Described as one of the closest races in Canadian history the Liberals managed to maintain power albeit with a minority government.   With the election now behind us, there are several issues and polices that will be the focus of debate in the coming weeks.

One major issue is the Trans Mountain Pipeline; due to the current pipeline constraints Canadian oil continues to sell at a sharp discount below the international benchmark price.  Out west the Albertan economy is struggling and governments are losing billions of dollars in lost tax revenue.   Throughout the election NDP’s Jagmeet Singh made it clear he was opposed to the pipeline, now with the liberals needing his support his demands may influence the governments agenda.

In addition, it is likely the USMCA (new NAFTA) deal will be brought to the House of Commons for ratification this spring.  Both the Conservatives and Liberals are expected to support it, however the NDP may delay the process by fighting hard to make some amendments.

Budget Talks – Federal budget motions are confidence votes; and can easily bring down a minority government.  Trudeau will have to negotiate with the NDP, Tories and the Bloc to stay in power.  Trudeau will need support from the NDP and therefore will have little choice than to accept at least one of their expensive programs.   Implementing the national pharmacare program for example, has already raised concerns that we could see higher deficit spending in the future.

Personal Tax Cuts and Hikes

  • The Liberals intend to increase the basic personal exemption from $12,069 (in 2019) to $15,000 over the next four years. However, any individuals making over $147,000 would see claw backs and the exemption may be eliminated for anyone making over $210,371.
  • The NDP wants to see the inclusion rate on capital gains increased from 50% to 75%
  • Liberals would impost a luxury tax of 10% on cars over $100,000
  • The NDP would raise the top federal marginal tax from 33% to 35%
  • The NDP wants to impose a 1% annual wealth tax on individuals with assets over $20 million
  • Liberals want to place a $200,000 limit on certain stock option deductions while the NDP wants to eliminate the deduction altogether.

Any Positive Changes?  A few:

  • The Liberals will increase the Canada Child Benefit to 15% for parents with a child under 12 months of age
  • Adoptive parents may become eligible for the 15-week maternity leave; same as birth parents
  • Parents receiving maternity and/or parental benefits through Employment Insurance (EI) will receive them tax exempt starting in 2020
  • If buying a home under $750,000, first-time homebuyers could receive a subsidy
  • The child disability benefit may be doubled
  • The liberals 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 benefit by 25%

 

I hope you have found this useful, don’t hesitate to contact me if you have any questions.

Have a great weekend,

Tracey

 

 

 

 

Source:  Article by Sadiq S. Adatia, Chief Investment Officer and Michelle Connolly, Director of Estate Planning Sun Life Global Investments (Canada) Inc.  Article by Michelle Schriver posted on AdvisorToGo