Canadians elected a new government on October 19, 2015. The new government plans to amend income tax rates, family and seniors benefits and the Employment Insurance program. Key policies that could impact you and your family are outlined below.
Please note that the following changes have only to date been PROPOSED and have not yet been enacted.
Taxation
The new government plans to make various changes to the tax system, including:
- Cutting the tax rate for individuals with income between $44,700 and $89,401 from 22% to 20.5%, decreasing taxes by up to $671 per year.
- Increasing the tax rate on incomes over $200,000 from 29% to 33%.
- Scaling back the annual contribution limit for Tax Free Savings Accounts from $10,000 to $5,500.
- Cancelling the income splitting measure which formerly allowed the higher-earning spouse in a family with children under 18 to transfer up to $50,000 of income to the lower-earning spouse so it can be taxed at a lower rate. This will no longer be available.
- Reducing the small business tax rate to 9% from 11%.
Families and Seniors
The new government plans to change benefits to families and seniors by:
- Replacing the Universal Child Care Benefit with a new tax-free Canada Child Benefit, which will provide an additional $2,500 a year for a typical family of four.
- Introducing more flexible parental benefits under the Employment Insurance program that will make it possible for parents to take a longer leave at a lower benefit level.
- Restoring the eligibility age for Old Age Security and the Guaranteed Income Supplement to 65 from 67, increasing seniors’ guaranteed income supplement by 10%.
- Making the Employment Insurance Compassionate Care Benefit more flexible and easier to access, so that those who are caring for seriously ill family members can access six months of benefits.
- Enhancing the flexibility of the Registered Retirement Savings Plan (RRSP) Home Buyers’ Plan to allow more Canadians to access the program and use money from their RRSPs to buy a house without tax penalty.
Students
The new government plans to make the following changes to post-secondary tax credits, grants and loans by:
- Increasing the Canada Student Grant for students from low-income families to $3,000 per year for full-time students, and to $1,800 for part-time students.
- Increasing the income thresholds for eligibility for Canada Student Grants for students from middle-income families.
- Ensuring that graduates are not required to repay student loans until they are earning an income of at least $25,000 per year.
- Eliminating the Education and Textbook Tax Credits, annually worth up to $60 and $10, respectively.
Jobs
- The government has pledged to invest $300 million annually in a Youth Employment Strategy to help young Canadians gain work experience, and plans to offer a 12-month break on Employment Insurance premiums to encourage companies to hire young Canadians in permanent positions.
- The new government also plans to cut Employment Insurance premiums from the current $1.88 per $100 earned to $1.65, as well as provide additional funding to provinces and territories for job and skills training to help Canadians get the training they need to find and keep good jobs.
Infrastructure
- The government plans to invest $60 billion in infrastructure over the next ten years, with a focus on public transit, affordable housing, seniors’ facilities, early learning and recreational facilities, and green infrastructure including local water and wastewater facilities, climate resilient infrastructure, and clean energy.
Immigration
- The government plans to increase the number of immigration applications for parents and grandparents and increase funding for processing family class sponsorships. They also propose to grant immediate permanent residency to new spouses entering Canada.
- The new government also plans to admit 25,000 more Syrian refugees immediately and restore temporary federal health benefits to refugees and refugee claimants.
Details of how these changes will be implemented will be provided by the government in due course. Please consult your financial advisor to understand how these new measures will affect you.