Election 2021: Where the parties stand on financial issues

Canadians head to the polls on Sept. 20 in what is shaping up to be a close federal election. The parties have pledged a number a policies related to financial institutions, taxation, housing and disability benefits that will impact your clients and your practice. Here’s a breakdown.

Financial services

Liberal Party of Canada

• Raise the corporate income tax rate for banks from 15% to 18% on all earnings above $1 billion. These financial institutions would also need to contribute to a “Canada Recovery Dividend.”
• Enhance the powers of the Financial Consumer Agency of Canada to review the prices charged by banks and implement changes if they are excessive.
• Implement the recommendations of the Advisory Committee on Open Banking to provide consumers with more options for financial services.
• Establish a single, independent ombudsperson for dealing with consumer complaints involving banks, with the authority to impose binding arbitration.
• Invest $200 million over the next four years to establish a nationwide agency to investigate financial crimes that brings together the RCMP, the Financial Transactions and Reports Analysis Centre (FINTRAC) and the Canada Revenue Agency (CRA).

Conservative Party of Canada

• Order the Competition Bureau to investigate bank fees.
• Legislate open banking “so that Canadians can connect with fintech companies that can provide a better offer for banking services such as a mortgage, line of credit, or credit card.”
• Require more transparency for investment management fees “so that seniors and savers don’t get ripped off.”

New Democratic Party

• Require financial advisors to “offer advice that is in your best financial interest, not what is best for the bank’s bottom line.”
• Introduce more powers to investigate and enforce the above and offer compensation for consumers who have been misled.

Green Party of Canada

• Impose a 0.5% financial transactions tax in the finance sector.
• Charge a 5% surtax on commercial bank profits. (Credit unions, caisses populaires and co-ops would be exempt.)

Taxation

Liberal Party of Canada

• Implement a tax on luxury cars, boats and planes, as outlined in the 2021 federal budget. The tax would apply to the sale of new luxury cars and personal aircraft with a retail price of more than $100,000, and new boats that cost more than $250,000. The tax would be calculated at the lesser of 20% of the value above the thresholds or 10% of the full value.
• Develop a minimum tax rule to ensure that top earners (those earning more than $216,511 in 2021) pay at least 15% per year (the tax rate paid by people earning less than $49,000), “removing their ability to artificially pay no tax through excessive use of deductions or credits.”
• Increase CRA resources by up to $1 billion per year to combat “aggressive tax planning and tax avoidance” and close the tax gap.
• Allow privately owned, Canadian-controlled businesses to expense up to $1.5 million of “growth-enhancing investments” (i.e., software, patents and machinery).

Conservative Party of Canada

• Increase CRA funding to $750 million per year to go after “wealthy tax cheats” and large corporations.
• Fix the high-net-worth compliance program to ensure the wealthy pay their “fair share of taxes.”
• Impose a duty of care on the CRA and revise penalties so that first-time “problems or errors” receive minor fines.
• Implement “a month-long GST holiday” this fall where all retail store purchases are tax-free.
• Provide a 5% investment tax credit for any capital investment made in 2022 and 2023, with the first $25,000 to be refundable for small business.
• Maintain existing corporate, small business and personal income tax rates.

New Democratic Party

• Impose an annual tax of 1% on Canadian families with a net worth of more than $10 million.
• Increase the capital gains inclusion rate to 75%.
• Introduce a temporary Covid-19 excess profit tax that puts an additional 15% tax on “large corporate windfall profits during the pandemic.”
• Introduce a luxury goods tax on items such as yachts and private jets.  
• Raise the top federal marginal tax rate by two percentage points (from 33% to 35% on taxable income over $216,511 in 2021).
• Boost CRA funding to enforce compliance with international and corporate taxation.
• Increase the corporate tax rate from 15% to 18%.

Green Party of Canada

• Impose a 1% tax on net family wealth above $20 million.
• Close “capital gains tax loopholes” that enable individuals and corporations to “only add half of their capital gains to their taxable income.” (The party platform didn’t provide details as to whether, or how, the capital gains inclusion rate would change.)
• Apply a tax on luxury goods, such as planes and luxury cars.
• Direct the CRA to focus on identifying people who obfuscate wealth.
• Raise the federal corporate tax rate from 15% to 21%.
• Eliminate the 50% corporate meals and entertainment expense deduction.  

Housing 

The Liberal Party of Canada

• Impose an annual 1% tax on the value of non-resident, non-Canadian owned residential real estate that is considered to be vacant or underused.
• Double the First-Time Home Buyers Tax Credit from $5,000 to $10,000.
• Introduce a tax-free First Home Savings Account to enable Canadians under 40 to save up to $40,000 toward their first home, with no tax on contributions or withdrawals.
• Make the First-Time Home Buyer Incentive more flexible by giving Canadians the option of choosing a deferred mortgage loan as an alternative to the current shared equity model.
• Reduce the price charged by the Canadian Mortgage and Housing Corporation on mortgage insurance by 25%.
• Commit $1 billion in loans and grants to develop and scale up rent-to-own projects “creating a pathway to home ownership for renters in five years or less.”
• Review the tax treatment of large corporate owners of residential properties like REITs and implement policies to curb excessive profits in this area while protecting small independent landlords.
• Introduce an “anti-flipping tax” on the speculation of residential homes, requiring property to be held for at least 12 months.
• Make $4 billion available to Canada’s largest cities to accelerate their housing plans toward creating 100,000 new homes by 2024–25.
• Build, preserve or repair 1.4 million homes in four years.

Conservative Party of Canada

• Encourage investment in rental housing by allowing those who sell a rental property and reinvest in rental housing to defer the capital gains tax.
• Ban foreign investors not living in or moving to Canada from buying homes for a two-year period.
• Increase the limit on eligibility for mortgage insurance and index it to home price inflation.
• No longer require a stress test when a homeowner renews a mortgage with a different lender.
• Build a million homes in three years and convert some federal buildings into communal housing.

New Democratic Party

• Introduce a 20% foreign buyer’s tax on homes.
• Double the Home Buyer’s Tax Credit to $1,500.
• Reintroduce 30-year terms to CMHC-insured mortgages on entry-level homes for first-time buyers.
• Build at least 500,000 affordable housing units in the next decade.

Green Party of Canada

• Introduce an “empty home” tax for foreign and corporate residential property owners who leave buildings and units vacant.
• Assess the role of REITs in the housing market.
• Re-focus the CMHC’s mandate on developing “affordable, non-market and co-operative housing, as opposed to its current priority of supporting Canadian lenders to de-risk investment in housing ownership.”

Disability benefits

Liberal Party of Canada

• Make the Canada Caregiver Credit refundable.
• Introduce a Canada Disability Benefit, a direct monthly payment for low-income Canadians with disabilities aged 18 to 64.
• Review the Disability Tax Credit (DTC) and other federal benefits and programs to make sure they’re accessible to those experiencing mental health challenges.

Conservative Party of Canada

• Implement a Lifelong Disability Benefit for moderately to severely injured veterans.
• Reduce the number of hours required to qualify for the DTC from 14 to 10 hours per week, making it easier to access various programs and benefits for which the DTC serves as a gateway, including the RDSP and the child disability benefit.
• Double the disability supplement in the Canada Workers Benefit from $713 to $1,500.

New Democratic Party

• Make the Canada Caregiver Credit refundable.
• Expand income security programs to ensure Canadians living with a disability have a guaranteed livable income.

Green Party of Canada

• Make the Canada Caregiver Credit refundable.
• Redesign the CPP disability benefit test to incorporate the DTC definition of disability and permit employment.
• Convert the DTC into a refundable credit.
• Create a guaranteed livable income.

Seniors

Liberal Party of Canada

• Implement a Career Extension Tax Credit to allow working seniors over 65 who earn at least $5,000 at their jobs to eliminate tax payable on a portion of their income and receive a tax credit of up to $1,650.
• Introduce a Multigenerational Home Renovation Tax Credit so families can claim a 15% tax credit for up to $50,000 in renovation and construction costs.
• Increase old age security by 10% in 2022 for seniors 75 and older.
• 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.

Conservative Party of Canada

• Change the Home Accessibility Tax Credit for seniors to $10,000 per person rather than $10,000 per dwelling.
• Allow seniors or their caregivers to claim the Medical Expense Tax Credit for home care.
• Implement a Canada Seniors Care benefit paying $200 per month per household to any Canadian who is living with and taking care of a parent over the age of 70.

New Democratic Party

• Provide a guaranteed livable income for seniors.
• Create a Pension Advisory Committee to develop a long-term plan to enhance the OAS, raise the GIS “to lift all seniors out of poverty,” and bolster the Canadian Pension Plan.
• Make automatic OAS and GIS enrolment retroactive.

The Green Party of Canada

• Provide a guaranteed livable income for seniors.
• Introduce measures to protect pensioners in the event of insolvency.