From the CPP to the Disability Tax Credit, Ottawa included measures that will give a little boost to Canadians’ pocketbooks
that was expected to focus on big-picture plans to strengthen investment and economic growth, Ottawa also included several measures that will give a little boost to Canadians’ pocketbooks.
The federal government had already unveiled the most costly of those initiatives, including an $11.7-billion temporary increase of the GST credit for lower-income Canadians and a $2.4-billion short-term gas tax holiday to soften the impact of high oil prices linked to the U.S.-Israel war against Iran. The Liberals proposed a small cut to how much working Canadians and employers pay into the Canada Pension Plan.
The change would reduce the rate for base contributions to 9.5 per cent from the current 9.9 per cent, starting in 2027. This will result in slightly lower payroll deductions for employees.
For example, someone with an annual income of $70,000 would save $133 a year, the government said. Employers, which are required to contribute half of the base rate, and self-employed Canadians, who must pay both the employee and the employer shares, would also see savings. Overall, collective contributions to the CPP would shrink by $3-billion a year, according to the economic update.
The base CPP is the original component of the public pension plan, which aims to replace one quarter of workers’ average earnings in retirement. The proposed reduction wouldn’t affect additional contributions that Ottawa introduced between 2019 and 2024 to increase future retirement income for workers. Even with lower base contributions, the CPP will remain well funded, Ottawa said.
It cited a recent actuarial review of the plan that found base contributions could be 0.69 of a percentage point lower than they currently are and still satisfy the plan’s long-term financial obligations. The government’s proposal would lower that rate by a smaller amount equivalent to 0.4 of a percentage point.
A cut to base contribution rates became possible because investment income has been higher than expected for the base CPP, Michael Leduc, chief public affairs officer at the Canada Pension Plan Investment Board, said in a memo to staff viewed by The Globe and Mail. The memo also said the CPPIB does not expect the change to alter capital available to its investment programs.
The federal government plans to temporarily extend the repayment grace period for the Home Buyers’ Plan, which allows Canadians to withdraw up to $60,000 from their Registered Retirement Savings Plan to buy or build their first home. Under the HBP, qualifying homebuyers can withdraw funds from their RRSPs tax-free but must put that money back within 15 years.
Failure to replenish one’s RRSP account by a minimum amount every year turns any missing repayments into taxable income, just as a regular RRSP withdrawal would do. The repayment countdown clock usually starts two years after the first HBP withdrawal, but Ottawa had previously extended that grace period to five years for withdrawals made between 2022 and 2025. The Carney government is now proposing to keep the grace period at five years for withdrawals made until the end of 2028.
The Carney government is also proposing a few tweaks to make it easier for Canadians with severe physical and mental-health disabilities to apply to the Disability Tax Credit, a non-refundable tax credit. Advocates for people with disabilities have long criticized the application process for the DTC, saying it is excessively complex and that eligibility criteria exclude many Canadians with debilitating conditions.
In addition to providing a small tax break, eligibility for the DTC is required to access a slew of federal supports, including the Registered Disability Savings Plan and the recently created Canada Disability Benefit. The Liberals plan to streamline DTC applications for people who have been diagnosed with certain long-lasting conditions, including cystic fibrosis, Alzheimer’s disease, schizophrenia and severe autism spectrum disorder. The change would apply for the 2026 tax year. Tony Keller: The takeaway from the spring fiscal update?
Your answer will have to wait until the fall budget The government also wants to expand the list of professionals who would be allowed to certify eligibility for the DTC and allow medical practitioners such as physiotherapists and occupational therapists to be able to certify more conditions. Rabia Khedr, national director of Disability Without Poverty, a grassroots advocacy group, called the proposals “a start” that will reduce paperwork for some DTC applicants.
But Ms. Khedr said the tweaks won’t make the Canada Disability Benefit accessible to a significantly larger pool of Canadians with disabilities.
“The most obvious fix was missing: automatic DTC eligibility for people already receiving provincial or territorial disability social assistance,” Ms. Khedr said via e-mail. How much your retirement will cost vs. how much you’re making right nowHow much your retirement will cost vs. how much you’re making right now
United States Latest News, United States Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Three newest MPs enter House of Commons after byelectionsNational Newswatch: Canada's most comprehensive site for political news and views.
Read more »
Redblacks sign Canadian Vilain to three-year dealThe Ottawa Redblacks signed Canadian defensive lineman Luiji Vilain to a three-year contract Monday. Ottawa acquired Vilain’s rights last week from the Toronto Argonauts.
Read more »
Man killed, three injured in Nova Scotia crash; Rogers offers voluntary departuresA fatal two-vehicle crash in Shubenacadie, Nova Scotia, left one dead and three injured. Meanwhile, Rogers offers voluntary departure packages to roughly 10,000 employees. Other news includes Saskatchewan medical students advocating for pharmacare, a Waterloo MPP pushing for accountability in sexual assault cases, and a Chinese student accused of photographing U.S. military planes.
Read more »
Rescue Efforts Continue After Deadly Train Collision in Indonesia, Three Still TrappedRescuers in Bekasi, Indonesia, are working to free three trapped passengers after a long-distance train collided with a stationary commuter train, killing at least seven and injuring 81. The accident occurred at Bekasi Timur Station, with the impacted car being a women-only section. Authorities are investigating the cause, including a possible rail disruption after another train struck a stalled taxi nearby. This incident highlights ongoing safety concerns in Indonesia’s aging rail network.
Read more »
Suarez shines as Red Sox blank Blue Jays 5-0 in opener of three-game seriesWith one month of the regular season complete, the Toronto Blue Jays and Boston Red Sox have both spent time in the American League East Division basement.
Read more »
Three injured in crash involving Toronto police carThree people are in hospital, two with serious injuries, after a collision involving a Toronto police car in Etobicoke.
Read more »