The Canadian Credit Union Association welcomes the Federal Government’s leadership on providing Canadians access to affordable financial services with the release of the Federal Budget for 2023.
The budget promises to update the over 50-year-old definition of credit union in the Income Tax Act.
The proposed update to the definition of “Credit Union” in the income tax act should remove a potential future tax liability from the sector worth tens or even hundreds of millions of dollars.
This change helps to ensure that credit unions will be able to continue to offer a full and competitive suite of banking services to over 10 million Canadians and helps to counter the concentration of the financial services sector in Canada.
The update to the credit union definition is an issue CCUA has been advocating for several years, and this change could not have been accomplished without the support of our members through grassroots advocacy. This reform should remove a potential future tax liability from the sector worth tens or even hundreds of millions of dollars.
The budget also reaffirmed the strength of the Canadian banking sector, known for its stability and resilience. Credit unions are an important part of the sector, as financial institutions that offer financial services that work solely to serve their members. The government announced measures that will further the stability of the sector and prepare the sector for future risks.
Key announcements in Budget 2023 of importance to the credit union sector include:
- Amending the Income Tax Act by eliminating the revenue test from the definition of “credit union” and amending that definition to accommodate how credit unions currently operate.
- The government will introduce legislation to allow virtual only AGMs for federally regulated financial institutions.
- Measures to reduce credit card fees for small businesses.
- A suite of measures to strengthen the AML/ATF regime.
- Legislative amendments to modernize the federal financial framework to address emerging risks.
- Legislative amendments to add diversity disclosure requirements for boards and senior management at federally regulated financial institutions.
- FCAC will publish a guideline on protecting Canadians with mortgages facing exceptional circumstances.
- Reducing the criminal interest rate from 47 APR to 35 APR.
- The CRA will pilot automatic tax filing.
We look forward to continuing to work closely with the Government of Canada to ensure a strong financial sector that provides choice and affordability for all Canadians.
CCUA members can find a more in-depth analysis of the budget here. (member log in required)
If you have any questions about the budget please contact Rachel Barry, National Advocacy Lead.