In the early hours following the release of the 2023 federal budget in Canada on March 28, two industry groups, including the Conference for Advanced Life Underwriting (CALU) and the Insurance Bureau of Canada (IBC) issued statements highlighting their perspectives on matters addressed, including anti-avoidance rules for intergenerational business transfers, wealth taxes, general anti avoidance rules (GAARs) and the proposed national flood insurance program.
CALU first points to section 84.1 of the Income Tax Act, which they say created unfair tax penalties for business owners who choose to sell their business to a family member rather than an arm’s length buyer. “Budget 2023 addresses this outstanding matter and includes proposed changes to the existing rules so that the exemption from section 84.1 applies only to genuine intergenerational business transfers,” they write. “These proposed changes are to apply to transfers that occur on or after January 1, 2024, with the result that intergenerational transfers finalized before the end of 2023 will continued to be governed by the existing rules.”
They note that the Alternative Minimum Tax (AMT) rules have changed, increasing the AMT rate from 15 per cent to 20.5 per cent and increasing the AMT exemption from $40,000 to approximately $173,000 (in 2023). They also draw attention to rules increasing the inclusion rate for benefits and securities donated to charity.
Concluding, however, CALU notes that its submissions to the Department of Finance regarding Registered Retirement Savings Plan (RRSP) and Registered Retirement Income Fund (RRIF) minimum payment rules received no comment in the budget. Notably, the budget also makes no mention of any effort to ensure wider availability of employer sponsored dental care programs, now that the Canadian Dental Care Plan has come into being.
Over at the IBC, meanwhile, president and CEO Celyeste Power calls the plan to create a national flood insurance program “a major step forward, and critical to protecting homeowners across the country, even those at high risk of flooding,” she states. “Canada now joins the UK, and most other G7 countries in announcing a government-backed insurance program in collaboration with Canada’s property and casualty insurance industry.”
Although the budget does mention collaboration – between Public Safety Canada, the Canada Mortgage and Housing Corporation and with the Department of Finance – it says the effort will include offering reinsurance through a federal Crown corporation and a separate insurance subsidy program. “People need to be able to access affordable property insurance so that natural disasters don’t lead to unnecessary financial disaster,” the budget states. “Working with the insurance industry, more needs to be done to protect Canadians from the costs that come with recovering from disasters and make insurance affordable.”
