All About Estates

The Upcoming Federal Election: Changes that Could Affect the Advice Provided by Estate Planners

On Monday, October 21st, Canadians will go to the polls to elect the federal government. While the major parties’ platforms address many issues that are important to Canadians, there are several that will, in particular, impact the personal finances of Canadians and, ultimately, the advice provided by estate planners:[1]

Personal Income Taxes

All of the major parties have proposed changes to current tax rates:

  • The Liberals have proposed tax cuts on the first $15,000.00 of earned income;
  • The Conservatives have proposed tax cuts on the first $47,630.00 of earned income; and
  • The NDP have proposed an increase in taxes on income earned over $210,371.

Of note for planners with clients with a Quebec connection: both the Conservatives and the Greens have proposed integrating federal and provincial income tax returns in Quebec. Currently, Quebec residents must file two separate returns.

Capital Gains Tax

The NDP have proposed an increase to the capital gains inclusion rate, from 50% to 75%. The Greens have proposed an increase to 100% for individuals with a net worth of over $3 million. These changes would impact the disposition of capital assets other than a principal residence.

None of the major parties have made any proposals with respect to the principal residence exemption for capital gains tax.

Wealth Tax”

Both the NDP and the Greens have proposed a 1% tax on asset holdings greater than $20 million.

CPP Survivor Benefits

The Liberals are promising an increase of 25% in Canada Pension Plan survivor benefits for surviving spouses of deceased contributors.

Income Splitting

Conservatives have proposed scrapping the income splitting (“TOSI”) rules and the passive income rules for small businesses that were put in place by the Liberals in 2017 (with changes in 2018).

 

Of course, whether these platform promises will be turned into law is another question, particularly with polls pointing to the very real possibility of a minority government.[2] However, it is interesting to consider what might be coming down the pipeline in the years to come, and the potential planning opportunities they may create for estate practitioners.

 

[1] This list has been compiled from a number of summary news sources. It is not intended to be an exhaustive summary of proposed changes.

[2] https://newsinteractives.cbc.ca/elections/poll-tracker/canada/

About Emily Hubling
Emily Hubling is an associate in the Trusts, Wills, Estates and Charities group at Fasken. Emily has experience in advising estate trustees in administering a range of complex estate matters, including intestacies, cross-border matters, and contested estates. Working closely with clients’ advisors, Emily prepares Wills, Powers of Attorney, and Trusts to assist clients in fulfilling their unique estate-planning objectives.

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