Personal Finance 101

2022 Federal Budget Highlights

On April 7, Canada’s Finance Minister, the Honourable Chrystia Freeland, tabled the 2022 Federal Budget. While the budget includes measures that may impact individuals and businesses, we’ll focus on key proposals affecting individuals.

Please note these measures are only proposals until passed by Parliament, so at this time they’re still conditional.

Personal income tax rates and tax brackets

There were no proposed changes to personal income tax rates. Tax brackets and other amounts have been indexed (i.e., moved higher) by 2.4% to recognize the impact of inflation. The table below shows federal personal income tax rates and brackets for 2022. 

The following table shows the highest 2022 marginal federal tax rates for various types of income. 

Tax-Free First Home Savings Account

Budget 2022 proposes to create the Tax-Free First Home Savings Account (FHSA) to help individuals save for their first home. FHSA contributions are deductible and income earned in an FHSA are not subject to tax. Qualifying withdrawals from an FHSA to purchase a first home are not taxable.


To open an FHSA, you must be a resident of Canada and at least 18 years old. In addition, you must not have lived in a home that you owned either:

  • at any time in the year the account is opened, or
  • during the preceding four calendar years.

You can only make non-taxable withdrawals for one property in your lifetime. Once you’ve made a non-taxable withdrawal to purchase a home, you must close your FHSA within a year from the first withdrawal.


The lifetime contribution limit is $40,000, subject to an annual contribution limit of $8,000 that becomes available starting in 2023. Unused contribution room cannot be carried forward, so if you’ve contributed less than $8,000 in a given year, your annual limit will remain $8,000 in future years.

Withdrawals and transfers

Amounts withdrawn from your FHSA to make a qualifying first-home purchase are not subject to tax. Amounts withdrawn for other purposes are taxable.

You may transfer funds from an FHSA to a registered retirement savings plan (RRSP) any time before the year you turn 71, or to a registered retirement income fund (RRIF). Transfers to an RRSP or RRIF are not taxable until amounts are withdrawn in the usual manner.

If you haven’t used the funds in your FHSA for a qualifying first-home purchase within 15 years of opening the account, your FHSA must be closed.

You may transfer funds from an RRSP to an FHSA on a tax-free basis, subject to the $40,000 lifetime limit and $8,000 annual contribution limit.

Home Buyers’ Plan

With certain repayment requirements, the Home Buyers’ Plan (HBP) allows you to withdraw up to $35,000 from an RRSP to purchase or build a home without paying tax on the withdrawal. Please note, you cannot make both an FHSA withdrawal and HBP withdrawal for the same qualifying home purchase.

Effective date

If the proposal is passed, the government will work with financial institutions to have the infrastructure in place sometime in 2023 for individuals to open and start contributing to an FHSA.

Home Buyers’ Tax Credit

If you’re a first-time buyer of a qualifying home, you may get up to $750 in tax relief by claiming the First-Time Home Buyers’ Tax Credit (HBTC). Any unused portion of the HBTC may be claimed by your spouse or common-law partner if the combined total does not exceed $750 in tax relief.

You’re considered a first-time home buyer if neither you nor your spouse or common-law partner owned and lived in another home in the calendar year of the home purchase, or in any of the four preceding calendar years.

Budget 2022 proposes to double the HBTC amount to $10,000, which may provide up to $1,500 in tax relief to eligible home buyers.

If passed, this measure will apply to acquisitions of a qualifying home made on or after January 1, 2022.

Multigenerational Home Renovation Tax Credit

Budget 2022 proposes a refundable Multigenerational Home Renovation Tax Credit for eligible expenses pertaining to a qualifying renovation. A qualifying renovation is one that creates a secondary dwelling unit to allow an eligible person (e.g., a senior or person with a disability) to live with a qualifying relation. The credit’s value is 15% of eligible expenses or $50,000, whichever is less.

A qualifying relation must be 18 years or older on December 31 of the tax year that includes the end of the renovation period. A qualifying relation may be a parent, grandparent, child, grandchild, brother, sister, aunt, uncle, niece or nephew of the eligible person, which includes the spouse or common-law partner of one of those individuals.

A qualifying renovation is a renovation or alteration of, or addition to, an eligible dwelling that is:

  • of an enduring nature and integral to the eligible dwelling; and
  • undertaken to enable an eligible person to reside in the dwelling with a qualifying relation, by establishing a secondary unit where the eligible person or qualifying relation can live.

Only one qualifying renovation may be claimed over an eligible person’s lifetime. Eligible expenses include the cost of labour and professional services, building materials, fixtures, equipment rentals and permits.

If passed, this measure will apply to the 2023 and subsequent tax years, regarding work performed and paid for, and/or goods acquired on or after January 1, 2023.

Residential property flipping rule

Property flipping involves purchasing real estate with the intention to resell the property at a profit within a short period of time. Under a new budget proposal, profits from flipping residential properties (including rental properties) owned for less than 12 months are fully taxable as business income. This means they are ineligible for the 50% capital gains inclusion rate – as is usually the case when selling a property at a profit – and the Principal Residence Exemption (which allows you to sell the home you primarily live in without having to pay any capital gains tax).

The new measure won’t apply if the property sale is in relation to at least one of the following life events:

  • Death, household addition (e.g., birth of a child, adoption, care of an elderly parent), separation, personal safety, disability or illness, employment change, insolvency or involuntary disposition.

If passed, this measure will apply to residential properties sold on or after January 1, 2023.

Medical Expense Tax Credit for surrogacy and other expenses

Some people may use assisted reproductive technologies to help start a family, and this may involve medical expenses for individuals other than the intended parents. Budget 2022 proposes to broaden the Medical Expense Tax Credit (METC) to recognize these circumstances.

The budget proposes a broader definition of “patient” when an individual relies on a surrogate or donor to become a parent. This broader definition allows a range of medical expenses paid by the taxpayer – or the taxpayer’s spouse or common-law partner – regarding a surrogate mother or donor, to be eligible for the METC.

If passed, this measure will apply to expenses incurred in the 2022 and subsequent tax years.

GST/HST on assignment sales by individuals

The government is proposing GST/HST measures on an assignment sale of new residential homes. Such sales typically involve a purchaser (an assignor) who makes a “purchase and sale” agreement with a new-home builder, and then sells their right and obligations under the agreement to another period (an assignee).

Based on current GST/HST rules, an assignment sale is either taxable or exempt. Budget 2022 proposes creating greater certainty by making all assignment sales of newly constructed or substantially renovated residential housing GST/HST taxable. This means the GST/HST applies to the total amount paid for a new home by its first occupant (the assignor).

If passed, this measure will apply effective May 7, 2022.

We can help

We can help you assess the impact of these proposals on your personal finances or business affairs, and show you ways to take advantage of their benefits or ease their impact. Contact your CI Direct Investing Portfolio Manager.