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  • Peter Wiesner

2 of 3 New Federal Government programs need Applications in 2022 and Beyond. Paperwork, paperwork!


The New "Canada Dental Benefit" for Those Children 12 and Under


Kids under the age of 12 with a family income of less than $90,000 will receive some sort of a dental benefit.


The program would cover expenses retroactive to Oct. 1, 2022 and is being rolled out for a December 1, 2022 start once the up coming Bill is passed and Assent is received.


According to the government, this benefit would provide payments up to $650 per child per year, depending on family income.

For example:

  • $650 would be provided per child if the family’s adjusted net income is under $70,000;

  • $390 would be provided per child if the family’s adjusted net income is between $70,000 and $79,999; and

  • $260 would be provided per child if the family’s adjusted net income is between $80,000 and $89,999.

The first phase of dental care will provide eligible parents or guardians with "direct, up-front tax-free payments to cover dental expenses." However, in order to access the benefit, parents or guardians need to apply through the Canada Revenue Agency (CRA) and attest that:

  • Their child does not have access to private dental care coverage;

  • They will have out of pocket dental care expenses for which they will use the benefit; and

  • They understand they will need to provide receipts to verify out of pocket expenses occurred if required.

Program Changes 2023 to 2025

In the budget of 2022, the program announced will expand to under-18 year old children, seniors 65 and older, and people living with a disability in calendar 2023.

By 2025, it would be available to all Canadian families with incomes of less than $90,000 annually, with no co-pays for anyone earning less than $70,000 annually.

The 2022 federal budget earmarked $5.3 billion to Health Canada over the next five years to oversee implementation of the dental care plan.

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Double GST Credit For Six Months


The total annual value of the GST Credit depends on family size and income. For the July 2022 through June 2023 benefit year, eligible people can receive up to a maximum of:


$467 for singles without children;

$612 for married or common-law partners;

$612 for single parents; plus

$161 for each child under the age of 19.


The GST Credit is targeted to those with family net income of less than $39,826 in 2021 as they receive the full Credit amount. Above this income level, the GST Credit amount is gradually lowered as income increases. The full phasing out depends on family type – for instance, it is fully phased out at about $49,200 for a single person without children, and at about $58,500 for a couple with two children.


The GST Credit is indexed to inflation on an annual basis using Consumer Price Index data, as reported by Statistics Canada. For the July 2022 to June 2023 benefit year, the value of the GST Credit grew by 2.4 per cent based on the average Consumer Price Index over the October 2020 to September 2021 period.


However, because these increases are based on the inflation rate from the prior year, the sharp rise in inflation in 2022 is not yet reflected in the GST Credit payments that Canadians are currently receiving.


This will assist low income College and University students, and low income single workers that earn under $23.65 an hour working full time 40 hours a week with 2 weeks vacation.


The government is proposing to double the GST Credit for six months, which would deliver $2.5 billion in additional spending to the current GST Credit recipients.

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Canada Housing Benefit - $500 One Time


A one time top up in the amount of $500 Canada Housing Benefit, for renters with adjusted net incomes below $35,000 for families, or $20,000 for individuals, by the end of the year once the legislation is passed and receives Royal Ascent. Also, the method of delivery of the payments is also going to be announced on a later date re monthly/quarterly?


The proposed funding cost of this announcement totals $1.2 billion. It is believed that approximately 1.8 million low-income renters, including students, would be eligible for this support.


This is another attestation-based program that the CRA will deliver, so long as applicants have filed their 2021 tax return, are paying at least 30 per cent of their adjusted net income on shelter, and are paying rent for their own primary residence in Canada.


The one-time payment will not be automatic and would require an application.


The Canada Revenue Agency (CRA) would need to verify an applicant’s age, income, and residency before the CRA distributes the payment. Applicants would also need to have filled out their 2021 tax return and attest that they:


a) Are paying at least 30% of their adjusted net income on shelter;


b) Are paying rent for their own primary residence in Canada, which would include the address of the rental property, the amount of the rent paid in 2022, and the landlord’s contact information;


and


c) Consent to the Canada Revenue Agency verifying their information to confirm eligibility.


This one-time top-up of the Canada Housing Benefit would also not reduce other federal income-dependent benefits, such as the Canada Workers Benefit, the Canada Child Benefit, the Guaranteed Income Supplement, and the Goods and Services Tax Credit.


A Poll


From the Fraser Institute - the preference for more spending while avoiding the costs (i.e. higher taxes) was highlighted in a May 2022 poll, which asked Canadians whether they support new national programs.


The results of the poll indicated widespread support for national daycare (69 per cent), pharmacare (79 per cent) and dental care (72 per cent).


However, the poll also asked respondents if they support the new programs (and spending) if they were linked with GST/HST hikes to pay for them. The support plummeted from 69 per cent to 36 per cent for national daycare, 79 per cent to 40 per cent for pharmacare, and 72 per cent to 42 per cent for dental care.


Observations on Poll


Interesting observation about the Poll is if it's no cost to me sure I am in, if I have to pay more in taxes then maybe not such a good idea to expand government services.


Observations on New Programs


These programs add more spending into the economy when inflation is running at a all time high in Canada. The Federal Government said it did scale them back in order to not impact inflation as much. Thus, the Bank of Canada indirectly needs to raise interest rates to combat this spending. So one step forward and two steps backwards is what these policies do.


Conclusion


If the Federal government was determined to these programs in their vision then they should have found the 2% savings from other programs or $8.6 Billion and redirect the resources as the current Federal spending will reach $434.3 billion this year. However, piling onto the debt and causing some of the interest rate hikes for new home owners, car buyers, and other borrowers is the end result of these announcements. Decisions have consequences.


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If any questions or comments arise, please contact Peter at 905-898-3355 or send an email to peter@taxhome.net


Date: September 14, 2022


Copyright © 2022 by Peter Wiesner CPA


All Rights Reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or in any means – by electronic, mechanical, photocopying, recording or otherwise – without prior written permission.






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