History was made this week with the stronger than expected come back of the Liberals lead by the high value and enthusiastic Justin Trudeau. With a majority government in hand, he has all the political power he needs to implement his party platform unimpeded.
Trudeau and his Cabinet will be sworn in on November 4, and it will likely be months before the new government releases its budget or starts passing legislation.
Here’s what you can expect from the Liberals once Parliament gets into full swing:
How will personal tax rates change, if at all?
- Middle class tax rate decrease: Rate for taxable income between $44,700 and $89,401 would drop from 22% to 20.5%, for tax savings worth up to $670 a year per person.
- High income marginal tax rate increase: Marginal tax rate for income above $200,000 would increase from 29% to 33%. On a $250,000 income, this would mean paying up to $1,329.50 more.
Will any tax credits or deductions change?
The Liberals have promised the following changes:
- TFSA: Return TFSA contribution rates to $5,500 from $10,000.
- OAS at 65: The Liberals have said they would not go ahead with plans to gradually raise the eligibility age to 67. This will restore eligibility at age 65 for everyone born from 1958.
- Child benefit: the Universal Child Care Benefit will be replaced with the Canada Child Benefit, a tax-free monthly benefit for the middle class. Families would receive up to $6,400 a year per child under six, and up to $5,400 a year per child aged six to 17. The amount would decrease as family income rises. Families with incomes of $200,000 or above wouldn’t get a benefit.
- Employment Insurance: Eligibility will be enhanced and premiums reduced.
- Create a Teachers School Supply Tax Benefit: teachers and educational assistants who buy their own classroom supplies will benefit from a refundable credit worth up to $150.
- Home buying: Allow Canadians to put RRSP money toward buying a house more than once. The Home Buyers’ Plan currently focuses on first-time buyers; people would additionally be able to use it multiple times when moving for work, after the death of a spouse, after a marital split or to take in an elderly relative.
- CPP Enhancement: The Liberals have talked about working with the provinces to bolster Canada Pension Plan benefits.
- Student loans: Grads would not have to repay student loans until they have earned at least $25,000 a year, with interest paid by the federal government during that period; also, the maximum Canada Student Grant for low-income students would rise to $3,000 annually for people studying full time.
How about income splitting?
- Pension income splitting will be kept.
- Income splitting for families with children under 18 will be eliminated.
I own a small business. What happens to me?
- The small business tax rate is expected to drop from 11% to 9% by 2019.
These were promises made. There is no way to know if and when these will be effective. We will continue to keep you up to date through these blog posts. Keep reading us regularly!