It was a wild day on Parliament Hill as Chrystia Freeland resigned from her role as Finance Minister, just hours before she was expected to present the fall economic statement. Her resignation letter cited fiscal policy differences with Prime Minister Justin Trudeau.
We’ve identified four headlines in the statement for financial advisors.
The Canada Disability Benefit will be tax-exempt
The federal government intends to bring legislation that will exclude the Canada Disability Benefit as income under the Income Tax Act.
This proposal will “ensure Canada Disability Benefit recipients keep the full value of their benefits, including other federal income-tested benefits and programs” like the Canada Child Benefit and GST credits.
Ottawa called on provinces and territories to ensure that Canada Disability Benefit recipients don’t face reductions in provincial and territorial disability support programs.
“The government will be monitoring the decisions of provinces and territories and is prepared to take action to ensure the federal benefit is not clawed back,” the document read.
The benefit, which will distribute up to $200 a month to eligible beneficiaries beginning in July, was announced in Budget 2024 and expected to cost $6.1 billion over six years beginning in the 2024-25 fiscal year.
Automatic tax filing, tax evasion crackdown funding for CRA
The Liberal government will work on legislation to allow the Canada Revenue Agency (CRA) to automatically file a tax return on behalf of certain lower-income Canadians and provide new funding for the agency to crack down on tax evasion.
If implemented, eligible Canadians will receive a pre-filled tax return based on CRA data and can review and modify their information. If they don’t opt out of the automated filing process, the tax return would be filed by the CRA on their behalf.
The move, which would extend the Canada Child Benefit, Canada Worker Benefit and GST/HST credit to current non-filers, could cost $8.67 billion between the 2024–25 and 2028–29 financial years, the parliamentary budget officer (PBO) estimated in June.
The government also said it intends to look at expanding automatic tax filing to middle-class Canadians with simple tax situations, and proposes to expand the Minister of National Revenue’s role to include simplifying and automating individual tax filing.
In addition to automatic tax filing, the statement proposes $451.5 million for the CRA over five years, beginning in 2025-26, to crack down on tax evasion and recover an estimated $2.9 billion in federal revenue in the same period.
The funding is intended to help CRA conclude audits of Covid-era programs like the Canada Emergency Rent Subsidy and Canada Emergency Wage Subsidy, and have an emphasis on high net-wealth individuals and those in the underground economy.
Strengthening AML, penalties for financial crimes
The Liberal government intends to bolster Canada’s Anti-Money Laundering and Anti-Terrorist Financing (AML/ATF) regime and increase administrative money penalties (AMP).
Proposed changes to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) will require all reporting entities that are not already registered to enroll with FINTRAC, permit FINTRAC to disclose information to the Office of the Commissioner of Canada Elections to deter foreign interference in Canadian elections and clearly prohibit anonymous accounts, among other measures.
The government also intends to increase individual AMPs under the PCMLTFA by 40 times the current amount, and raise fines for all criminal offences by 10 times the current amount.
A new aggregate penalty limit for all AMPs issued in a single notice of violation will be the greater of $4 million for an individual and $20 million for an entity, or 3% of annual worldwide gross revenue.
Those with an outstanding AMP could have their registration refused or revoked, and the AMP for an existing compliance program that is in violation will be reclassified as “very serious.”If a compliance agreement isn’t adhered to, the FINTRAC director can issue a compliance order with an AMP to the greater of $5 million for an individual and $30 million for an entity, or 3% of annual worldwide gross revenue.
The government expects the stronger penalties to yield $631 million in fine revenue between 2026-27 and 2029-30, or $158 million per year for four years.
The government intends to build a new taskforce for law enforcement and the financial sector to exchange information on high-end money laundering schemes, modelled after the U.K.’s Joint Money Laundering Intelligence Taskforce. It also wants FINTRAC to become a member of the Financial Institutions Supervisory Committee to enable better coordination with other agencies to fight financial crime.
Feds promise open banking by early 2026
The Liberal government said it intends to bring open banking to Canada by early 2026.It said it would legislate for the remaining elements of open banking, or consumer-driven banking, in a phased approach. The framework will put in place accreditation requirements, a common liability structure and a single technical standard.
Open banking allows financial institutions, with consent, to securely share client account details with third parties such as other banks and wealth management firms. It’s seen as benefiting consumers by increasing competition in financial services, but other countries have moved faster in implementing their frameworks.
The government intends to provide the Financial Consumer Agency of Canada (FCAC) with $44.3 million over three years, beginning in 2025-26, to implement the framework. It will include developing a consumer awareness campaign, and creating a public registry of the banks, credit unions, financial technology and other participating financial services providers.
In the initial phase, the government will require banks meeting a specified retail volume threshold to participate while other federally regulated financial institutions can opt in. The scope will initially include information related to chequing and savings accounts, investment products available through online portals and lending products.
Financial institutions seeking accreditation will apply to FCAC with information on their oversight arrangements, governance, security and privacy controls and liability instruments, among other requirements. Entities will be subject to mandatory reporting of key information on a regular basis to maintain accreditation.
Liability will move with the data and rest with the at-fault party if anything goes wrong. For instance, a data provider’s liability for how a consumer’s data is protected ceases once it has left the institution. Consumers will not be held liable for financial losses incurred from sharing their data with the open banking framework.
The government will mandate the use of a single technical standard to ensure application programming interfaces are interoperable between participating financial institutions and with other jurisdictions. Existing legislation gives the minister of finance authority to identify and revoke a technical standard, and authority to the FCAC to supervise the technical standard body.
Data sharing services currently depend on screen scraping, which requires users to share login details with a third party, raising security risks. Open banking would eventually eliminate this practice.
Once the framework is in place, FCAC oversight, administration and enforcement of open banking will operate on a cost-recovery basis.