The below highlights some of the tax measures proposed by the Liberal Party of Canada for the 2021 Canadian federal election that will be held on September 20, 2021. The purpose of the below article is to summarize and outline the different tax measures published by the political parties in their election platforms in an impartial manner. The views and measures expressed herein are those of the Liberal Party of Canada , they do not necessarily represent our views.
Tax Measures for Businesses
Extend the Canada Recovery Hiring Program to March 2022
The Liberals plan to extend the Canada Recovery Hiring Program to March 31, 2022, to encourage businesses to hire more workers.
Temporary Wage and Rent Support for Tourism Industry
The Liberals plan to provide Canada’s hard-hit tourism industry with temporary wage and rent support of up to 75% of their expenses to help them get through the winter.
Canada Digital Adoption Grants
Give microgrants of up to $2,400 to smaller small businesses so they can afford the costs of new technology.
Reform the Scientific Research and Experimental Development Program
The Liberals plan to reform the Scientific Research and Experimental Development Program to reduce red tape and the need for consultants, better align eligible expenses to today’s innovation and R&D and make the program more generous for those companies who take the biggest risks, promoting productivity, new inventions, and the creation of good jobs.
Clean Technologies Tax Credit
The Liberals plan to develop an investment tax credit of up to 30% for a range of clean technologies including low carbon and net-zero technologies with input from external experts on what technologies should be covered.
Raise Corporate Taxes on Banks and Insurance Companies
Raise corporate income taxes on the largest, most profitable banks and insurance companies who earn more than $1 billion per year and introduce a temporary Canada Recovery Dividend that these companies would pay in recognition of the fact they have recovered faster and stronger than many other industries.
Tax Measures for Individuals and Families
A New Minimum Tax for High-Income Earners
Create a minimum tax rule so that everyone who earns enough to qualify for the top bracket pays at least 15 % each 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 and credits.
A Luxury Tax
Implement a tax on luxury cars, boats, and planes as outlined in Budget 2021.
Benefits for Health Care Professionals in Rural Areas
To incentivize health care professionals to practice in rural areas, the Liberals propose the following:
- Expand the number of family doctors and primary health teams in rural communities by increasing by 50% (from $40,000 up to $60,000 over 5 years), the maximum debt relief that family doctors, residents in family medicine, nurse practitioners, or nurses are eligible for the under Canada Student Loans forgiveness program.
- Expand the list of professionals eligible for forgiveness to include dentists, pharmacists, dental hygienists, midwives, social workers, psychologists, teachers, and early childhood educators so that rural communities have greater access to the full suite of health and social service providers they need.
- Offer health care professionals, who are just starting out in their careers, a one-time income tax deduction of up to $15,000 over their first 3 years of practice to help with the costs of setting up a practice.
Increase to the Educator School Supply Tax Credit
Teachers can now claim up to $1,000 of eligible teaching supplies expenses for a 15% tax credit.
The Liberals propose to increase the refundable tax credit to 25% (from 15%). They also plan to expand eligibility criteria to include tech devices and ensure that teaching supplies purchased to perform employment duties are eligible, no matter where that may be.
Multigenerational Home Renovation Tax Credit
Liberals propose to introduce a new Multigenerational Home Renovation tax credit to help families add a secondary unit to their home for an immediate or extended family member. Families will be able to claim a 15% tax credit for up to $50,000 in renovation and construction costs, saving up to $7,500.
Expanding the Canada Caregiver Credit
Expand the Canada Caregiver Credit into a refundable, tax-free benefit. With this measure, caregivers can receive up to $1,250 per year
$10 a Day Child Care
The Liberals plan to have the $10 a Day Child Care ready in five years or less.
Giving New Parents a Break on Student Loans
The Liberals propose to let new parents pause repayment of their federal student loans until their youngest child reaches the age of five. This would also include new parents who have graduated but still haven’t finished paying off their loans.
Boost OAS, GIS, and CPP Survivors’ Benefit for Low-income Seniors
Move forward with our plan to boost the OAS by 10% next year for seniors 75 and over.
Increase the GIS by $500 for single seniors and $750 for couples, starting at age 65.
Increase the CPP Survivors’ Benefit by 25%
Home Accessibility Tax Credit to Help Seniors and People with Disabilities Live at Home
Double the Home Accessibility Tax Credit, to $20,000 to allow for renovations to be made to homes for better accessibility.
Eliminate Interest on Student Loans and Loan Repayment Extension
Permanently eliminate the federal interest on Canada Student Loans and Canada Apprentice Loans to support young Canadians who invest in post-secondary education.
Increase the repayment assistance threshold to $50,000 for Canada Student Loan borrowers who are single. This means that new grads, working hard early in their careers, won’t have to begin repaying their loans until they earn at least $50,000 annually.
Canada Workers Benefit Expansion
The Liberals plan to expand the Canada Workers Benefit so that an additional 1 million Canadians can qualify.
EI System for Self-Employed
Introduce a new EI benefit for self-employed Canadians, delivered through the tax system, that would provide unemployment assistance comparable to EI and lasting for as much as 26 weeks. This is meant to help freelancers, contractors, and gig workers.
EI Career Insurance Benefit
Establish an EI Career Insurance Benefit. This benefit will be available to people who have worked continuously for the same employer for five or more years and are laid off when the business closes. The Career Insurance Benefit will kick in after regular EI ends, providing an additional 20% of insured earnings in the first year following the layoff, and an extra 10% in the second year. The Liberals say that this will give workers up to almost $16,900 over two years.
Increase to the Home Office Expense Deduction
COVID-19, the Liberals introduced a simplified home office expense deduction that enabled claim up to $400 in expenses for things like new office equipment, without the need to keep receipts. The Liberals plan to extend the Home Expense deduction for an additional 2 years, through the 2022 tax year, and increase the deductible amount to $500.
Home Appliance Repairs Tax Credit
To help reduce waste and encourage Canadians to repair their appliances rather than buy a new one, the Liberals plan to introduce a new 15% tax credit to cover the cost of home appliance repairs performed by technicians (up to $500).
To Combat the Hot Housing Market
Rent-to-Own Program
Introduce a new rent-to-own program for renters to get on the path towards homeownership while renting. The program will be designed based on three principles:
- the landlord must commit to charging a renter a lower-than-market rate to help Canadians build up savings for a down payment;
- the landlord must commit to ownership in a five-year term or less; and
- proper safeguards will be in place to protect the future homeowner.
Tax-free First Home Savings Account
Introduce a tax-free First Home Savings Account will allow Canadians under 40 to save up to $40,000 towards their first home, and to withdraw it tax-free to put towards their first home purchase, with no requirement to repay it.
A More Flexible First-Time Home Buyers’ Incentive
Under the current First-Time Home Buyers’ Incentive (FTHBI), it is a shared-equity mortgage, where, upon sale, the government incurs a portion of any increase (or decrease) in a home’s value. For example, you receive a 5% incentive of the home’s purchase price of $200,000, or $10,000. If your home value increases to $300,000, your payback would be 5% of the current value or $15,000.
The Liberals propose to allow borrowers under the FTHBI to choose between the current shared-equity approach or a loan that is repayable only at the time of sale. This would let borrowers keep more of any increase in the value of their home, while still reducing their monthly mortgage costs.
Double the First-Time Home Buyers Tax Credit
The Liberals propose to double the First-Time Home Buyers Tax Credit, from $5,000 to $10,000.
Reduce Monthly CMHC Insurance
Reduce the price charged by the Canadian Mortgage and Housing Corporation on mortgage insurance by 25%.
The Home Buyers’ Bill of Rights To Reduce Bidding Wars and Unconditional Offers
The Liberals propose to introduce The Home Buyers’ Bill of Rights which will:
- Ban blind bidding, which prevents bidders from knowing the bids of other prospective buyers, and ultimately drives up home prices.
- Establish a legal right to a home inspection to ensure that buyers have the peace of mind that their investment is sound.
- Ensure total transparency on the history of recent house sale prices on title searches.
- Require real estate agents to disclose when they are involved in both sides of a potential sale to all participants in a transaction.
- Move forward with a publicly accessible beneficial ownership registry.
- Ensure banks and lenders offer mortgage deferrals for up to 6 months in the event of job loss or other major life events.
- Require mortgage lenders act in the borrower’s best interest so that they are fully informed of the full range of choices at your disposal, including the First-Time Home Buyers’ Incentive.
Deterring Unfair Rent Increases by Taxing Renovictors
Stop “renovictions” by deterring unfair rent increases that fall outside of a normal change in rent.
Require landlords to disclose, on their tax filing, the rent they receive pre-and post-renovation, and implement a proportional surtax if the rent increase is excessive.
Anti-Flipping Tax to Curb Speculation and House Flipping
Establish an anti-flipping tax on residential properties, requiring properties to be held for at least 12 months.
Canadians who encounter changes in life circumstances due to, for example, pregnancy, death, new jobs, divorce, or disability will be exempt from this policy. As this tax is introduced, rules will be established to ensure that sellers subject to this tax can deduct legitimate investments in refurbishment.
Crack Down on Foreign Ownership
The Liberals propose the following measures to disincentivize foreign real-estate ownership.
- Ban foreign money from purchasing a non-recreational, residential property in Canada for the next two years, unless this purchase is confirmed to be for future employment or immigration in the next two years.
- Extend Canada’s first-ever national tax on non-resident, non-Canadian owners of vacant, underused housing, announced to begin on January 1, 2022, to include foreign-owned vacant land within large urban areas.
- Work with provinces and municipalities to develop a framework to better regulate the role of foreign buyers in the Canadian housing market so that this money does not deter housing from being available for, and used by, Canadians.
Target Large Corporate Owners of Residential Real Estate
The Liberals state that large corporate owners of residential properties such as Real Estate Investment Trusts (REITs) are amassing increasingly large portfolios of Canadian rental housing, making rent more expensive.
The Liberals state that homes should be for people to live in, not financial assets for investment funds to speculate on. As a result, they propose the following:
- Review the tax treatment of these large corporate owners.
- Put in place policies to curb excessive profits in this area, while protecting small independent landlords.
- Review the down payment requirements for investment properties.
