Keep in mind that, because the Liberals are now managing a minority government, the implementation of potential tax changes is less certain.
Regarding corporations, consider the Liberals’ broad-based proposed changes. These include a promise to crack down on tax loopholes that allow companies to deduct debt from earnings to reduce tax.
We’ll have to wait and see what those changes actually are.
Also note the promise to cut corporate taxes by 50% for clean-tech companies, specifically those that develop and manufacture zero-emissions technology.
For personal taxes, several changes are in the works. What will impact the most Canadians is changes to the basic personal amount — the amount of income that any individual can earn that is not subject to tax.
That amount is currently $12,069 in 2019 and rises annually with inflation. The Liberals have promised to increase it by 15% over four years. According to this timeline, by 2023, it will reach $15,000.
The increase isn’t universal. It will not apply for those individuals who are described as being Canada’s wealthiest 1%. The amount will be reduced for those earning more than $147,667 — those in the second-highest federal tax bracket — and completely eliminated for those in the top bracket, which is $210,371 in 2019. Those in the top bracket will continue to receive the current basic personal amount, which will continue to be adjusted for inflation.
The Liberals also promised to boost Old Age Security (OAS) by 10% for seniors over age 75 who earn less than $77,580, and to raise the Canada Pension Plan (CPP) survivor’s benefits by 25%.
The change to OAS could mean an increase of $729 a year, according to the Liberals’ platform. It is anticipated that this will start in July 2020. With CPP, a spouse or common-law partner currently receives about 60% of what their deceased spouse or common-law partner received in benefits. The promised increase could mean an additional $2,080 per year.
Parents have been promised that their maternity and parental benefits, received through employment insurance, will be tax-exempt at source, starting in 2020. The result would be about $1,800 more annually for someone receiving EI benefits who earns about $45,000 annually. Adoptive parents could also see a change in their EI benefits, with the Liberals proposing a 15-week leave — the same length as for maternity leave.
The tax-free Canada Child Benefit is also slated for an increase for those with kids under one year old. The promise is to boost the benefit by 15%, resulting in an increase of up to $1,000. Starting in July 2020, the base benefit should be $7,750 for these children.
The Liberals proposed to immediately double the tax-free Child Disability Benefit. The benefit applies to families caring for a child with a disability who is under age 18 and eligible for the disability tax credit. The Liberal platform said the increase could result in more than $2,800, to $5,664 annually.
Other tax highlights include a new vacancy tax that would “limit the housing speculation that can drive up home prices,” the Liberal platform said. The residential tax would apply to vacant properties owned by non-resident non-Canadians.
Finally, the Liberals might move forward with two tax credits originally announced in the federal budget. The Canada Training Credit was proposed to start in 2020, to help cover up to half of eligible tuition and fees associated with training. The credit could accumulate a balance up to a lifetime limit of $5,000.
The second is a non-refundable 15% credit for eligible digital news subscriptions. The credit is for a limited time, for amounts paid after 2019 and before 2025, and is a maximum tax credit of $75 annually, to start in 2020.