Federal Budget 2022 - Financial section highlights
The 2022 federal budget, A Plan to Grow Our Economy and Make Life More Affordable, was released yesterday, setting out the Government of Canada’s spending and policy priorities for this year. The budget focused on matters important to Canadians, including housing, the environment, reconciliation and employment.
Payments Canada supports and applauds the government’s plan to bolster safety, stability and security in finance, which aligns with our statutory mandate. Although amendments to the Canadian Payments Act were not included in the budget, we are confident that the government is committed to, and appreciates the importance of, payment modernization. We will continue to work with the Department of Finance to ensure Canadian Payments Act amendments will be enacted, and we remain focused on delivery of the new Real-Time Rail system, which is due to go-live in mid-2023.
Payments Canada remains optimistic that the necessary changes to its legislation will be in place in advance of implementation of the Retail Payments Activities Act (RPAA). This is a necessary step in order for new members and new participants to be welcomed into Canada’s payment systems. Following the planned Department of Finance consultation on membership reform, we will consult publicly on proposed changes to our system access and participation policies.
The 2022 budget continued the financial sector law enforcement policy themes that emerged in late 2021, including strengthening Canada’s Anti-Money Laundering and Anti-Terrorist Financing (AML/ATF) Regime. And with the rise of crypto assets and related innovation, the government announced it would launch a financial sector legislative review focused on the digitization of money and maintaining financial sector stability and security.
Financial sector highlights:
Addressing the digitization of money
- The launch of a financial sector legislative review focused on the digitization of money and maintaining financial sector stability and security. Led by the Department of Finance, the budget notes that the first phase of the review will be directed at digital currencies, including cryptocurrencies and stablecoins.
Strengthening Canada’s anti-money laundering and anti-terrorist financing regime
- Focused on strengthening FINTRAC to implement new AML/ATF financing requirements for crowdfunding platforms and payment service providers; support the supervision of federally regulated financial institutions; continue to build expertise related to virtual currency; modernize its compliance functions; and update its financial management, human resources, intelligence, and disaster recovery systems. This includes legislative changes to strengthen the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, and the Criminal Code.
Reducing credit card transaction fees
- As announced in Budget 2021,the government remains committed to lowering the cost of credit card fees to benefit small businesses and protect existing reward points for consumers. Consultation with stakeholders will continue on solutions to lower the cost of fees for merchants.
Requiring financial institutions to help pay for the recovery
- To help Canada fully recover from the financial impacts of the pandemic, the budget proposes two measures that affect banks and life insurer groups: a one-time 15 per cent tax on taxable income above $1 billion for the 2021 tax year and permanent 1.5 per cent corporate income tax rate increase above $100-million.
Limiting aggressive tax avoidance by financial institutions
- Budget 2022 sets out to examine potential changes to the financial transaction approval process to limit the ability of federally regulated financial institutions to use corporate structures in tax havens to mitigate heavy tax burdens.
Enhancing Canada’s cyber security
- As Canadians become more reliant on digital systems, the 2022 budget proposes to infuse $875.2-million into the Communications Security Establishment (CSE) over the next five years.
To read the full budget, visit: budget.gc.ca/2022