Steve McGuinness
Columnist
The recent re-election of Prime Minister Mark Carney’s Liberal government will usher in a host of tax and policy changes that could impact Canadians’ wallets. Some measures will take effect almost immediately, while others must await the passage of a federal budget, expected after the King delivers the throne speech on May 27.
Some changes will affect everyone; others apply in specific situations. Here’s a summary of what to expect:
The rate of the consumer carbon tax has already been reduced to zero. A legislative amendment to permanently eliminate it is anticipated. The change has led to lower gas prices at the pump but also means taxpayers will no longer receive the Canadian carbon rebate in future quarters.
The Liberals also pledged to cut the marginal tax rate on the lowest income bracket by one percentage point in the name of middle-class tax relief. This is expected to save two-income families up to $825 a year and could take effect by July 1.
Two new measures are aimed at seniors.
First is a temporary reduction in the minimum amount that must be withdrawn from a registered retirement income fund (RRIF) by 25 per cent. Canadians must convert their RRSPs into a RRIF by the end of the year they turn 71. Once converted, plan holders must withdraw a prescribed minimum amount annually, which is included in taxable income. Seniors who do not require the full withdrawals can defer some tax by remaining invested. Remaining amounts in these registered accounts are taxed upon death, unless transferred to a surviving spouse.
The second seniors-focused change is a temporary five per cent increase in the Guaranteed Income Supplement (GIS), providing up to $652 more, tax-free, to low-income Old Age Security recipients. A single senior must have an annual income below $21,624 to qualify for the full GIS.
Homebuyers are also promised relief from GST on newly constructed homes priced at $1 million or less, and reduced GST on homes between $1 million and $1.5 million. The Home Buyers’ Plan and Tax-Free First Home Savings Account will continue to encourage home ownership. I will explain how these plans work in a future column on housing.
Meanwhile, the Canadian Dental Care Plan is expanding to cover eight million lower-income Canadians aged 18 to 64. The average enrollee could save around $800 on routine dental care. The rollout is already underway, with Canadians aged 55 to 64 now eligible to apply online. Those over 65 were previously eligible. Many dentists accept the plan, with claims administered through Sun Life Canada.
In one way or another, most NOTLers should benefit from these upcoming changes.
Steve McGuinness was a senior adviser to major financial institutions during his Bay Street career and is now retired in Niagara-on-the-Lake. Send your personal finance questions to him at smcgfinplan@gmail.com.
