A Glimpse into the Canadian Budget 2023-24

Recently, Canadian government introduced Canada’s federal budget. The budget is introduced every year so the government can ensure control, accountability, and planning in the spending of public money. The budget is usually made by “Department of Finance”, and it is first presented in the House of Commons. The budget outlines the government’s revenue projections, spending plans, and fiscal policies for the upcoming fiscal year. The budget is a critical component of the government’s overall economic policy and is subject to parliamentary scrutiny and debate.

The word “budget” does not appear in the Canadian Constitution Act, 1867, which is the primary constitutional document of Canada. However, the Constitution Act, 1867 does provide the federal government with the power to make laws related to taxation and spending, which are the main components of a budget. Section 91 of the Constitution Act, 1867 sets out the exclusive federal powers, which include the power to levy and collect taxes, duties, and customs, and to borrow money on the public credit. Section 92 sets out the exclusive provincial powers, which include the power to levy direct taxes within the province.

The financial year of the government of Canada runs from 1st April to 31st March.

Glimpse of Budget of 2023-24

“A Made-in-Canada Plan: Strong Middle Class, Affordable Economy, Healthy Future”.

An additional expenditure of $70 billion over next 6 years for Made in Canada plan will raise Canada’s deficit to $40.1 Billion, up by projected $30.6 Billion.

Inflation Targeted Relief

The new Grocery Rebate will deliver targeted inflation relief for 11 million low- and modest-income Canadians and families who need it most, with up to an extra $467 for eligible couples with two children; an extra $234 for single Canadians without children; and an extra $225 for seniors, on average.

Relief through Tax and Policies will crack down hidden consumer fees known as “junk fees” that inflate the overall cost of a product or service. Through this the Liberals say they will be going after telecom roaming charges, event and concert fees, excessive baggage fees, and unjustified shipping fees.

Excise duty on Alcohol decreased to 2% from 6%. This measure would provide support to alcohol producers, and would directly benefit owners and shareholders in the alcohol production industry.

Automatic tax filing will be done for more low-income Canadians, to ensure they can easily file their tax returns in order to receive the benefits they are entitled to.

Launching the new Tax-Free First Home Savings Account on April 1, 2023 to help save for the first home.

Direct, tax-free payments of up to $1,300 per child over two years to eligible families to cover dental expenses for their children under 12.

A tax-free payment of $500 to help low-income people who are struggling with the cost of rent.

A ten per cent increase in Old Age Security (OAS) payments for seniors who are 75 and older, which is providing over $800 in new supports to full pensioners in the first year.

To control affordability crises, rebate is being offered through the GST tax credit system. Eligible couples with two children will receive a payment of up to $467. Senior citizens would receive $225, while a single person would receive $234. It will be benefit 11 million low income and modest- income Canadians. This will boost the revenue for the companies in retail industry and food processing.

Healthcare Industry

To strengthen Canada’s universal public health care system, Budget 2023 delivers $198.3 billion to reduce backlogs, expand access to family health services and ensure provinces and territories can provide the high quality and timely health care Canadians expect and deserve.

$4.4 billion for Canadian dental care plan for uninsured Canadians with family income less than $90,000 by end of this year. Government also plans to spend $250 million over three years setting up an “Oral Health Access Fund” to address gaps in access for vulnerable populations and those living in rural and remote communities.

$158.4 million over three years to support the implementation and operation of the new 988 suicide prevention hotline. $144 million over five years, starting in 2023-24, to Health Canada for the Substance Use and Addictions Program to fund community based supports, including safer supply, supervised consumption sites, and other evidence-based health interventions

All these initiatives will boost the whole healthcare sector. Companies in this sector will see increase in its revenue as government will support companies which will develop and manufacture new healthcare product.

Clean Economy based Initiatives

The world’s leading economies are currently moving at an unprecedented rate to combat climate change, restructure their economies, and create tomorrow’s net-zero sectors. At the same time, countries around the world want to change their economic reliance from autocracies to solid, trustworthy democracies.

These two changes together provide Canada a substantial economic potential.

Budget 2023 proposes to provide $500 million over ten years to the Strategic Innovation Fund to support the development and application of clean technologies in Canada. The Strategic Innovation Fund will also direct up to $1.5 billion of its existing resources towards projects in sectors including clean technologies, critical minerals, and industrial transformation.

Budget 2023 proposes to provide $165.4 million over next seven years to Transport Canada to establish a Green Shipping Corridor Program to reduce the impact of marine shipping on surrounding communities and ecosystems.

Other Key Factors

Financial Assistance to Ukraine- Budget 2023 provides Ukraine with an additional loan of $2.4 billion for 2023, which will be provided via the IMF Administered Account for Ukraine.

Tax on share Buybacks- Budget 2023 announces that the proposed tax would apply as of January 1, 2024 to the annual net value of repurchases of equity by public corporations and certain publicly traded trusts and partnerships in Canada. A business would not be subject to the tax in a year if its gross repurchases of equity were less than $1 million.

Modernizing Financial Sector- Budget 2023 provides Ukraine with an additional loan of $2.4 billion for 2023, which will be provided via the IMF Administered Account for Ukraine.

Security Measures of Airline Industry- In Airline industry, $1.8 billion of new money provided to Canadian Air Transport Security Authority (CATSA) over 5 years to speed up processing time and strengthening security measures.

Government Cuts (Specially in public service)- Reducing spending on consultants and travel by 15% it will save $7.1 billion over 5 years. And 3% spending reduction across all government department by $7 billion over 4 years.

To tackle Foreign Interference such as by China and other nation, Government is pledging 13.5 Mn in over 5 years to start a “National Counter-Foreign Interference Office”.

Government will also amend the Criminal Code to stamp out predatory lending that targets Canadians in perilous financial situations with high interest rate loans, by lowering the amount of interest that can legally be charged, to 35 per cent. Master Card and Visa will also charge lower fee in interchange for small business up to 27% which will save $1 billion over next 5 years.

The responsible plan outlined in Budget 2023 aims to protect the environment, strengthen Canada’s public health care system, expand access to dental care for Canadians, and support a number of other important priorities that are important to Canadians.

Canada is in an admirable financial situation in comparison to its international peers because to years of prudent fiscal management. The government is also able to take proactive action thanks to this responsible stewardship, providing aid to those in need and making crucial investments in the long-term prosperity of Canadians.