

  • New refundable tax credit to support constructing a secondary suite for an eligible person to live with a qualifying relation.
  • An eligible person would be a senior (65+ years of age at the end of the tax year when the renovation was completed) or an adult (18+ years of age) eligible for the disability tax credit.
  • A qualifying relation would be 18+ years of age and a parent, grandparent, child, grandchild, brother, sister, aunt, uncle, niece or nephew of the eligible person (which includes the spouse or common-law partner of one of those individuals).
  • This tax credit would provide tax relief of 15% on up to $50,000 of eligible expenditures, providing a maximum benefit of $7,500.

Effective Date

  • 2023 and subsequent taxation years, in respect of work performed and paid for and/or goods acquired on or after January 1, 2023.

(New) Residential Property Flipping Rule

  • Concern that flippers are not reporting their income as business income and are instead claiming capital gains – or even principal residence exemptions
  • Profits arising from a property that is owned less than 12 months would be deemed to be business income
  • There are some exceptions (death, household addition (birth or care for elderly), separation, personal safety (abusive relationship or domestic violence), disability, illness, employment change, insolvency, involuntary disposition)
  • If the income is deemed to be business income, there would be no principal residence exemption
  • Where a property is owned more than 12 months, it is still a question of fact whether the disposition is business income, capital gains or eligible for the primary residence exception.

(New) Labour Mobility Deduction for Tradespeople

  • Would allow up to $4,000 per year to temporarily relocate for work
  • Must be 150km closer to the job site and must be for a minimum of 36 hours
  • Can claim one round trip, temporary lodging (as long as they maintain a permanent residence), and meals
  • Applies to the 2022 and subsequent taxation years.


(New) Medical Expense Tax Credit (METC) for Surrogacy and Other Expenses

  • Medical expenses of a surrogate mother could be eligible expenses for the taxpayer
  • Only medical expenses incurred in Canada would be eligible
  • Applies to expenses incurred in the 2022 and subsequent taxation years.

(New) Dental care

  • Starting for children under age 12 in 2022, expanding to children under age 18, seniors and disabled individuals in 2023, with full implementation by 2025.
  • Full coverage would be provided for families with under $70,000 of annual income and no coverage would be provided for families with income of $90,000 or more.
  • Additional details of the program are yet to be released

Other Personal Measures

  • The Incentives for Zero-Emission Vehicles program that has offered purchase incentives of up to $5,000 for eligible vehicles since 2019 would be extended until March 2025. Eligibility would be broadened to include more vehicle models, including more vans, trucks and SUVs.

B.   Business Measures

Small Business Deduction

  • The $500,000 small business deduction limit is reduced by $1 for every $80 of taxable capital in excess of $10 million, such that the limit will be more gradually reduced, and only eliminated where taxable capital equals or exceeds $50 million (previously $15 million).
  • Applies to corporate taxation years beginning on or after April 7, 2022.

No changes are proposed to the parallel reduction to the business limit where adjusted aggregate investment income exceeds $50,000.

(New) Anti-Avoidance Measures – Corporate Investment Income

  • Private corporations which are not CCPCs, but are factually controlled by one or more Canadian persons, will now be subject to the same investment income rules as a CCPC.
  • An anti-avoidance rule will also apply this treatment to any corporation falling outside the technical rules, where it is reasonable to consider that one or more transactions were undertaken to avoid these rules.
  • This measure will generally apply to taxation years that end on or after April 7, 2022, with possible deferral where an arm’s length sale pursuant to a written purchase and sale agreement was entered into prior to that date.

Flow-through Shares

  • Flow-through share agreements allow corporations to renounce or “flow through” specified expenses to investors, who can deduct the expenses in calculating their taxable income.
  • A Mineral Exploration Tax Credit equal to 30% (up from 15%) of specified mineral exploration expenses incurred in Canada and renounced to flow-through share investors also applies to some flow-through shares.
  • Applies to minerals used in the production of batteries and permanent magnets, both of which are used in zero-emission vehicles, or are necessary in the production and processing of advanced materials, clean technology, or semiconductors
  • Applies to expenditures renounced under eligible flow-through share agreements entered into after April 7, 2022 and on or before March 31, 2027.

Elimination of Flow-through Shares for Oil, Gas and Coal

  • Eliminated the flow-through share regime for oil, gas and coal activities for agreements entered into after March 31, 2023.

Other Business Measures

Several business measures proposed in Budget 2022 target specific sectors. These include the following:

(New) Real Estate

  • Budget 2022 announces a federal review of housing as an asset class, including the examination of potential changes to the tax treatment of large corporate players that invest in residential real estate. Further details on the review will be released later in 2022, with potential early actions to be announced before the end of the year.
  • Budget 2022 announces that anti-money laundering and anti-terrorist financing requirements will be extended to all businesses conducting mortgage lending in Canada.

Green Economy

  • New purchase incentive program for medium- and heavy-duty Zero-Emission Vehicles (ZEVs). Transport Canada will work with provinces and territories to develop and harmonize regulations and to conduct safety testing for long-haul zero-emission trucks.
  • Investment tax credit of up to 30%, focused on net-zero technologies, battery storage solutions and clean hydrogen.

(New) Financial Sector

  • A one-time 15% tax on bank and life insurance groups, based on taxable income in excess of $1 billion for taxation years ended in 2021, would be imposed for the 2022 taxation year and payable over five years. For subsequent years, a 1.5% additional tax would apply to income of such corporate groups in excess of $100 million.

Combatting Aggressive Tax Planning

  • (New) Budget 2022 proposes to provide $1.2 billion over five years for CRA to expand audits of larger entities and non-residents engaged in aggressive tax planning; increase both the investigation and prosecution of those engaged in criminal tax evasion; and to expand its educational outreach.
  • The General Anti-avoidance Rule (GAAR) is proposed to be amended to allow CRA to challenge transactions that affect tax attributes (e.g. asset costs, losses carried forward, paid-up capital, capital dividend account) that have not yet become relevant to the computation of tax. This specific measure overrides a 2018 Federal Court of Appeal decision that held that GAAR could only be applied when the tax attribute was utilized to reduce income taxes.

C.   International Measures

(New) Ban on Residential Real Estate Purchases by Non-residents

  • Foreign commercial enterprises and people who are not Canadian citizens or permanent residents canno acquire non-recreational, residential property in Canada for a period of two years.
  • Does not apply to refugees and people authorized to come to Canada while fleeing international crises, certain international students on the path to permanent residency or individuals on work permits who are residing in Canada.

D.   Sales and Excise Tax (GST/HST)

GST/HST Health Care Rebate

  • Hospitals can claim an 83% rebate and charities and non-profit organizations can claim a 50% rebate of the GST (or federal component of the HST) that they pay on inputs used in their exempt supplies.
  • The 83% hospital rebate will now apply to eligible charities and non-profit organizations that provide health care services similar to those traditionally performed in hospitals.
  • To be eligible for the expanded hospital rebate a charity or non-profit organization must deliver the health care service with the active involvement of, or on the recommendation of, a physician, or a nurse practitioner.
    • Applies to rebate claim periods ending after April 7, 2022 in respect of GST/HST paid or payable after that date.

(New) Excise Tax (GST) on Vaping Products

  • New excise taxon vaping products that include either liquid or solid vaping substances (whether or not they contain nicotine), with an equivalency of 1 ml of liquid = 1 gram of solids (excluding those already subject to the cannabis excise duty framework).
  • A federal excise tax rate of $1 per 2 ml, or fraction thereof, for the first 10 ml of vaping substance, and $1 per 10 ml, or fraction thereof, for volumes beyond that.
  • It is unclear when this will come into effect.

100% Canadian Wine Exemption

  • Per the World Trade Organization (WTO) and the settlement reached in July 2020, the 100% Canadian wine excise duty exemption repeal is effective on June 30, 2022.

E. Retirement Plans

(New) Reporting Requirements for RRSPs and RRIFs

  • Financial institutions will be required to annually report to CRA the total fair market value of property held in each RRSP and RRIF at the end of the calendar year.
  • Applies to the 2023 and subsequent taxation years.

F. Charitable Measures

(New) Annual Disbursement Quota for Registered Charities

  • Increase in the Disbursement Quota (DQ) rate from 3.5% to 5% for the portion of property not used in charitable activities or administration that exceeds $1 million.
  • Where a charity cannot meet its DQ, it may apply to CRA and request relief.
  • Applies to charities in respect of their fiscal periods beginning on or after January 1, 2023.

Charitable Partnerships

  • A charity may provide its resources to organizations that are not qualified donees, provided that these disbursements further the charity’s charitable purposes and the charity ensures that the funds are applied to charitable activities by the grantee.

To be considered a qualifying disbursement, the charity will need to meet mandatory accountability requirements, including, for example:

  • conducting a pre-grant inquiry sufficient to provide reasonable assurances that the charity’s resources will be used for the purposes set out in the written agreement, including a review of the identity, past history, practices, activities and areas of expertise of the grantee;
  • monitoring the grantee, which would include receiving periodic reports on the use of the charity’s resources, at least annually and taking remedial action as required; and
  • publicly disclosing on its annual information return information relating to grants above $5,000.

G. Previously Announced Measures

Budget 2022 confirms the government’s intention to proceed with the following previously announced tax and related measures, as modified to take into account consultations and deliberations since their release:

  • Legislative proposals relating to the Select Luxury Items Tax Act (a tax on certain automobiles, boats and aircrafts) released on March 11, 2022.
  • Legislative proposals released on February 4, 2022 in respect of the following measures: