The Canadian federal government's spring economic update introduces several measures designed to impact personal finances, including changes to the Canada Pension Plan, air travel compensation, and financial crime regulations.
Effective January 1, 2027, the CPP contribution rate will decrease from 9.9% to 9.5% for the base CPP. This change is projected to save employees earning $70,000 annually approximately $133 per year, with equivalent employer savings. The government states this adjustment will not affect the CPP's sustainability.
To address the backlog of over 96,000 air travel passenger complaints, a neutral third-party dispute resolution organization will be engaged, based on models from the U.K. and E.U. This initiative aims to create a more effective regulatory regime for passenger compensation.
A permanent tax exemption for Employment Ownership Trusts is proposed, facilitating employee purchase of corporate shares and offering succession planning. This builds on a temporary $10-million capital gains tax exemption introduced in 2023.
Employment Insurance supports for seasonal workers will be extended by up to five additional weeks, lasting until October 2028. This extension aims to address seasonal employment gaps and is estimated to cost $356.2 million over five years.
Proposed amendments to mortgage insurance rules will enable insurers to offer multi-unit loan packages for residential properties with five to eight units. Additional flexibilities will also be introduced for three-unit and four-unit housing developments to encourage financing for the "missing middle" construction.
The Disability Tax Credit application process will be streamlined, with expanded eligibility for medical practitioners who can certify conditions such as Alzheimer's, autism, and dementia. This initiative is expected to provide $345 million in tax relief over six years.
In a move to combat financial crimes, the federal government plans to ban cryptocurrency ATMs, citing their use by scammers. Measures will also tighten regulations for currency exchanges and digital payment services, with increased funding allocated to the Financial Crimes Agency and the Public Prosecution Service of Canada.