2022 Federal Budget: How the Changes Affect Medical Doctors

On April 7, 2022, the Minister of Finance unveiled the 2022 Federal Budget titled “A Plan to Grow Our Economy and Make Life More Affordable (Budget 2022).” This article provides a concise overview of the tax announcements from the Federal Budget 2022 and other Federal/Provincial Tax Changes from 2021/22 that are pertinent to physicians. 

Key Highlights from the 2022 Federal Budget: 

• Tax-Free First Home Savings Account (FHSA): Introduced in Budget 2022, the FHSA is a new registered account designed to assist individuals in saving for their first home. Starting in 2023, individuals can contribute up to $8,000 annually and a total of $40,000 throughout their lifetime to the FHSA. Contributions are deductible, and any income earned within the FHSA is not taxed. Withdrawals for a qualifying first home purchase are tax-free, but any other withdrawals are taxable. It’s important to note that unused annual contribution limits cannot be carried forward, and individuals cannot utilize both a home buyers’ plan (HBP) withdrawal and an FHSA withdrawal for the same qualifying first home purchase. 

• Home Buyers’ Tax Credit: The proposed change in Budget 2022 is to double the Home Buyers’ Tax Credit from $5,000 to $10,000, offering up to $1,500 in tax relief for eligible home buyers. 

• Residential Property Flipping Rule: Profits from the sale of residential properties owned for less than 12 months will be considered business income. However, certain exceptions apply, such as in cases of death, household addition, separation, personal safety concerns, disability/illness, employment changes, insolvency, or involuntary dispositions. 

• Medical Expense Tax Credit for Surrogacy and Other Expenses: The Medical Expense Tax Credit (METC) will be expanded to include medical expenses related to surrogate mothers, sperm donors, ova donors, and embryo donors. This also covers the reimbursement of medical expenses for these individuals and fees for acquiring donated human sperm or ova. This change is applicable to expenses from 2022 onwards. 

• Multigenerational Home Renovation Tax Credit: A new refundable credit is proposed for eligible expenses related to creating a secondary dwelling unit for seniors or individuals with disabilities. The credit value is 15% of the lesser of the eligible expenses or $50,000. 

• Home Accessibility Tax Credit: The annual expense limit for this credit, which is for renovations to enhance accessibility for qualifying individuals, is proposed to be increased from $10,000 to $20,000. 

Other Notable Federal/Provincial Tax Changes: 

• Ontario Staycation Tax Credit: This temporary credit for 2022 encourages Ontario residents to explore their province and supports the tourism and hospitality sectors. Residents can claim 20% of eligible 2022 accommodation expenses, with a maximum claim of $1,000 for individuals or $2,000 for families. 

• Ontario Jobs Training Tax Credit: This temporary, refundable personal income tax credit offers up to $2,000 per year, covering 50% of eligible tuition expenses for 2021 or 2022. 

• Small Businesses Air Quality Improvement Tax Credit: This proposed refundable credit of 25% is for eligible air quality improvement expenses incurred by small businesses. It covers expenses from September 1, 2021, to December 31, 2022, for HVAC system upgrades and the purchase of HEPA filter devices.