As the CTV election coverage commercial proclaims, “Tonight, history will be made.” Today is election day! Don’t miss out on your chance to participate by casting a ballot.
Many of the parties’ promises impact personal wealth and may therefore affect estate planning. The following is a summary of the Conservative, Liberal and NDP positions on some of these issues:
- Tax Free Savings Accounts: The Conservative government recently increased the annual contribution limit for TFSAs to $10,000 from $5,500. The Conservatives would maintain this increase. The Liberals and the NDP have promised to cancel the increase.
- Old Age Security Eligibility: The Conservative government has implemented a plan to increase the age for OAS eligibility from 65 to 67. Both the Liberals and the NDP have promised to cancel this increase.
- Personal Income Taxes:
- Income Splitting: Limited income-splitting is currently available to families with children under the age of 18 (up to a maximum tax credit of $2,000) and couples at least one of whom is age 65 or older, for pension income-splitting, or both of whom are age 60 or older, for CPP income-splitting. The Conservatives would maintain the income-splitting that is currently available for families and older couples. The Liberals and the NDP have promised to cancel income-splitting for families, but would maintain the current rules for older couples.
- Personal Income Tax Rates: The Conservatives and the NDP have promised not to raise personal income tax rates. The Liberals would reduce the marginal income tax rate for income between $44,700 and $89,401 from 22 percent to 20.5 percent. This reduction will generate a maximum tax savings of $670 per person, or $1,340 for a two-income household. The Liberals would raise taxes on income over $200,000, by creating a new tax rate of 33 percent.
- Business Taxes: The Conservative government determined to reduce the small business tax rate to nine percent from the current 11 percent by 2019. Both the NDP and the Liberals have promised to maintain this reduction. However, the Liberals have indicated that they will review the reduction to ensure that it does not primarily benefit the wealthy. The NDP would raise the corporate tax rate to 17% from 15% and the Liberals would increase this rate to 19%.
- Stock Options: The NDP has promised to close a stock option tax “loophole” which allows individuals to deduct 50 percent of the benefit received through a stock option. The Liberals have promised to place a cap on the amount that can be claimed through the deduction. The Conservatives appear to favour the status quo.
- Canadian-Controlled Private Corporations: Both the Liberals and the NDP have suggested that some Canadians are using CCPCs to income-split and otherwise reduce their personal income taxes. Both parties have indicated that they will review the tax rules surrounding CCPCs in an effort to prevent these practices. The Conservatives appear to favour the status quo.