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Apr 27, 2022
5 min read

2022 Federal Budget Highlights

The federal budget was released by the Honourable Chrystia Freeland, Deputy Prime Minister and Minister of Finance, earlier this month. Below is an overview of some of the measures introduced that may be of interest and relevance to our valued CWB Trust Services clients.

Tax-Free First Home Savings Account

Budget 2022 proposes to introduce the Tax-Free First Home Savings Account (FHSA) 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 Tax-Free Savings Account (TFSA). Tax-free in, tax-free out.


The lifetime limit on contributions would be $40,000, subject to an annual contribution limit of $8,000. Unused annual contribution room would not be carried forward. Individuals would also be allowed to transfer funds from an RRSP to an FHSA tax-free, subject to the $40,000 lifetime and $8,000 annual contribution limits.


The government intends to work with financial institutions to ensure that a FHSA could be opened and contributed to in 2023.

Reporting Requirements for RRSPs and RRIFs

Budget 2022 proposes to require financial institutions to annually report to the Canada Revenue Agency (CRA) the total fair market value, determined at the end of the calendar year, of property held in each Registered Retirement Savings Plan (RRSP) and Registered Retirement Income Fund (RRIF) that they administer. This information would assist the CRA in its risk-assessment activities regarding qualified investments held by RRSPs and RRIFs.

RRSPs and RRIFs form an important part of Canada’s retirement income system. The tax deferral provided by these savings vehicles assists and encourages Canadians to save for retirement and achieve their retirement income goals.

Financial institutions are currently required to report annually to the CRA the payments out of, and contributions to, each RRSP and RRIF that they administer. By comparison, financial institutions file a comprehensive annual information return in respect of each tax-free savings account that they administer, which includes the fair market value of property held in the account.

This measure would apply to the 2023 and subsequent taxation years.

Other Highlights for Reference

Employee Ownership Trusts

Budget 2022 proposes to create the Employee Ownership Trust—a new, dedicated type of trust under the Income Tax Act to support employee ownership. Employee Ownership Trusts encourage employee ownership of a business and facilitate the transition of privately owned businesses to employees. The government will continue to engage with stakeholders to finalize the development of rules for the Employee Ownership Trust and to assess remaining barriers to the creation of these trusts.

Borrowing by Defined Benefit Pension Plans

Budget 2022 proposes to provide more borrowing flexibility to administrators of defined benefit registered pension plans (other than individual pension plans) by maintaining the borrowing rule for real property acquisitions and replacing the 90-day term limit with a limit on the total amount of additional borrowed money (for purposes other than acquiring real property), equal to the lesser of:

  • 20 per cent of the value of the plan’s assets (net of unpaid borrowed amounts); and
  • the amount, if any, by which 125 per cent of the plan’s actuarial liabilities exceeds the value of the plan’s assets (net of unpaid borrowed amounts).

The new borrowing limit would be redetermined on the first day of each fiscal year of the plan, based on the value of assets and unpaid borrowed amounts on that day and the actuarial liabilities on the effective date of the plan’s most recent actuarial valuation report.  Each redetermined limit would not apply to borrowings entered into before that time.

Plan administrators must continue to comply with the provisions of federal or provincial pension benefit standards legislation which ensure that pension funds are administered with a duty of care, investments are made in a reasonable and prudent manner and the plan is funded in accordance with prescribed funding standards. These standards are designed to manage the risks to the promised benefits of plan members and ensure the stability of registered pension plans. They would be unaffected by the proposed measure.

This measure would apply to amounts borrowed by defined benefit registered pension plans (other than individual pension plans) on or after Budget Day, April 7, 2022.


If you would like to discuss how these measures may affect you, please contact our Client Service Team at 1-800-663-1124 or email [email protected]


For more information, please see the Federal Budget Commentary from CWB Wealth Management.


Source: Government of Canada