2018 Federal Budget Overview
Author: Sound Choices
February 28, 2018
The content in the article below is meant for Canadian investors only.
Budget 2018 Prioritizes Economic Equality, Opportunity & Diversity
Economy by the Numbers
- Income tax revenues are projected to increase to $208.6 billion. This includes personal, corporate and non-resident tax revenue
- Net debt is projected to be $736.7 billion in 2017-2018, and growing to $831.5 billion by 2022-2023
- GDP growth is expected to change little from Budget 2017, ranging from 1.6% in 2019 to 1.8% in 2022
- Nominal GDP growth is projected to range from 3.5% in 2019 to 3.8% in 2022
- Inflation is projected to average 1.9%, no change from Budget 2017
- Canadian-to-U.S. dollar exchange rate is expected to average US$0.796/C$1.00
- Crude oil prices will average US$57 per barrel
- 3-month treasury bill rate will average 1.9%
- 10-year government bond rate will average 2.7%
- Unemployment rate will average 6.1%
The theme of the 2018 Federal Budget announced February 27 is focused on Equality and Growth, and carries forward the 2017 theme of “a Strong Middle Class”.
This budget has definitely taken an ‘issues-based’ approach with very little change to legislation. There are five key areas this budget addresses:
1. Growth of our economy with a strong emphasis on empowering our Canadian workforce in all of its diversity, with particular attention to gender equality. According to the 2018 budget, there is a 31% gap in the median income between men and women. The Government will be introducing legislation to close this gap.
2. Progress in the Innovation and Skills Plan with a focus on recognizing, supporting, and funding research within Canada. This budget proposes to provide $2.6 billion over five years to support innovation in Canada. This is a continuation of the Innovation and Skills Plan announced in the 2017 budget. Budget 2018 also introduces a Women Entrepreneurship Strategy to further encourage women in positions of leadership. This includes additional funding through organizations such as Business Development Canada (BDC) and Export Development Canada (EDC) to the tune of over $1.4 billion over three years.
3. Advancement for a sustainable future both inside and outside of our borders, tackling such topics as environment, gender equality, national pharmacare, and enhancements to security in a digital environment.
4. Reconciliation with Indigenous peoples through investments in infrastructure and skills training. This budget projects a total of $4.1 billion over six years, including 2017.
5. Equality within the Canadian workforce is also a priority, with particular attention paid to gender gaps between men and women, is a lens the Government has used throughout this document with regards to proposed and implemented legislation within the four key areas: growth, progress, advancement, and reconciliation.
This 2018 budget overview addresses tax measures for individuals and businesses such as:
- Working Income Tax Benefit (rebranded as the Canada Workers Benefit), effective for the 2019 tax year
- Psychiatric service dogs, effective after 2017
- Deductibility of QPP enhanced contributions, effective for tax year 2019
- Retroactive eligibility for Child Benefits, effective retroactively to July 2016
- New reporting requirements and penalties for trusts, effective 2021
- Passive investment income taxation for small business, proposed to begin after 2018
To read the full overview, download the PDF.