The Liberal Party has proposed to reduce the tax rate for the
second lowest tax bracket ($44,700 to $89,401 of taxable income)
from 22% to 20.5%, stating that this can result in tax relief of up
to $670 per person. The Liberal Party has also proposed a new top
federal tax rate of 33% for individuals with taxable income in
excess of $200,000. For 2015, the top federal tax rate is 29% on
taxable income over $138,586.
The table below provides the top marginal tax rates for 2015 and
2016. The rates include the Alberta rate increases announced in
June of 2015. However, please note that the Alberta tax rates for
eligible and ineligible dividends do not account for upcoming
changes to the calculation of Alberta dividend tax credits which we
expect the Alberta Government to announce in the near future
(please see our comments on the 2015 Alberta Budget
If the new 33% federal tax rate becomes effective as of January
1, 2016, the increase in tax rates for individuals with more than
$200,000 of taxable income will be significant. Accordingly, you
may consider reviewing the timing of discretionary bonus and
dividend payments, and accelerating such payments to 2015.
Corporate Tax Measures
The Liberal Party has supported the reduction of the small
business tax rate for Canadian-Controlled Private Corporations
("CCPCs") from 11% to 9% that was proposed in the most
recent Federal Budget. However, they have stated their intention to
ensure that CCPC status is not used to reduce personal income tax
obligations for high-income earners rather than supporting small
businesses. We expect additional details on how the Liberal Party
intends to enact these measures at a later date.
Other Tax Measures
The Liberal Party's platform also mentions the following
items that it plans to implement.
Eliminate the education and textbook tax credits and increase
access to student grants.
Introduce a refundable tax credit for teachers and early
childhood educators who purchase certain supplies for their
Cancel the increase of the Tax Free Savings Account annual
contribution limit to $10,000.
Eliminate the Family Tax Cut tax credit.
Replace the Universal Child Care Benefit, the Canada Child Tax
Benefit and the National Child Benefit with a new tax-free Canada
Restore the Old Age Security and Guaranteed Income Supplement
eligibility age to 65 and increase the Guaranteed Income
Increase the Northern Residents Deduction to a maximum of
$8,000 per year and index the amount in subsequent years.
Limit the stock option deduction for individuals with more than
$100,000 in annual stock option gains.
Overhaul Canada Revenue Agency's service model to be more
client-focused. For example, by proactively contacting Canadians
who are entitled to, but not receiving, tax benefits.
1 These rates assume that the 33% federal rate does not
become effective as of January 1, 2016.
2 These rates assume that the 33% federal rate does become
effective as of January 1, 2016.
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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