2023 Federal Budget Highlights

By David Young

The Finance Minister, Chrystia Freeland, has tabled the 2023 federal budget aimed at tackling the affordability crisis in the country.

One of the main highlights of the budget is the introduction of the Tax-Free First Home Savings Account, which allows financial institutions to offer accounts to Canadians from April 1. In the 2022 Budget, the federal government committed to introducing a Tax-Free First Home Savings Account, providing first-home home buyers the ability to save $40,000 on a tax-free basis. Similar to an RRSP, contributions will be tax-deductible and withdrawals non-taxable.

The budget also addresses the lack of supply in the housing market by reallocating funds from the National Housing Co-Investment Fund's repair stream to its new construction stream. Additionally, the budget includes an extra $4 billion to implement an Housing Strategy that will address housing challenges in urban, rural, and northern Indigenous communities.

The government is also taking steps to remove regulatory barriers for homebuyers from diverse communities seeking access to alternative financing products. This is part of the government's efforts to move away from the financialization of housing in Canada. The budget aims to crack down on predatory lending practices by amending the Criminal Code to lower the amount of interest legally allowed to be charged on loans to 35% from 47% and limiting payday lenders to charging no more than $14 per $100 borrowed. 

The federal government also plans on publishing a “Code of Conduct” guideline to protect Canadians who are struggling to make mortgage payments due to recent increase in interest rates. Under the guidelines the government will attempt to ensure that federally regulated financial institutions, like banks, provide fair and equitable access to relief measures in exceptional circumstances. Measures may include temporary extensions of mortgage amortizations beyond 25 years, adjusting payment schedules, or authorizing lump-sum payments.

To help offset the rising cost of food, the budget includes a new grocery rebate program worth $2.5 billion that will benefit 11 million low- and modest-income Canadians and families via a one-time payment. Seniors will receive $225, while single Canadians without children will receive up to $234, and couples with two or more children will receive up to $467 on average. The budget also pledges to work to reduce "junk fees," unexpected hidden additional fees on various services, such as internet overage charges, roaming fees, airline charges, and concert tickets.

The budget also includes small updates to the transportation sector, in an effort to increase the reliability of the supply chain infrastructure in Canada.

The budget proposes doubling the maximum employment deduction for tradespeople's tool expenses and aims to expedite essential private sector projects, including those involving clean electricity and critical minerals, to grow a clean economy. Businesses that use Clean Technology and Clean Hydrogen Investment Tax Credits will be required to pay a total compensation package that equates to the prevailing wage.

Overall, the budget aims to address various challenges in Canada, from affordable housing to food insecurity and environmental sustainability.