As we head into the Federal election, the parties are campaigning for your vote. A popular issue is always how much money they’ll put into your pocket.
Government grants, benefits, tax credits, reduced taxes, job creation, subsidies, and more directly impact how much money you have. Here’s how the party platforms compare when it comes to your personal finance:
Liberal Party of Canada | Conservative Party of Canada | |
|---|---|---|
| Canada Child Benefit | Increase CCB by 15% for children under age 1 (potential benefit $995 per child) | None |
| Maternity and parental leave benefits | Tax-free when disbursed | Parents receive a 15% tax credit following year |
| Universal pharmacare | Committed $35 million to Canadian Drug Agency, a first step towards universal pharmacare | None |
| First Time Home Buyers | Introduced the First-Time Home Buyer Incentive, a shared equity mortgage with the government that provides up to 10% of a home's value as a down payment | Remove the mortgage stress test Increase maximum term to 30 years (you will pay an 25% more interest on your mortgage) |
| Affordable housing | Impose a 1% tax on absentee foreign owners | Home heating costs exempt from GST (approximate savings $180) |
| Green Homes | up to $40,000 interest-free loan with a 10 year term to retrofit your house or apartment for energy efficiency (approximate savings $18,000 in interest that would otherwise be paid on a 10 year loan @ 8%) | Green homes tax-credit for energy efficient renovations (approximate savings $2,800) |
| Carbon Tax | Carbon tax on individuals living in a province with no provincial carbon tax. Most individuals will receive a rebate greater than the amount they pay. (approximate rebate $250 to $600 per year) | No federal carbon tax. Will leave it up to provinces to decide if they want to impose a carbon tax. |
| Tax Cut | First $15,000 of income earned is tax-free (approximate savings $300 per year) | Reduce taxes from 15% to 13.75% on taxable income under $47,630 (approximate savings $400 per year) |
| Canada Student Grant | Increase number of students eligible | Increase number of students eligible |
| Cellphone bills | Reduce by 25% within 2 years (approximate savings $1,000 per year) | None |
| Student Loans | Interest free for the first 2 years after you graduate No payments if your income is less than $35,000 per year No payments & no interest for new parents, until their youngest child turns 5 | None |
The Liberal Party of Canada campaign promises will have an impact on your money. But by how much? Here’s a detailed breakdown of how the tax cuts and credits will affect your bank account!
Don’t forget to check out the other posts in this series, How the Conservative Party of Canada Campaign Promises Will Impact Your Finances
No taxes on the first $15,000 you earn
The Liberal Party has promised to raise the basic personal income tax deduction to $15,000 for anyone earning under $147,000. This means the first $15,000 of income you earn will not be subject to any federal tax. This is expected to save the average Canadian just shy of $300 per year.
In 2015, the Liberals added an upper tax bracket for those making more than $200,000 a year, while dropping the tax rate on earnings between $45,282 and $90,563 from 22% to 20.5%.
Remove income taxes for maternity and parental benefits
Both the Liberal and Conservative parties are offering to make maternity and parental benefits tax-free. This is an especially popular campaign promise because many new parents are surprised by the tax bill on the Employment Insurance (EI) benefits they receive during maternity or parental leave.
The Government of Canada currently provides up to up to 18 months of paid parental leave to new parents. While the program has flaws, it’s one of the most generous parental leave programs in the developed world. Mothers are entitled to 15 weeks of paid maternity leave at a maximum of $562 per week. Parents can then choose to receive up to a maximum of $562 per week for 12 months, or $337 per week for approximately 16 months.
Under Trudeau’s plan, families will receive their maternity or parental EI benefits without any income taxes taken off. Families will still need to pay provincial tax on this income. This is much different than the Conservative promise to give you a 15% tax credit the following year.
Increase the Canada Child Benefit (CCB)
The Canada Child Benefit is a monthly income-dependent tax-free disbursement from the Government of Canada to families with children to help with child-rearing costs. Families can receive up to $6,639 per child under the age of 6, and up to $5,602 per child aged 6 to 17.
More than 4 out of 5 Canadian families receive the CCB. While there is a clawback as household incomes increase, most families earning less than $188,000 receive some money. They can use this money however they want, from childcare costs to RESP contributions to living costs.
The Liberal Party of Canada has pledged to increase the Canada Child Benefit by 15% for children under one. This will make the maximum amount families are eligible for in baby’s first year to $7,635 or $636 per month!
RELATED POSTS
The CCB is one of the most successful actions of the Liberal Party and has lifted more than 300,000 children out of poverty.
Student loans are interest-free and payment-free for new grads, low-income earners, and new parents
The Liberal Party of Canada recently announced a few changes to Federal Student Loan repayment terms:
- Your student loans will be interest-free for the first 2 years after you graduate
- You do not have to make payments on your student loans until you earn at least $35,000 (currently you do not have to make payments until you earn at least $25,000, something Justin Trudeau introduced when he first took office
- You can pause your student loans, interest-free and payment-free when you have a baby. Your loans will not accrue interest and you do not have to make payments until your youngest child turns 5!
These are incredible offers to young voters, as the student loan burden has been universally crippling to Millennials trying to get a foothold in the workforce. It’s particularly beneficial to new parents, who struggle to make their student loan payments while grappling with sky-high daycare bills.
This is a big helping hand to young people, but don’t forget that you may carry provincial student loans as well, and those will not be subject to these rules. Nevertheless, this can have a hugely positive financial impact for post-secondary graduates across Canada!
Implementation of a federal carbon tax
Liberals have imposed a carbon tax on businesses and individuals in provinces with no federally approved carbon price plan. This includes Saskatchewan, Manitoba, Ontario and New Brunswick. However, in those provinces, the government is handing back carbon tax rebates to most residents.
The Liberals set a minimum carbon price of $20 per tonne this year, increasing $10 a year to $50 by 2022. What that will cost you out of pocket depends on how much fossil fuel energy you use. If you drive and heat large homes, it will be more expensive than if you live in an apartment and take public transit.
The federal government has committed to returning all carbon tax revenues to the province from which it is collected. The average household rebate will vary from $250 to $600.
Despite the uproar over the carbon tax, most taxpayers will get more money back than they will pay in carbon taxes. In other words, the implementation of the carbon tax will give you more money.
Liberal Party of Canada | Conservative Party of Canada | |
|---|---|---|
| Canada Child Benefit | Increase CCB by 15% for children under age 1 (potential benefit $995 per child) | None |
| Maternity and parental leave benefits | Tax-free when disbursed | Parents receive a 15% tax credit following year |
| Universal pharmacare | Committed $35 million to Canadian Drug Agency, a first step towards universal pharmacare | None |
| First Time Home Buyers | Introduced the First-Time Home Buyer Incentive, a shared equity mortgage with the government that provides up to 10% of a home's value as a down payment | Remove the mortgage stress test Increase maximum term to 30 years (you will pay an 25% more interest on your mortgage) |
| Affordable housing | Impose a 1% tax on absentee foreign owners | Home heating costs exempt from GST (approximate savings $180) |
| Green Homes | up to $40,000 interest-free loan with a 10 year term to retrofit your house or apartment for energy efficiency (approximate savings $18,000 in interest that would otherwise be paid on a 10 year loan @ 8%) | Green homes tax-credit for energy efficient renovations (approximate savings $2,800) |
| Carbon Tax | Carbon tax on individuals living in a province with no provincial carbon tax. Most individuals will receive a rebate greater than the amount they pay. (approximate rebate $250 to $600 per year) | No federal carbon tax. Will leave it up to provinces to decide if they want to impose a carbon tax. |
| Tax Cut | First $15,000 of income earned is tax-free (approximate savings $300 per year) | Reduce taxes from 15% to 13.75% on taxable income under $47,630 (approximate savings $400 per year) |
| Canada Student Grant | Increase number of students eligible | Increase number of students eligible |
| Cellphone bills | Reduce by 25% within 2 years (approximate savings $1,000 per year) | None |
| Student Loans | Interest free for the first 2 years after you graduate No payments if your income is less than $35,000 per year No payments & no interest for new parents, until their youngest child turns 5 | None |
The First Time Home Buyer’s Incentive
Earlier this year, the Liberal Party of Canada introduced the First Time Home Buyer’s Incentive (HBI). This is a type of shared equity mortgage with the Government of Canada.
The HBI provides up to 10% of the home’s value as a down payment, in exchange for the same amount of equity in the property value. When you go to sell your home later, you will need to pay 10% of its value back to the Government. If you want to know more, check out our post on The First Time Home Buyer’s Incentive Explained!
Interest-free loans to retrofit your home for energy efficiency
The Liberal Party announced they will offer up to $40,000 as an interest-free loan to do energy-efficient upgrades on your house or apartment. You can use this money to upgrade old furnaces, replace leaky windows or make homes more resilient to floods and wildfires caused by climate change.
The loan would be offered through a Canadian Mortgage and Housing Corporation insured mortgage, a bank loan or in partnership with a utility company through savings on monthly bills.
Normally, a $40,000 loan at 8% interest would cost you $18,237 in interest before you pay it all back. By making this amount interest-free, you’ll save that amount instead. This is significantly more money in your pocket than the $2,835 Green Homes tax credit offered by the Conservative Party of Canada. It’s also worth noting the Liberal offer is for both apartments and houses, where as the Tories provide a tax credit for houses only.
The Liberal Party says the program would offer a free energy audit, and Canadians who took out such a loan could receive a cash incentive of between $250 and $750 based on how much energy waste they reduce.
Lower cellphone bills by 25%
Canada pays some of the highest cellphone costs in the world. For absolutely no good reason. Trudeau has promised to pressure cellphone providers to cut customer bills by 1/4th over two years. This plan is expected to save Canadian households as much as $1,000 per year.
If cellphone providers don’t manage to meet the target, competitors who can would be welcomed into the market. This is great news for anyone that owns a cellphone. It’s probably a little bit bad news for those of us that own Telus and Rogers stock.
Increase the number of students eligible for the Canada Student Grant
The Canada Student Grant provides up to $3,000 per year to low-income undergraduate students to help with the expenses of attending post-secondary. When you apply for student loans, you are automatically assessed for this grant, and it is disbursed with your student loans. However, because it is a grant and not a loan, it does not have to be paid back.
The Liberal Party of Canada has made the same promise as the Conservative Party of Canada: to increase the number of students eligible for the Canada Student Grant.
Final thoughts
When it comes to how the Liberal platform will impact your finances, the result is par for the course for this party: the largest benefits go to the most Canadians, and extremely financially vulnerable citizens stand to gain the most.
This article will be updated as more Liberal personal finance promises are made.
Want to see how the Conservative Party of Canada campaign promises stack up? Check out our post here!
2 Comments. Leave new
Thank you for this info. I feel it is not talked about enough! Please do review NDP and Green Party tax promises as well! I’d love to read them!
Can’t agree more, I love these articles, can’t wait to read NDP and Green Party’s reviews!