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2015 Federal Election…and your taxes

As the 2015 federal election approaches, Stern Cohen Accountants have compiled an easy to read chart comparing the tax policies of the three largest federal parties: the Conservatives, the Liberals, and the NDP. We understand that tax impacts how you invest, whether to grow your business, and how you budget for an addition to your family. We hope our chart helps you assess how each party’s platform will affect those decisions.

Please note that except for the Green Party, the three federal parties we’re comparing have not yet released fully costed platforms. When complete platforms are released we will update the chart to reflect any changes.

In the meantime, it’s going to be an interesting race!

Comparison of Tax Policy Platforms

Corporate Tax:

Personal Tax:

Liberal

NDP

Conservative

Personal tax rates

1)      Decrease rate by 1.5% (from 22% to 20.5%) on income between $44,701 to $89,401. Worth at max $670 per year.

2)      Increase rate by 4% (29% to 33%) on income over $200,000. For Ontario residents this would mean a top tax rate of 53.53%.

No change* No change*

TFSA annual contribution limit

$5,500 $5,500 $10,000

Child care benefit

Replace taxable Universal Child Care Benefit (UCCB) with income-tested, tax-free monthly child benefit that would increase payments for families with income below $150,000. 1)      Create $15 a day child care program (requires provinces to fund 40% of cost).

2)      Maintain UCCB

Maintain UCCB:
– $160 a month for children under 6.
– $60 per month for children 6-17.

Employee Stock Options (ESO)

Increase tax rate

Annual stock option gains that exceed $100,000 will be taxed as regular income. For a top rate Ontario resident this would mean the rate of tax on stock option gains above $100,000 would increase from 24.77% to 49.53%.

Increase tax rate**

ESOs will be taxed as regular employment income effectively doubling rate of tax. For top rate Ontario resident this would increase the rate from 24.77% to 49.53%.

Some exceptions may be offered for start-up companies.

No change

Currently if certain conditions are met ESOs are taxed at 50% of the normal employment income rate (similar to capital gains).

RESP grant for low and middle income families

No change No change Increase***
Increase is worth $50-$100 a year extra (or at max $2,200 in total per student).

Tax credits:

Income splitting tax credit

(This is separate from pension splitting)

See our article on the Family Tax Cut to determine how much this credit is worth to you.

Eliminate Eliminate No change

Allows high income earning spouse to transfer up to $50,000 of income to lower income earning spouse.

Max value = $2,000

Home Renovation

N/A N/A Renovations of $1,000 to $5,000. Credit is worth 15% of eligible renovations.

Teacher’s supplies credit

Refundable credit for up to $1,000 of school supplies. Credit is worth 15% of eligible supplies. N/A N/A

Single Seniors Tax Credit

N/A N/A $2,000 credit for single and widowed seniors to be phased in over four years beginning January 2017.

Credit will result in $300 of tax savings.

Liberal

NDP

Conservative

General rate

No change Increase from 15% to 17% starting in 2016. Combined Federal + Ontario rate would therefore increase from 26.5% to 28.5%. No change

Small business rate –  First $500,000 of active business income

Decrease from 11% – 9%.

Combined Ontario + Federal rate would therefore decrease from 15.5% to 13.5%.

Decrease from 11% – 9%.

Combined Ontario + Federal rate would therefore decrease from 15.5% to 13.5%.

Decrease from 11%-9% by 2019.

Notes:

*Personal tax on dividends received will likely change as corporate tax rates are changed. It’s anticipated that as corporate tax rates decrease the personal tax rate on dividends will increase. This is consistent with the design of the dividend tax credit which attempts to compensate individuals for tax already paid by the corporation.

**Details on the NDP plan are limited other than to say they’ll “close loopholes that allow CEOs to pay lower tax on their stock options.” We have interpreted this to mean they’ll tax employee stock options as regular income.

***RESP grant changes:

  • If family income is less than approximately $44,000 then additional $100 received on the first $500 contributed to RESP each year.
  • If family income is between approximately $44,000-$88,000 then additional $50 received on first $500 contributed to RESP each year.