Today, Julie Payette, the Governor-General of Canada, opened the new session of Parliament with the throne speech. The following is a summary of some of the proposed tax measures that were discussed.

Tax Measures Targeted at High-Net worth Individuals

The Government proposes to identify additional ways to tax extreme wealth inequality, including by concluding work to limit the stock option deduction for wealthy individuals at large and established corporations.

In the 2019 Budget, the Government made the following announcements:

1. A $200,000 annual limit will apply on employee stock option grants (based on the fair market value of the underlying shares when the options are granted) that can receive tax-preferred treatment under the current employee stock option tax rules.
2. Employee stock options granted by Canadian-controlled private corporations (CCPCs) will not be subject to the new limit.
3. In recognition that some non-CCPCs could be start-ups, emerging or scale-up companies, those non-CCPCs that meet certain prescribed conditions will also not be subject to the new limit.
4. Employee stock options above the limit will be subject to the new employee stock option tax rules.

These rules were supposed to come into effect starting January 1, 2020. However, then Finance Minister, Bill Morneau, announced that the above-proposed changes to the tax treatment of employee stock options will not come into force on the previously proposed date of January 1, 2020. The Government proposed to announce details on how it intends to move forward with the measure in Budget 2020. We may see some of these measures getting implemented soon.

Taxing the Digital Economy

The throne speech made reference to the fact that web giants are not paying their fair share of taxes to the Canadian Government. The Government has asserted that the way revenues and profits are allocated between countries for tax purposes should be modified.

The Government will likely follow the approach suggested by the OECD. Please click here to learn more about OECD’s proposed measures concerning the digital economy.

Increase to the OAS and CPP Survivor Benefits

The Government remains committed to increasing Old Age Security once a senior turn 75, and boosting the Canada Pension Plan survivor’s benefit.

Disability Inclusion Plan

The Government proposes to introduce a Disability Inclusion Plan, which includes a new Canadian Disability Benefit modelled after the Guaranteed Income Supplement for seniors.

Extending COVID-19 Financial Measures

• To reduce unemployment caused by COVID-19, the Government proposes extending the Canada Emergency Wage Subsidy (CEWS) until next summer (summer 2021). The Government will work with businesses to ensure that the program meets the economic situation as it evolves.
• CERB recipients will be supported by the Employment Insurance system. For people who would not traditionally qualify for EI, the Government proposes to create the transitional Canada Recovery Benefit.
• The EI system will become the sole delivery mechanism for employment benefits, even for Canadians who did not qualify for EI before the pandemic. The Government has acknowledged that the EI system needs to be adapted for the 21^st-century economy, including self-employed individuals and those in the gig economy.
• In fall 2020, the Government proposes to expand the Canada Emergency Business Account (CEBA) to help businesses with fixed costs.

Other

• Further support will be introduced for specific sectors significantly affected by the COVID-19 pandemic, such as travel, tourism, hospitality and performing arts
• Reducing the corporate tax rate for companies producing zero-emissions products by half.