Budget 2023 Overview
Toronto, ON — March 24, 2023 — On March 28, Deputy Prime Minister and Minister of Finance, Chrystia Freeland, tabled the federal government’s 2023 budget entitled “A Made-in-Canada Plan: Strong Middle Class, Affordable Economy,Healthy Future.”
The NDP have already stated their support for the budget, therefore, the Liberal government is expected to maintain the confidence of the House of Commons when the budget motion is voted on. Further legislation is required to enact the changes included in the budget plan which will be introduced soon, following the passage of the budget motion, this is still subject to ongoing negotiation with the opposition parties.
Budget 2023 includes measures to reduce credit card interchange fees for small businesses, lowering the criminal code rate of interest to 35 per cent, consulting on “predatory lending practices” by payday operators, and enhancing protections for mortgage holders.
Highlights for the financial services sector include:
- Changes to the Income Tax Act that would treat dividends received on Canadian shares held by financial institutions in the ordinary course of their business as business income.
- Converted the Effective Annual Interest (EAI) to the industry-standard Annual Percentage Rate (APR)
- Lowering the criminal code rate of interest from an APR rate of 47 per cent to 35 per cent.
- The government will also launch consultations on whether the criminal code rate of interest should be further reduced.
- Adjusting the payday lending exemption to require payday lenders to charge no more than $14 per $100 borrowed. (The government will launch consultations on additional revisions to the Criminal Code’s provincial/territorial-requested payday lending exemption).
- The government has announced that it has secured commitments from Visa and Mastercard to lower credit card interchange fees for Canadian small businesses.
- The Financial Consumer Agency of Canada will publish guidelines to ensure federally regulated financial institutions provide Canadians with fair and equitable access to relief measures for mortgage holders, including by extending amortizations, adjusting payment schedules, or authorizing lump-sum payments.
- Introducing amendments to the Criminal Code and the Proceeds of Crime (Money Laundering) and Terrorist Financial Act to strengthen the investigative, enforcement and information sharing tools of Canada’s AML/ATF Regime.
- Implementing a public, searchable beneficial ownership registry of federal corporations by the end of this year to prevent against money laundering, tax avoidance and sanction evasion.
- Modernizing the federal financial framework to address emerging risks to Canada’s financial sector.
- Reviewing the mandate of FINTRAC to determine whether it should be expanded to counter sanctions evasion and threats to security and will provide an update in the 2023 fall economic and fiscal update.
- OSFI will consult federally regulated financial institutions on guidelines for publicly disclosing their exposure to crypto-assets.