Feigenbaum Law

Canada’s Federal Election: What Will it Mean for Your Taxes?

Corporate Tax Planning
Personal Tax Planning
October 18, 2019

Canada’s federal election is happening on Monday, October 21. What are the top three parties promising in terms of tax proposals and how will this impact Canadians?

The Liberals

Personal Tax Rates

Part of the Liberals’ platform includes a 15% increase in the basic personal tax amount, bringing it to $15,000 by 2023.

This amount will be phased out for high-net-worth individuals in the second-highest tax bracket (with income of more than $147,667), and fully eliminated for high-net-worth individuals in the highest tax bracket (with income of more than $210,371).

Tax Credits

The current Liberal platform does not include any new tax credits, however, two previously announced tax credits are scheduled to begin in 2020:

  • The Canada Training Credit: introduced in the 2019 budget, this credit will provide financial support for up to 50% of eligible tuition and fees associated to training. Those who are eligible (taxpayers between 25 to 65 with income of $10,000 to $147,667) can begin to accumulate $250 annually to be subsequently claimed during  a tax year to offset eligible tuition.
  • Digital News Subscription Creditthis credit will allow taxpayers to claim a tax credit of $75 annually for up to $500 paid towards digital subscriptions.

Capital Gains Inclusion Rates

No proposed changes to taxation of capital gains.

The Conservatives

Personal Tax Rates

A large aspect of the Conservatives’ platform is a plan to reduce the personal tax rate from 15% to 13.75% for those in the lowest income bracket (above the basic personal amount, $12,069, and under $47,630).

This tax cut would be introduced gradually:

  • 14.5% by 2021;
  • 14% by 2022;
  • 13.75% by 2023.

Tax Credits

Several tax credits are part of the Conservatives’ platform. These include:

  • The Children’s Fitness Tax Credit: this proposed credit would allow parents of children under the age of 16 to claim a 15% credit (of up to $1,000/child/year) for expenses related to sports and other fitness activities.
  • The Children’s Arts and Learning Tax Credit: this proposed credit would allow parents to claim up to 15% (up to $500) of expenses related to arts and other educational expenses.
  • The Green Public Transit Tax Credit: this proposed incentive would allow a 15% credit for the purchase of public transit passes
  • The Green Home Renovation Tax Credit: this proposed tax credit would allow individuals to obtain a 20% refundable credit for green improvements of between $1000-$20,000 made to their home.

Capital Gains Inclusion Rates

No proposed changes to taxation of capital gains.

The NDP

Personal Tax Rates

If elected, the New Democratic Party plans to increase the top tax marginal tax rate (for those earning more than $210,371 annually) from its current rate of 33% to 35%.

In addition, the NDP has proposed a so-called “super-wealth tax” of 1% applicable to individuals with more than $20 million in wealth.

Tax Credits

The New Democrats have vowed to make the Canada Caregiver Credit, which is currently non-refundable, refundable. The credit is available for individuals who are caring for spouses, common-law partners, or dependants who have physical or mental impairments.

Capital Gains Inclusion Rates

The NDP has announced a plan to increase the inclusion rate back up to 75 per cent, from its current rate of 50%. This is intended to make the tax system “fairer”.

The capital gains tax was introduced in Canada in 1972. At that time, a capital gains inclusion tax was introduced to tax capital gains at 50%. This was subsequently increased to 75% in 1990, and then decreased to 66.67% in February 2000, and decreased further back down to its current 50% rate in October 2000.

How Can Feigenbaum Law Help?

If you have questions about personal tax planning, HST remittances, paying taxes as an independent contractor or self-employed individual, or other related matters, contact Mark Feigenbaum. We assist our clients in making informed choices that lower their overall tax burden, ensure tax compliance, and avoid penalties that can amount to thousands of dollars. We offer our clients the confidence and peace of mind that comes with knowing that they have a highly skilled team working to manage their tax matters.

We offer custom solutions to your complex tax issues. Our extensive familiarity with the US and Canadian tax systems means we create novel solutions to meet your individual needs. We are lauded for our ability to solve problems that other professionals have deemed unsolvable. Our approach is solution-focused and creative. We pride ourselves on our ability to think outside the box and provide our clients with solutions tailored specifically for their needs.

Contact us to learn more about how we can help or call us at (905) 695-1269 or toll free at (877) 275-4792.


Tagged: corporate tax planning, election, Liberals, personal tax planning, personal tax rates, tax credits