Canadian Federal Budget 2023: 5 measures that impact you
31 Mar 2023
Chrystia Freeland, Deputy Prime Minister and Minister of Finance, delivered Budget 2023 – A Made-in- Canada Plan (Budget 2023) on March 28, 2023. Budget 2023 is influenced by a range of factors, including the need to:
- address the cost-of-living pressures driven by inflation
- strengthen Canada’s public health care system (including dental)
- stay competitive in a competitive global market
We break down the measures that may impact you.
1. Grocery rebate
Budget 2023 proposes a new one-time “grocery rebate” to help offset higher grocery bills for low- and modest-income Canadians. Offered through the GST tax credit, eligible couples with two children could receive up to $467, seniors could see $225, and a single person could be eligible for $234.
According to our recent Consumer Debt Insights report, the rising cost of living has caused financial stress for Canadians, with 32% cutting back on essential spending like food and medication. If passed, this rebate may offer some relief for those struggling to make ends meet.
2. Reduce maximum lending rate
“Predatory lending” has become more common as Canadians turn to debt to meet their basic needs. Budget 2023 announces plans to reduce the maximum allowable annual percentage rate (APR) on loans to 35 per cent, down from the current 47 per cent. The federal government will also hold consultations on whether the rate should be lowered even further.
The maximum interest rate is usually charged on installment loans of $1,500 or more offered by “alternative lenders” to borrowers who don’t qualify for loans at lower rates from big banks. This new measure doesn’t apply to payday loans. If you find yourself stuck in high-interest or payday loan debt, it is important to review your options and settle your debt quickly.
3. Update on the Tax-Free First Home Savings Accounts
Budget 2023 clarifies that Canadian financial institutions may begin offering Tax-Free First Home Savings Accounts (FHSA) on April 1, 2023. First announced in Budget 2022, the FHSA will allow eligible Canadian first-time homebuyers to save up to $40,000 tax-free towards the purchase of their first home if certain conditions are met.
If you’re looking to save, we’ve compiled tips to help you stay on top of your financial goals.
4. Canada Student Grants program
Budget 2023 proposes increasing financial assistance for post-secondary students, as well as measures to help them pay off their student loan debt. Announced measures include increasing Canada Student Grants by 40% and the interest-free Canada Student Loan weekly limit to $300 (from $210) and removing the credit screening requirement for students aged 22 years or older to obtain a student grant or loan for the first time.
Some of the measures the federal government put in place to help students during the pandemic are set to expire at the end of July, and these new measures will come into effect at the beginning of August.
5. Canada Dental Benefit
Expanding healthcare, including access to dental health, is a priority in Budget 2023. The new Canadian Dental Care Plan will provide dental coverage for all uninsured Canadians with an annual family income of less than $90,000 or for single Canadians earning less than $70,000. The plan is set to begin providing coverage to eligible Canadians by the end of 2023.
While Budget 2023 introduces measures to help make life more affordable, many Canadians will continue to struggle with the rising cost of living. If you find yourself overwhelmed by debt, it might be time to talk with a professional. Our Licensed Insolvency Trustees and debt professionals are here to help you find the path to debt freedom. Book your free consultation today to find the debt solution that works for you.