Party Platforms and Your Wallet
With Monday's election coinciding with the extended personal tax-filing deadline for your 2010 tax return, what better time to quickly review a few of each of the main three parties' personal tax platforms.
Perhaps the Tories' biggest announcement was the "Family Tax Cut," which would allow income sharing of up to $50,000 for couples with dependent children under 18, once the deficit is eliminated. They claim that nearly 1.8 million families would benefit, by saving an average of $1,300 in taxes annually.
The other Tory promise that drew a fair amount of attention during the campaign is the proposed doubling of the annual TFSA limit to $10,000 from the current $5,000 -once the budget is balanced.
Other tax measures were outlined in the Conservatives' March federal budget and include: the new Children's Arts Tax Credit and the Family Caregiver Tax Credit. The Conservatives' would presumably also continue with proposed legislation to curb RRSP abuses, including swap transactions where property in a registered account is "swapped" for nonregistered property, restrict the capital gains exemption on the donation of flow-through shares to charity, as well as a couple of proposals that would impair the attractiveness of an Individual Pension Plan for a small business owner.
During the campaign, the Tories also announced a doubling of the Children's Fitness Tax Credit and a brand new Adult Fitness Tax Credit.
While the Liberals promised not to raise personal income taxes, they did state that they would be cracking down on employee stock-option benefits. Under the current tax rules, employees who exercise stock options generally get a stock-option deduction equal to 50% of the difference between the fair value of the shares when the option is exercised and the option exercise price. This provides taxation akin to capital gains treatment, in which only 50% of the gain is taxable.
The Liberals would cap the stock-option deduction to $50,000 per employee annually, taxing any benefit above $100,000 at 100%, similar to the tax treatment of other employment income.
Chief among the Liberals' post-secondary education measures is the "Canadian Learning Passport" that would eliminate the current education and textbook tax credits and instead provide a post-secondary bursary of $1,000 per year ($1,500 for low-income families) over four years for every high school student that wishes to attend post-secondary level schooling.
The funds for the Learning Passport would be provided through the registered education savings plan (RESP) and no contributions would be required by students or their families to receive this annual benefit.
While the NDP would increase general corporate tax rates to 19.5%, the party did promise to reduce the preferred small business tax rate, which small incorporated businesses pay on their first $500,000 of annual earnings, to 9% from 11%.
Artists and cultural workers would benefit from income averaging while seniors could enjoy double their current CPP/QPP benefits.
Post-secondary students' education tax credits would be increased to $5,760 from the current maximum of $4,800 and the party would combine existing supports such as the Child Tax Benefit to create a non-taxable "Child Benefit" in addition to the current Universal Child Care Benefit.
While these are but a few of the parties' proposed changes, accounting giant KPMG has compiled a handy chart listing all five parties' tax proposals which can be found online at http: //www.kpmg.ca.