Federal Budget 101

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The 2021 Budget, titled “A Recovery Plan for Jobs, Growth, and Resilience,” was the first federal budget to be released prior to the pandemic.

Skilled trades highlighted in the 2021 federal budget with an emphasis on apprenticeships.

By Ron Coleman

The 2021 federal budget has been tabled but not enacted at the time of writing. NDP leader Jagmeet Singh has said that he wouldn’t do anything that would send the country into an election. Debate and modifications to the budget are the norms and with the NDP support, it will get legislated.

Anything that doesn’t get spent before the next federal election (on or before October 16, 2023) may be changed. If you are in the market for a personal-use, luxury car that costs over $100,000 or a boat for over $250,000; buy now as a luxury tax is coming. It is also important to look at the timing within the budget. Some initiatives start immediately, some are delayed, and some programs are being expanded or phased out over a longer time frame.

Budget highlights

These uncertain times will continue. We do know that the federal and provincial governments have incurred significant debt throughout the pandemic and will incur more while trying to minimize COVID-19’s impact.

We need to start looking to the future and do everything possible to ensure we survive —both personally and in our businesses. The feds are throwing a lot of money at stimulating the economy and much of it will benefit contractors.

Highlights from the budget include expanding the Canada Emergency Wage Subsidy (CEWS), expanding the Rent Subsidy Program, new hiring incentives through the Recovery Hiring Program, support for skilled tradespeople, and a focus on green energy.

Need for skilled labour

Apprentices are desperately needed in our industry. The shortage of skilled labour is a major problem for all of us. The Apprenticeship Service program is for first-year apprentices in the construction and manufacturing Red Seal trades. Employers can receive up to $5,000 for all first-year apprenticeships to cover salaries and training. This incentive will be doubled to $10,000 for hiring those underrepresented, including women, racialized Canadians, and persons with disabilities. This program is expected to start this year.

Jobs Creation

The Canada Recovery Hiring Program was designed to assist employers that continue to experience qualifying declines in revenues relative to before the pandemic. The proposed subsidy would offset a portion of the extra labour costs employers take on as they reopen.

Employers eligible for CEWS will generally be eligible for the hiring subsidy; provided that an eligible employer’s decline in revenues exceeds the revenue-decline threshold for a qualifying period. Its subsidy in that qualifying period would also have to be equal to its incremental remuneration, multiplied by the applicable hiring subsidy rate for that qualifying period.

The hiring subsidy rate will be 50 per cent from June 6 to Aug. 28, 40 per cent from Aug. 29 to Sept. 25, 30 per cent from Sept. 26 to Oct. 23, and 20 per cent from Oct. 24 to Nov. 20.

Eligible employers would claim the higher of the Canada Emergency Wage Subsidy or the new proposed subsidy. This should make it easier for businesses to hire new workers as the economy re-opens.

CEWS is currently set at 75 per cent and will be extended to July 3 at that rate. For the balance of July, it will drop to 60 per cent. For the first four weeks of August, the rate will be 40 per cent and from Aug. 29 to Sept. 25 to 20 per cent. Price your future work with these changes in mind. Ensure you can revise prices if the work gets extended.

Canada Emergency Rent Subsidy and Lockdown Support are also being phased out. The maximum rent subsidy of 65 per cent will be extended to July 3 and will drop to 60 per cent for the balance of July, 40 per cent for the first four weeks of August and 20 per cent from Aug. 29 to Sept. 25.

Small Business and Growth

The Canada Technology Adoption Fund will help many construction businesses looking to improve efficiency. Eligible businesses will receive micro-grants and access to zero-interest financing to help offset the costs of going digital and be able to access support from digital trainers within a network of up to 28,000 Canadians.

The Canada Small Business Financing Program will increase annual financing by $560 million. Eligibility to this financing will be increased and will permit lending against intellectual property and start-up assets and expenses.

The government expects to lower “interchange” fees so that small businesses will pay similar credit card fees compared to large businesses and protect existing reward points.

The Community Revitalization Fund will provide $500 million over two years, starting in 2021-22, to the regional development agencies for community infrastructure.

Accelerated depreciation will be allowed for investment in new technologies and capital projects acquired from the budget day and are in use by the end of 2023. It doesn’t apply to all classes of assets so check with your accountant to see which classes of acquisitions are excluded.

Women and Early Learning and Child Care

Starting in 2021-22 up to $146.9 million over four years will be available to strengthen the Women Entrepreneurship Strategy. Women entrepreneurs would have greater access to financing, mentorship, and training.

Climate Action and a Green Economy

This is an issue that is particularly relevant to plumbing and HVAC contractors. It has become apparent that clean air circulation is critically important to our health. The budget proposes to provide $4.4 billion on a cash basis ($778.7 million on an accrual basis over five years, starting in 2021-22, with $414.1 million in future years), to the Canada Mortgage and Housing Corporation (CMHC) to help homeowners complete deep home retrofits through interest-free loans worth up to $40,000. The program would be available by summer 2021 and support retrofits for up to 200,000 households. Retrofits should include plumbing and HVAC issues and are relevant to all residential units.

The budget proposes to provide $5 billion over seven years to the Net Zero Accelerator. This funding would allow the government to provide up to $8 billion of support for jobs and projects that will help reduce domestic greenhouse gas emissions.

“Carbon Capture, Utilization and Storage” (CCUS) is part of Canada’s efforts to minimize our carbon footprint. The program is designed to support research and development that would improve the commercial viability of carbon capture, utilization, and storage technologies. The budget proposes to provide $319 million over seven years, starting in 2021-22, with $1.5 million in remaining amortization to Natural Resources Canada.

You need to ensure your customers are aware of these changes. As contractors, you should be supplying some of the equipment listed.

The budget proposes to expand classes 43.1 and 43.2 of the capital cost allowance to include pumped hydroelectric storage equipment, electricity generation equipment that uses physical barriers or dam-like structures to harness the kinetic energy of flowing water, wave or tidal energy, active solar heating systems, ground source heat pumps, geothermal energy systems that are used to heat water for a swimming pool, equipment used to produce solid and liquid fuels (e.g. wood pellets and renewable diesel) from specified waste material or carbon dioxide, a broader range of equipment used for the production of hydrogen by electrolysis of water, and equipment used to dispense hydrogen for use in hydrogen-powered automotive equipment and vehicles.

The expansion of classes 43.1 and 43.2 applies in respect of property that is acquired and that becomes available for use after April 18, 2021, where it has not been used or acquired for any purpose before.

Young Canadians

Financial assistance for students will include doubling of the Canada Student Grants for two more years, waiving interest on federal student loans until March 31, 2023, enhancing repayment assistance so that no person earning $40,000 per year or less will need to make any payments on their federal student loans, and extending disability supports for recipients of student financial assistance whose disabilities are persistent or prolonged.

To ensure youth and students can access valuable job skills and experience, the government is proposing to invest $721 million over the next two years and provide over 100,000 new job opportunities.

Additionally, $708 million over five years, starting in 2021-22, would create 85,000 work-integrated learning placements.

I have focused on the areas of the budget that are most relevant to plumbing and HVAC contractors. There are many more elements to the budget, with more programs related to youth, women, minorities and indigenous peoples. I just can’t go over all 700-pages of the budget.

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