What a Liberal majority means for you

The end of the $10,000 TFSA, higher taxes for the 1% and more

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The Liberal party, led by Justin Trudeau, will form a majority government, capturing 184 seats in a sweeping election win Monday.

Throughout the 78-day campaign, Liberal leader Justin Trudeau has repeatedly pledged help for Canada’s middle class. Here’s what he’s promised to do as Prime Minister of Canada as it relates to household balance sheets.

Cut the annual Tax Free Savings Account (TFSA) contribution limit from $10,000 back to $5,500. Arguably one of Trudeau’s least popular campaign promises (an Angus Reid survey recently found that 67% of Canadians aren’t in favour of any political party reversing the increase), the roll back could cost savers tens of thousands of dollars over the long term. A recent MoneySense analysis found high-income individuals stand to lose an estimated $53,000 over 30 years, assuming 5% equity returns and a combined federal and provincial tax rate of 50% under the Liberal plan.

What to do with your TFSA (before Trudeau trims it) »

Raise income taxes on the top 1% of earners, trim it for everyone else. Trudeau’s platform was anchored by his promise to cut the middle income tax bracket from 22% to 20.5% for Canadians earning between $44,700 and $89,401 a year, amounting to savings of $670 a year (or $1,340 for a two-income household). He’s also promised to create a new tax bracket of 33% for those earning $200,000 a year or more.

Reduce payroll taxesEmployment Insurance (EI) premiums are expected to fall to $1.65 per $100 under a Liberal majority government.

Give a little here, take a little there, from young families. Trudeau has vowed to cancel the up to $2,000 annual benefit to couples with kids under the age of 18, leveraging the recently introduced income splitting for families option. He also said he would ditch the Universal Child Care Benefit for Canada’s wealthiest families and instead introduce the Canada Child Benefit that will give the majority of families up to $2,500 more, tax-free, every year (typically for a family of four). The Liberal party has also touted a flexible parental benefits plan allowing parents to receive benefits in smaller blocks of time—for example, once every two weeks rather than once per month—and make it possible for parents to take a longer leave—up to 18 months when combined with maternity benefits, although at a lower benefit level.

Protect the home-ownership dream. Trudeau’s plan includes a new, 10-year investment in social housing, prioritizing affordable housing and seniors’ facilities (including building more units and refurbishing existing units) as well as removing all GST for developers of new affordable rental housing projects. The Liberals also said they would loosen the existing qualification rules for the Home Buyers’ Plan, allowing more Canadians affected by sudden and significant life changes (such as divorce) to access their RRSP savings for a down payment on a second home. Trudeau also pledged to review escalating home prices in high-priced markets, including Toronto and Vancouver, as well as all policy tools that could keep home-ownership within reach for more Canadians.

Reform the CRA. Among Trudeau’s plans for the Canada Revenue Agency (CRA) is a vague promise to have the agency contact people who have tax benefits but aren’t collecting them.

Restore the traditional retirement age. The Liberals have vowed to restore the Old Age Security (OAS) and Guaranteed Income Supplement (GIS) eligibility ages back to 65 after the Conservatives under Stephen Harper had introduced a plan to gradually raise the eligibility age to 67 for anyone born in or after 1958. Trudeau has promised however to leave pension income splitting intact for seniors as well as introduce a new seniors price index to ensure benefits keep up with rising living costs and a 10% boost to the GIS for single, low-income seniors.

Grants and grace periods for students and young professionals. Trudeau made headlines when he said he would eliminate the need for graduates to repay their student loans until they are earning at least $25,000 per year. He also pledged to increase the maximum Canada Student Grant to $3,000 per year for full-time students and to $1,800 per year for part-time students while increasing the income thresholds for eligibility so that more students can have access to the program. He also said he would invest $50 million in additional annual support to the Post-Secondary Student Support Program for Indigenous students attending post-secondary school. On the flip side, Trudeau said he would cancel existing textbook tax credits for all.

What personal finance issue is most important to you this election?

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33 comments on “What a Liberal majority means for you

  1. The reduction of TFSA Limit will reduce amount in middle income earners pockets…the $670 saving in Personal Income Tax will be lost
    in interest to be paid on gross income of middle income earners. Back where they started.

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    • TFSA is not RRSP. TFSAs do not decrease your gross income. TFSAs are meant to **avoid taxes on interest income**.

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  2. i’m interested to see how the deficit goes over the next 4 years, would hate to see the gap to debt get too high

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  3. It doesn’t bother me, because I just don’t have $10k each for me and the hubby each year to deposit. I can probably scrape up $11k for the both of us if I am careful on my budget, but as a middle income household with a child in university, plus RRSP contributions, I was short on cash for depositing to one or more of these expenses.

    I don’t think most middle income earners who are still working and paying off things have that much cash hanging around each year.

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  4. What about the $1,000 a year on average to be deducted from people’s paychecks for higher C.P.P. contributions that will increase over the years not just in Ontario?

    This alone will cost an average younger Canadian worker anywhere between $300,000 to $500,000 by retirement depending on when they retire and future investment earnings or income of about $14,000 to $23,000 a year in retirement. The extra C.P.P. benefit will be only about $7,000 a year with indexing but at not 65 years old for most but more likely at 70 to 75 years old.

    What about carbon taxes, carbon pricing and other increases in energy, food due to higher costs that will be passed on to consumers which I’ve seen estimates costing of thousands of dollar a year?

    This could cost another $300,000 to $500,000 or more in future lost money for younger Canadians and their families too. Higher, more taxes and more government and control over people’s abilities to be more independent is the Liberal’s platform. More poverty is on the way.

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    • Wow, these young Canadians are getting some excellent rates of return! If we’re going to make up numbers, why not give them a 20% guaranteed rate of return? Then an increased CPP will look like a REALLY stupid investment.

      Or, you know, we could pretend they’ll get a more realistic rate of return. Even at 6% after fees $1000 a year over 40 years turns into around $160K. Not including the effects of inflation, but then you didn’t index your CPP benefits number.

      That’s assuming that people save the money that would have gone into CPP in a retirement account, which is a dubious assumption at best.

      Then there’s the whole problem around the fact that most people are not knowledgable about investing and therefore end up paying inflated MERs to banks to manage their savings in mutual funds, knocking off several percentage points off of their returns right off the bat, and ensuring that they are probably invested with more of an eye towards making their “financial adviser” money than anything else.

      Oh, and then there’s the risk of that pot of money they’ve worked so hard to save disappearing in another market collapse. Because these days, if you park your money in safe investments you’re basically watching it slowly erode to inflation. Therefore you have to take some amount of risk. If that risk doesn’t pay off, you’re left with ….

      Well, hopefully you’re left with CPP. CPP that is enough to cover your needs in retirement. Thus stopping you from sitting in poverty.

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      • Well said Sarah

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      • …why would I want to give more of our paychecks for CPP and only be able to have chunks from the government when or IF I get to 65 years old to get it back when I could use this money for investments and get a better return NOW or invest it in real estate that would benefit me from now to when I retire with even more money in my pockets?? And pass on this wealth to my kids and pay them higher education so they don’t have to bankrupt themselves to get it…

        CPP is a scam so government can use OUR money to make profits and we never see the color of it! They are just hoping we die before we reach 65 so all that money gets to be kept/stolen by government.

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        • Re: CPP – why would we want to pay insurance for driving? Save/ invest it and use that money if you get into a MVA. Why pay health care premiums? Save/invest and use the money if you get sick and need to see a doctor. I’m not sure what this comment is about. CPP, EI, etc. are not based on protecting any one individual, but rather protecting society as a whole. Having said that, I’m not sure if most of us feel that this goal has been accomplished. CPP maybe seen as a scam to some – but to others it is a lifeline. If someone has a better suggestion in terms of balancing an individual and society, then say so.

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      • Agreed! Well said, Sarah.

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      • The biggest wildcard and reason I do not support CPP increases is death. If you do not live to at least your 70’s, neither you or your family get your money back. I would rather have the money in my hands to invest how I see fit than gamble on not seeing a cent because I wasn’t lucky to live to a ripe old age.

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        • And let’s be honest, where do you think the employer portion of the CPP increase is coming from? I’m willing to bet it will be from the raises of Canadian’s next year.

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      • If people aren’t knowledgeable about investing and end up paying inflated MERs then that’s their own fault. If they don’t do their due diligence then that’s not someone else’s fault but their own. I’ve made some bad investment decisions, and only have myself to blame, I don’t deflect.

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    • I agree with you 100% Dana Smith, and when Wynne said she would cancel her new Ontario Pension Plan if Trudeau elected, people should of watched that she used the word MAY in her comment. She was already talking about implementing it today on radio. Ontario is screwed. I would be ashamed to say I voted Liberal living in Ontario. Without the vote of Toronto turning completely red, Trudeau would not have won a majority. Canada will now be bankrupt just like Ontario. We will also have a bunch of pot heads driving on our roads.

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  5. Does anyone know if the eligibility for the Trudeau Child Care Benefit is based on gross OR net household income?

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    • Believe it is gross.

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  6. Will we still have the $10,,000 contribution limit in January 2016? I heard last night they are tabling the budget in February 2016.

    What a disaster.

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  7. There all important..what about the disability fund there now any changes?

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  8. as a senior, I would just like to see someone promise something and actually do it with benefit for all Canadians. Oh, and passports and licenses should have a clear photo I.D. no facial coverings.

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  9. Finally after years of never being in the group with benefits of any kind we have the TFSA which just might help middle income earners. Now Trudeau wants to roll it back. So much for his platform of helping middle income earners!

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  10. What it means to me is that my party lost and we are stuck with another trudeau running things. Wonderful example metric system.we are now going to bring in more foreigners and look after them. Would be nice if we could look after our own homeless people. Wonder if we can make trudeau another joe who. I think a lot of you will be wishing in short order that you had voted for someone else.

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  11. Think you will all be sorry you voted liberal

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  12. Personally I don’t think, any Party is doing enough for Senior’s, I worked for over 50 year’s, & due to Work Related Injury’s I’ve nothing to show for my years of toil. I live in Senior’s Assisted Accommodation, & I scrape by every month, & I’m considered to have a reasonable Senior income, but still struggle every month, & barely manage to keep my head above water.

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  13. Sounds like honest taxpayers earning high legal incomes are getting screwed.
    What about those “poor” self employed people who write off all their “business expenses” to bring their “earning income down to $40,000 ? These “poor” self employed people own a $2 Million home plus cottage and a Bimmer….. hmmmm interesting, maybe the govt should be focusing in tax evasion by the self employed rather than tax the honest 1%er earning a true $200k………when will the government realize that they should be finding additional tax revenue with self employed scam artists rather than honest high income earners?
    Why not raise prop taxes on homeowners with homes valued over $1 Million? or introduce new taxes on “recreational/cottage” properties owned by the “true rich” who have discovered tax loopholes to have their employment income show them living under the poverty level yet driving Bimmers?

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  14. I think everybody is too busy letting money rule their lives. It doesn’t matter how much money you have because it will NEVER be enough for those of you who have a lot of it. There is a lot of crap going on around us – wars, homelessness, job loss, doctor shortages, crazy weather etc. – and most people are too damn busy sticking their heads in the sand. It doesn’t matter how much you raise the minimum wage because everything else will always go up too so you will never be ahead of the game. All there is is the haves and have nots. When everything goes to hell in a hand basket, it will be the have nots that will know how to survive because that’s what they have always had to do.

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  15. I see nothing here that will help us at all. In the end , there is really no gain or improvement for anyone. I see only red ink with nothing to show for it. This government is setting us up to fail. Lost industry, less savings, greater consumer debt , home bankruptcies and higher taxes. We are being blindsided. A lot of garbily goop.

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  16. I see nothing here that will help us at all. In the end , there is really no gain or improvement for anyone. I see only red ink with nothing to show for it. This government is setting us up to fail. Lost industry, less savings, greater consumer debt , home bankruptcies and higher taxes. We are being blindsided. A lot of garbily goop.

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  17. JUST GIVE ME MORE MONEY TO LIVE ON TAX THE RICH THEY WILL FIND LOOPHOLES TO NOT PAY IT ANYWAY OR PASS IT ON TO THE POOR

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  18. When will us seniors get a decent increase in our government pensions to keep up with the rate of inflation? This years increase of approximately 1.00 dollar per month to our Old Age Pension is an insult to us seniors. Senior’s living on a fixed income need all the help that they can get after paying info our pension plan all our lives !

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  19. My Husband and I both had Cancer, we were both on CPP disability. My Husband recently passed away and I am NOT eligible to receive the survivors pension, as I am receiving the maximum amount under the cpp plan of 1236.00 per month. Thanks for that this is all that I have to live on. My Husband had not worked for more than 5 years battling cancer and I have not worked for more than 5 years. We used all of our retirement savings to live on and pay for our medications. Now what do I do???? After my Husband paid into the pension fund for more than 40 years I get nothing. Nice work,. Did not even no that there was a cap . What has my Husband’s contributions have to do with the fact that I have cancer and am on cpp disabiltity. I am so upset. There is no one to assist and nothing anyone seems to be able to do to assist me, especially since I am only 59 years of age. There are so many forms to complete when you go to retire, it is crazy, I bet it would be safe to say that most people miss out on a lot of benefits. There should be one place to call to get all the information one needs to apply for whatever benefits are available to a senior or one that is on disability. I nor my Husband did not ask for cancer or not be able to work we both loved our jobs.

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  20. Just because your in the 1% doesn’t mean you have it easy. The cost of living has gone on perportionally to my husbands income. Add in the cost of child support and we are barely scrapping by. With oil prices over the last year taking a dip I have been layed off and struggling to find work for more than 15/hr with won’t even come close to paying the bills here. I know we are considered to be fortunate as we are in the “1%” but thats simply not the case anymore. People need to factor in the higher cost of living that is connected to this 1%. our Provincial taxes have been raised as of october, now our federal taxes might jump up to 33% and child support already takes almost 40%, so whats left at the end of the day…probably not enough to have a home and see his children….the 1% group isn’t all rich people.

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    • Try being a senior living onCPP and OAS

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  21. glad to hear i’m getting a small tax break this year. although i don’t think the rich should pay most of the taxes – it ain’t me at the moment.

    hopefully the liberals tax foreigners and investors from buying up all the homes already the big cities. unreal what a home with a nice yard costs these days. not realistic for most to buy a home and living in a 600 sq 2 shoe box in the sky and having debt to carry your entire life isn’t what life should be about.

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