Finance Minister Bill Morneau has been tasked with changing rules for stock option deductions, reviewing tax expenditures with an eye on the wealthy, and introducing a tax on luxury purchases, according to ministerial mandate letters published Friday.
Prime Minister Justin Trudeau’s instructions to his new cabinet repeat pledges from the Liberal election platform and include measures from the 2019 federal budget that weren’t implemented last spring.
Among the latter is the plan to impose a limit on stock options taxed at a preferential rate. Morneau introduced draft legislation for the change in June, and the Department of Finance consulted with industry on the proposals.
The draft legislation proposed a $200,000 annual limit for certain companies on employee stock option grants that can be taxed effectively at the capital gains rate, beginning with stock options granted on or after Jan. 1, 2020. The limit will not apply to Canadian-controlled private corporations.
The government’s top legislative priority, according to Morneau’s mandate letter, is to raise the basic personal amount to $15,000. The Liberals tabled a motion to introduce the tax cut earlier this week.
The Prime Minister’s instructions also included tax measures from the Liberal platform aimed at wealthy Canadians.
Morneau was mandated to “undertake a review of tax expenditures to ensure that wealthy Canadians do not benefit from unfair tax breaks,” the letter said, adding that the process should be transparent.
The letter also repeated the election pledge to introduce a 10% tax on luxury boats, cars and personal aircraft that cost over $100,000.
One element in the mandate letter that the Liberals didn’t campaign on relates to housing affordability. Morneau was tasked with considering “recommendations from financial agencies related to making the borrower stress test more dynamic.”
The Conservatives, under recently deposed leader Andrew Scheer, campaigned on “fixing” the Office of the Superintendent of Financial Institutions’ mortgage stress test.
Seniors minister to focus on OAS, CPP
The Prime Minister’s letter to new Seniors Minister Deb Schulte highlighted election pledges to help low-income seniors by boosting Old Age Security (OAS) and the Canada Pension Plan (CPP) survivor’s benefit.
Schulte’s letter repeats the plan to increase OAS by 10% for seniors over the age of 75 and to raise the CPP survivor’s benefit by 25%.
It also builds on the election promise to create a national definition of elder abuse (with new offences in the Criminal Code), and a new national consumer advocate.
Read the mandate letters for the entire federal cabinet.