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Financial planning tips

March 20, 2019

First-time home buyers to benefit from federal budget

Ottawa plans more help for first-time home buyers, a tax break for seniors with lower incomes and money for skills training. Pharmacare? Not yet.

There’s help for Canadians at all stages of life in the March 19, 2019 federal budget.

There’s home-ownership help for first-time buyers. For working Canadians, there’s a skills-training benefit. And for older Canadians, there’s an increase in the exemption for the Guaranteed Income Supplement and improved protection for workplace pensions. There’s also automatic application for Canada Pension Plan (CPP) benefits at age 70, to include those Canadians who are eligible for CPP but don’t know it.

While the government is taking steps toward it, a national pharmacare plan appears to be still some years away.

A boost into home ownership

Anyone hoping to buy their first home will benefit. Here’s how:

  • A new First-Time Home Buyer Incentive will let qualified home buyers apply for a “shared-equity” mortgage from the Canada Mortgage and Housing Corporation (CMHC). This would lower their mortgage payments in exchange for giving the CMHC a piece of their home equity. A borrower would repay the loan when the house is sold. Look for more details later this year.
  • An increase in the maximum first-time home buyers can borrow from their RRSPs, from $25,000 to $35,000.

Skills training for working Canadians

Working Canadians will get help retraining for a changing workplace with the new Canada Training Benefit. This is a plan that will credit Canadians with a non-taxable $250 a year ($5,000 lifetime). The benefit would pay for up to half the cost of approved courses or training programs. To be eligible, you have to be between 25 and 64 and earning less than $150,000 a year. The government also proposes an Employment Insurance Support Benefit. This would pay up to four weeks’ EI benefits to people taking time off work for training.

Help for pensioners

The budget proposes to clarify pension law to better protect pensioners when their former employers go out of business and shut down their pension plans. It would also make the application for CPP automatic if you have reached 70 without applying for it yet.

There’s also help for Canadians with lower incomes. The Guaranteed Income Supplement (GIS) lifts the income of retired Canadians with annual incomes less than $18,240 for singles and $24,096 for couples. The budget proposes to increase the amount they can earn and still receive the GIS, from $3,500 to $5,000. The government would extend the exemption to self-employment income as well as employment income.

First steps toward pharmacare

In preparation for the possible introduction of a national pharmacare plan, the budget proposes to set up a Canadian Drug Agency Transition Office. The agency will negotiate drug prices with manufacturers on behalf of all the provinces and territories and will begin work on a national formulary, which is a list of prescription drugs that a plan pays for. The government also proposes to invest up  to $500 million a year on a strategy to help Canadians access high-cost drugs for rare diseases. 

Look for the final report from the pharmacare advisory council later this spring.

  • Are you dreaming of owning your own home? The First-Time Home Buyer Incentive and other measures in the budget may encourage you while you’re saving toward your dream. For help making a plan to save, talk to your advisor or find one near you.

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