The Liberals have secured enough seats to form a minority government in Canada's 2021 Federal Election. With another four years in office, taxpayers can expect the Liberals to continue COVID relief programming; implement new measures to help individuals, families, and small businesses; and target big businesses and foreigners.

Crowe MacKay's tax advisors highlight what Canadian taxpayers can expect from the re-elected Liberals.

COVID-19 Response

  • Extended the Canada Emergency Wage Subsidy and the Canada Emergency Rent Subsidy until May 2022 for businesses in the tourism sector
  • Extend the Canada Recovery Hiring Program until March 31, 2022
  • An increase to the Eligible Educator School Supply Tax Credit to 25% (from 15%) for teachers along with an expansion of eligibility criteria.
  • The implementation of a support program that provides emergency relief to out-of-work artists, craftspeople, creators, and authors

Housing

  • Anti-flipping tax on the sale of residential properties which will require owners to hold property for at least 12 months before selling, with certain exemptions
  • A reduction in the price charged by the Canadian Mortgage and Housing Corporation on mortgage insurance by 25% for those whose down payment is less than 20% or who have a mortgage over $1 million
  • A national tax on vacant property owned by non-resident, non-Canadians, will go into effect January 1, 2022
  • The introduction of a tax-free First-Time Home Savings Account which allows Canadians under 40 to save up to $40,000 towards their first home, putting their withdrawal towards their first home purchase tax free, with no requirement to repay it
  • The doubling of the First-Time Home Buyer's Tax Credit from $5,000 to $10,000 which will put $1,500 of tax savings in the first-time home buyer's pocket
  • A new Multigenerational Home Renovation tax credit to help families add a secondary unit to their home for immediate or extended family members. There will be a 15% tax credit for up to $50,000 in renovation and construction costs, saving up to $75,00
  • The doubling of the Home Accessibility Tax Credit, to $20,000, for seniors

Climate

  • The development of an investment tax credit of up to 30% for clean technologies
  • Elimination of flow-through shares for oil, gas and coal projects
  • A boost to clean and renewable power by doubling the Mineral Exploration Tax Credit
  • A new investment tax credit for a range of renewable energy and battery storage solutions
  • Grants of up-to $5,000 and interest-free loans of up to $40,000 to retrofit homes
  • A new 15% tax credit to cover the cost of home appliance repair performed by technicians

Working families and individuals

  • $10 per day childcare across Canada
  • A Parental Sharing Benefit giving an extra five weeks of EI benefits to families where both parents agree to take time off for their new child
  • The expansion of the Canada Caregiver Credit into a refundable, tax-free benefit
  • A minimum tax rule that will ensure individuals who qualify for the top bracket will pay federal tax of at least 15% each year.
  • A one-time income tax deduction of up to $15,000 over their first 3 years of practice for health care professionals in rural communities, who are just starting out in their careers, to help with the costs of setting up a practice.
  • A national tax on vaping products
  • The implementation of a tax on luxury cars, boats and planes
  • A review of the access to the Disability Tax Credit, CPP Disability and other federal benefits and programs to ensure they are available to those experiencing mental health challenges
  • Extend the Home Office Expense deduction for 2 years, with an increase of the deductible amount to $500
  • A Career Extension Tax Credit for seniors, helping them to stay in the workforce, if desired
  • A new Labour Mobility Tax Credit which will allow workers in the building and construction trades to deduct up to $4,000 in eligible travel and temporary relocation expenses

Large corporations

  • An increase in corporate taxes for the largest, most-profitable banks and insurance companies earning more than $1 billion per year as well as the introduction of a temporary Canada Recovery Dividend these businesses will need to pay
  • A review of the tax treatment of large corporate owners of residential properties who are increasingly trying to amass large portfolios of Canadian rental housing, putting upward pressure on rents.

Small businesses

  • Small businesses can receive up to $2,400 in microgrants so they can afford the cost of new technology
  • Zero-interest loans for small and medium-sized businesses to enable the adoption of new technologies
  • The maximum loan under the Canada Small Business Financing Program will be increased to $500,000 with an extension of the loan coverage to 15 years for equipment and leasehold improvements
  • The introduction of a tax credit to make it easier for small business to invest in better ventilation
  • A new EI benefit for self-employed Canadians that would provide as much as 26 weeks of assistant

Tax fairness

  • Modernization to the General Anti-Avoidance Rule so that businesses, such as financial institutions and insurance companies, that use a tiered structure as a form of corporate tax planning cannot reduce taxes through entities in low-tax jurisdictions
  • A significant Increase of the resources of the Canada Revenue Agency to combat aggressive tax planning and tax avoidance
  • Collaboration with international partners to implement a global minimum tax so that large, international businesses pay taxes owed to Canada

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.