The government’s fall economic statement and the Prime Minister’s mandate letters to his cabinet provided updates to promises made by the governing Liberals. Parliament is now adjourned until Jan. 31, 2022, and here’s a look at the status of major tax promises and proposals still outstanding:
Outstanding from the 2018 federal budget
Proposal: Any non-resident trust that files a T3 tax return and virtually all express trusts resident in this country will have to turn over beneficial ownership information to the Canada Revenue Agency for taxation years ending on or after Dec. 31, 2021.
Status: The changes have not been introduced in legislation, but the government stated in both the 2019 and 2021 federal budgets that it intended to proceed with the measures. As a result, the tax and estate community is proceeding based on the 2018 draft legislation.
Outstanding from the 2019 federal budget
Proposal: Change taxation affecting ETFs and mutual funds (e.g., allocation to redeemers).
Status: Passed June 29, 2021, in Bill C-30. Mutual fund changes are retroactive to March 19, 2019. For ETFs, changes don’t apply to tax years that begin before Dec. 16, 2021, but do apply to tax years beginning after that day. Bill C-30 broadened that deferral to include mutual fund trust ETFs created after Budget Day, 2019. The investment industry is still awaiting specific rules for ETFs.
Outstanding 2019 election promises
Promise: Raise CPP survivor’s benefit by 25%.
Status: Finance Minister Chrystia Freeland was directed to implement this in her 2021 mandate letter.
Promise: Increase Canada Child Benefit (CCB) by 15% for kids younger than one year old; make EI maternity and parental benefits tax-exempt.
Status: No progress. This promise was not mentioned in the Liberals’ 2021 election platform or in mandate letters. In 2021, the maximum CCB benefit is $6,833 per child younger than six, up from $6,765 in 2020. The EI maternity and parental benefits remain taxable.
Promise: Double the child disability benefit.
Status: No progress. This promise was not mentioned in the Liberals’ 2021 election platform or in mandate letters. The benefit is up to $2,915 for the period of July 2021 to June 2022 for each child who is eligible for the disability tax credit, up from $2,886 the year prior.
Promise: Enact a luxury tax of 10% on new cars and aircraft costing more than $100,000 and on new boats costing more than $250,000. The tax would be calculated as the lesser of 20% of the value above the thresholds and 10% of the full value.
Status: A consultation on this tax, which the government said would come into force on Jan. 1, 2022, ended Sept. 30, 2021. The fall economic update noted that draft legislation and details on when the tax would come into force would be released in 2022.
Outstanding from the 2020 speech from the throne
Promise: Enact a new Canadian disability benefit modelled on the guaranteed income supplement.
Status: The Canada Disability Benefit was introduced in Bill C-35 on June 22, 2021, but the legislation died when Parliament rose. The mandate letter for Carla Qualtrough, Minister of Employment, Workforce Development and Disability Inclusion, directs her to “move forward with the design, introduction and implementation of a Canada Disability Benefit Act and Canada Disability Benefit for low-income working age persons with disabilities.”
Promise: Revamp the EI system.
Status: Qualtrough’s mandate letter asked her to “bring forward and begin implementing a plan to modernize the EI system for the 21st century” by summer 2022. The plan will include: extended EI sickness benefits from 15 to 26 weeks; a new EI benefit for self-employed Canadians that would provide unemployment assistance comparable to EI and lasting for as many as 26 weeks; a new 15-week benefit for adoptive parents; a new EI Career Insurance Benefit to provide long-tenured workers who have lost their job with additional income support while they reintegrate into the labour market; and consideration of the realities of artists and cultural workers.
Promise: Permit free, automatic tax returns for simple situations.
Status: No progress. This promise was not mentioned in the Liberals’ 2021 election platform, and the mandate letter for Diane Lebouthillier, the Minister of National Revenue, did not include this directive. However, she was asked to develop a strategy for supporting first-time tax filers.
Outstanding from the 2021 federal budget
Proposal: Expand disability tax credit eligibility in the areas of mental functions and life-sustaining therapy.
Status: No progress. Not included in the mandate letters for the Ministers of National Revenue or of Employment, Workforce Development and Disability Inclusion.
Proposal: Examine raising charities’ disbursement quota, which currently is 3.5%.
Status: The consultation ended Sept. 30 and the issue was not mentioned in the finance minister’s mandate letter.
Proposal: Impose an annual 1% tax on the value of non-resident, non-Canadian-owned residential real estate that is considered to be vacant or underused.
Status: Final details of this tax, which comes into force Jan. 1, 2022, were released in the fall economic update.
Outstanding 2021 election promises
All of the following promises were reiterated in the finance minister’s mandate letter:
- Raise the corporate income tax rate for banks and insurers to 18% from 15% on all earnings above $1 billion. These financial services institutions also would have to contribute to a Canada Recovery Dividend.
- Develop a minimum tax rule to ensure that top earners (those earning more than $216,511 in 2021) pay at least 15% per year.
- Double the Home Buyers’ Amount to $10,000 from $5,000.
- Introduce a tax-free First Home Savings Account to enable Canadians younger than 40 to save up to $40,000 toward their first home, with no taxes on contributions or withdrawals.
- Introduce an “anti-flipping tax” on residential homes, requiring property to be held for at least 12 months.
- Make the Canada Caregiver Credit refundable.
- Implement a Career Extension Tax Credit to allow working seniors older than 65 who earn at least $5,000 at their jobs to eliminate taxes payable on a portion of their income and receive a tax credit of up to $1,650.
Promise: Increase the guaranteed income supplement by $500 for single seniors and by $750 for couples, beginning at age 65.
Status: The mandate letter to the Seniors Minister Kamal Khera included this directive. Khera was also asked to establish an expert panel to provide recommendations for establishing an Aging at Home Benefit, working with the Minister of Health Jean-Yves Duclos toward the goal.