(Dreamstime)

By Sheldon Spackman

Largely A Short-Term Approach

Local wealth management director sees positives in latest federal budget

Apr 12, 2022 | 4:54 PM

A local money manager says the federal government’s budget announced last week has more of a short-term approach in addressing the country’s current economic challenges.

Dion Zukiwsky, Branch Manager and Director of Wealth Management at Scotia Wealth Management in Red Deer, acknowledges Budget 2022 brings some positive initiatives to the table, along with some others that might raise a few eyebrows.

“What we did like, there was some definite measures put in for say, the everyday Canadian,” he explains. “One of the big ones was a focus on housing affordability. We were quite impressed with some of the ideas presented in the budget, mainly for affordability for first-time homebuyers.”

Zukiwsky says the challenge is being addressed in two ways, including the Tax-Free First Home Savings Account that would give prospective first-time home buyers the ability to save up to $40,000. Like an RRSP, contributions would be tax-deductible, and withdrawals to purchase a first home—including investment income—would be non-taxable, like a TFSA. Tax-free in, tax-free out, say government officials.

The second, notes Zukiwsky, is the First-Time Home Buyers’ Tax Credit amount, doubling to $10,000 and providing up to $1,500 in direct support to home buyers, applying to homes purchased on or after Jan. 1, 2022.

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“Another thing that people should be happy about, especially those here in Alberta that are in the trades, is the budget is proposing to introduce a Labour Mobility Deduction,” says Zukiwsky. “This is for tradespeople mainly in construction, so if you have to travel to work or have a temporary relocation to work, you’ll now be able to claim up to $4,000.”

Zukiwsky also points to small business tax cuts as positive as well.

Budget 2022 proposes to phase out access to the small business tax rate more gradually, with access to be fully phased out when taxable capital reaches $50 million, rather than at $15 million. Government officials say this measure would apply to taxation years that begin on or after April 7, 2022.

“What this will do for small business owners is be able to keep more money in your business to expand and to employ more people, so we really like that as well,” adds Zukiwsky.

He notes, however, that spending in areas such as defence and a nationwide dental care program, all have to be paid for somehow.

“There was a very focused tax measure on banks and life insurance companies. It’s called a Canada Recovery Dividend, which is a fancy word for, ‘extra tax on banks and insurance companies,’” Zukiwsky explains. “This is going to be a one-time 15 per cent tax on companies in that sector. In addition, there’s a proposal to have an extra 1.5 per cent going forward.”

“I realize this has to come from somewhere. That sector does employ a lot of people and obviously services Canadians, but the question for us is, if those companies are going to be taxed this heavily, is that going to be passed on to the consumer, to the people banking, in the form of fees?” questions Zukiwsky.

He describes Budget 2022 though, as quite positive overall.

“But there is definite concern around how they’re (federal government) going to cover those expenditures off,” highlights Zukiwsky. “It’s focusing on the short-term, it’s focusing on affordability which is totally fine, but I think part of the job of a federal budget is to also address, how our country is going to try and continue to grow over the next five, 10, 15 years, and so forth.”

With climate-related issues also a focus for the federal government moving forward, Zukiwsky feels Alberta has strong potential to be a leader in clean energy.

“By no means do we have to disrupt our oil and gas economy to 100 per cent switch to clean energy. I think there’s room for both,” he suggests. “Technological advances can be even more focused in the form of efficiency in oil and gas, rather than a full switch.”

New technology in helping restructure supply chains for natural resources is another area Zukiwsky sees potential in for the province.

“It’s a really interesting opportunity for Alberta to take the technology that we have and have always used for oil and gas, and maybe apply it to other areas, while at the same time, being efficient as possible. I don’t believe oil and gas and clean energy are mutually exclusive. I think they can work together very well going forward and that’s really the big opportunity that we have here in our province.”