Federal budget 2019

What does it mean for you and your clients?

Summary and in-depth commentary

Parliament building in Ottawa

Fidelity’s tax and retirement experts, Peter Bowen and Michelle Munro, discuss what the budget means for you and your clients.

(login required)

Budget 2019 summary highlights

Here’s what you need to know

The big picture

On March 19, 2019, the federal government tabled its budget, entitled Investing in the Middle Class. The big themes in this pre-election budget were making home ownership more affordable and investments in skills training. There were also a number of tax-related and other items that may be of interest to financial advisors and their clients. Selected items are noted below.



  • Modernizing the Home Buyers’ Plan – Currently, the Plan allows first-time home buyers to withdraw up to $25,000 from their Registered Retirement Savings Plan (RRSP) to purchase or build a home, without having to pay tax on the withdrawal. The withdrawal must be repaid over a 15-year period, or included in the individual’s income if not repaid. 

    Budget 2019 proposes to increase the Plan withdrawal limit to $35,000. Furthermore, it proposes that individuals who experience a breakdown of a marriage or common-law partnership be permitted to participate in the Plan, even if they do not meet the first-time requirement. This would be available for withdrawals made after March 19, 2019. 


  • First Time Home Buyer Incentive – The Incentive is a shared equity mortgage that would give eligible first-time homebuyers the ability to lower their borrowing costs by sharing the cost of buying a home with the Canada Mortgage and Housing Corporation.

    The Incentive would provide funding of 5% or 10% of the home purchase price. No ongoing monthly payments would be required. The buyer would eventually repay the Incentive, for example, upon selling the home. This program is expected to be operational by September 2019, and more details will be released later this year. 


  • Canada Training Credit – This new non-taxable credit would help Canadians pay for training fees. Every year, eligible workers between the ages of 25 and 64 would accumulate a credit balance of $250 per year, up to a lifetime limit of $5,000. 

    Starting in 2020, Canadians would be able to apply their accumulated Canada Training Credit balance against up to half the cost of training fees at colleges, universities and eligible institutions providing occupational skills training. 


  • Registered Disability Savings Plan (RDSP) improvement – To open an RDSP, an individual must be eligible for the Disability Tax Credit (DTC). When a beneficiary no longer qualifies for the DTC, the RDSP rules can require that the plan be closed, and that grants and bonds be repaid to the Government of Canada. 

    To address concerns that this treatment does not appropriately recognize the financial impact that periods of severe, but episodic, disability can have on individuals, Budget 2019 proposes to eliminate the requirement to close an RDSP when a beneficiary no longer qualifies for the DTC. Doing so will allow grants and bonds that otherwise would be required to be repaid to the Government to remain in the RDSP. 


  • Future limits on stock option deduction – The Government intends to move forward with changes to limit the benefit of the employee stock option deduction for high-income individuals employed at large, long-established, mature firms. Specifically, the Government will move toward aligning Canada’s employee stock option tax treatment with that of the U.S., by applying a $200,000 annual cap on employee stock option grants (based on the fair-market value of the underlying shares) that may receive tax-preferred treatment in the hands of employees of large, long-established, mature firms. 

    Under this approach, the vast majority of employees of these firms that may receive employee stock option benefits would be unaffected. Further details will be released before the summer of 2019. 


  • Closing tax loop holes – Budget 2019 seeks to make the tax system fairer by proposing to

    • prevent the use by mutual fund trusts of a method of allocating capital gains or income to their redeeming unitholders where the use of that method inappropriately defers tax or converts fully taxable ordinary income into capital gains taxed at a lower rate

    • improve existing rules meant to prevent taxpayers from using derivative transactions to convert fully taxable ordinary income into capital gains taxed at a lower rate

    • stop the use of individual pension plans to avoid the prescribed transfer limits, which are meant to prevent inappropriate tax deferrals when individuals transfer assets out of certain types of pension plans


The budget did not, however, include a commitment to undertake a comprehensive review of the tax system to make Canada’s personal and corporate income tax regime more competitive, as was recommended by numerous industry groups and stakeholders, including the House of Commons Standing Committee on Finance.

Of course, the highlights above are only some of the many measures contained in the budget, and taxpayers should consult their own tax advisors to assess the impact of Budget 2019 on their own situations.




Fidelity Investments Canada will continue to monitor and provide analysis on issues that matter to financial advisors and investors.

As at March 19, 2019. The information is for general knowledge only and should not be interpreted as legal, tax or financial advice or recommendations. This information may no be relied upon as investment advice, nor is it an indication of trading intent of any Fidelity Fund. Where such indication is based in whole or in part on information provided by third parties, we cannot guarantee that it is accurate, complete or current at all times. Fidelity Investments Canada ULC and its affiliates and related entities are not liable for any errors or omissions in the information or for any loss or damage suffered. These views are subject to change at any time based upon markets and other conditions, and Fidelity disclaims any responsibility to update such views. © 2019 Fidelity Investments Canada ULC. All rights reserved. Fidelity Investments is a registered trademark of Fidelity Investments Canada ULC.

Read a fund’s or pool’s prospectus or offering memorandum and speak to an advisor before investing. Read our privacy policy. By using or logging in to this website, you consent to the use of cookies as described in our privacy policy.

This site is for persons in Canada only. Mutual funds and ETFs sponsored by Fidelity Investments Canada ULC are only qualified for sale in the provinces and territories of Canada.