Election Review: Liberal Pledges to Know

Adam Pukalo |

For better or worse the Liberals are going to have a minority government for another term.  

Since 1935, Canadian stocks have returned on average 12% in the 12 months after the election of a minority government, compared with 8% in the year following a majority victory, according to Brian Belski, Chief Investment Strategist at BMO Capital Markets.                                                                                                                                                   
This year might be different given the current pandemic situation, but it always helps to know what has historically happened.

One important trend I'm going to be watching is how bank and insurance company profits could be hit.

The Liberals pledged to raise the corporate income tax rate for banks and insurance companies from 15% to 18% on all earnings above $1 billion.

Here are some of the other Liberal pledges to note:
 

  • A “career extension tax credit” for working seniors. Canadians over 65 who earn at least $5,000 at their jobs will be able to eliminate tax payable on a portion of their income and receive a tax credit of up to $1,650.

 

  • Increase Canada Revenue Agency resources by up to $1 billion per year to combat “aggressive tax planning and tax avoidance” and close the tax gap. Top earners would face a 15% minimum tax that would remove their “ability to artificially pay no tax through excessive use of deductions and credits".

 

  • On housing, prospective buyers may soon be able to access a new tax-sheltered savings account. The Liberals’ proposed First Home Savings Account would combine features of an RRSP and a TFSA to help Canadians under 40 build a down payment of up to $40,000 faster.

 

  • Double the First-Time Home Buyers’ Tax Credit; introduce an “anti-flipping tax” on the speculation of residential homes, requiring property to be held for at least 12 months; ban new foreign ownership of Canadian houses for the next two years; and implement a 1% annual tax on vacant housing owned by non-resident non-Canadians.

 

  • An extension of the home expense deduction for those working from home, with the deductible amount increased to $500 without receipts.

 

  • A new national agency to investigate financial crimes that brings together the RCMP, the Financial Transactions and Reports Analysis Centre and the CRA.

 

  • The elimination of flow-through shares for oil, gas, and coal projects to promote the transition to a net-zero economy.

 

  • A one-time tax deduction for health-care professionals in first three years of practice of up to $15,000.

 

  • An expanded Canada Caregiver Credit which would become a refundable, tax-free benefit.

 

  • Increase the guaranteed income supplement by $500 for single seniors and $750 for couples starting at age 65.

 

  • Double the Home Accessibility Tax Credit to $20,000.

 

  • Establish a single, independent ombudsperson with the authority to impose binding arbitration to handle consumer complaints involving banks.

 

  • Enhance the Financial Consumer Agency of Canada’s powers to review the prices charged by banks, and implement changes if they’re excessive.


Bottom Line: There are changes the Liberal government are implementing that could benefit your tax and investment planning. Click here to calculate your retirement potential.