Deputy Prime Minister and Minister of Finance Chrysia Freeland tabled the federal budget in Ottawa this week, and auto industry groups are offering a mixed reaction.
The government called it the “Fairness for Every Generation” budget, and it addressed broader issues such as housing affordability, economic growth, artificial intelligence, and had several provisions aimed directly at millennials and Gen Z voters.
The association representing Canada’s car dealers issued a memo to its members breaking down the impact it will have on dealers. In an interview from Ottawa, Huw Williams, Director of Public Affairs with the Canadian Automobile Dealers Association (CADA) expressed a mixture of disappointment and praise for some measures.
“The Bank of Canada has highlighted the need to improve productivity as a crisis. That’s why we were disappointed to see the attack on entrepreneurship with the changes to the capital gains tax rules,” said Williams. “There were some missed opportunities and the tax on capital gains does the opposite of supporting productivity. The government had an opportunity to pull back on program spending and the growth of government, but they did the opposite by attacking entrepreneurship.”
Williams did offer credit to the government for some measures, notably continued investment in EV purchase subsidies for consumers that the association had been calling for, and also for announcing they will bring new criminal penalties to fight back against organized crime groups involved in auto theft.
Here is the budget analysis that CADA provided to its member dealers:
- On the tax increase and revenue side of the equation, the government will raise the inclusion rate on capital gains realized annually above $250,000 by individuals — and on all capital gains realized by corporations and trusts — from one-half to two-thirds. Lifetime capital-gains exemption for Canadians will rise from $1 million to $1.25 million, with the total capital gains exemption from the sale of a principal residence not set to change;
- A new Electric Vehicle (EV) Supply Chain investment tax credit to support the EV supply chain and secure the future of Canada’s automotive industry;
- Budget 2024 announces the government’s intention to work with Talent for Innovation Canada to develop a pilot initiative to build an exceptional research and development workforce in Canada. This industry-led pilot will focus on attracting, training, and deploying top talent across four key sectors: bio-manufacturing; clean technology; electric vehicle manufacturing; and microelectronics, including semiconductors;
- Budget 2024 announces the government’s intention to introduce a new 10 per cent Electric Vehicle Supply Chain investment tax credit on the cost of buildings used in key segments of the electric vehicle supply chain, for businesses that invest in Canada across three supply chain segments: electric vehicle assembly; electric vehicle battery production; and, cathode active material production;
- Budget 2024 proposes to provide $607.9 million over two years, starting in 2024-25, to Transport Canada to top-up the Incentives for ZeroEmission Vehicles program;
- On stolen vehicles the government has listened to CADA and used the Budget to announce new legislation to fight the auto theft crisis. This includes the government’s intent to amend the Criminal Code to provide additional tools for law enforcement and prosecutors to address auto theft including:
- New criminal offences related to auto theft involving the use of violence or links to organized crime;
- Possession or distribution of an electronic or digital device for the purposes of committing auto theft; and
- Laundering proceeds of crime for the benefit of a criminal organization; and,
- Budget 2024 also announces the government’s intention to amend the Radiocommunication Act to regulate the sale, possession, distribution, and import of devices used to steal cars. This will enable law enforcement agencies to remove devices believed to be used to steal cars from the Canadian marketplace.
