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.
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 taxes. Employment 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.