How the New Government Could Affect Your Finances

The Globe and Mail looked at what the Liberals have said they would do that could affect your personal finances. Here’s our take:

  1. Middle class tax cuts: What’s not to like personally? But remember this is being financed by increased deficits—so we’re borrowing money to reduce taxes.
  2. Tax increases for high earners: I’m not a fan, everyone already pays a lot of tax. But probably not a big deal.
  3. Reduction to the TFSA limit: Terrible and very disappointing. The idea that this only helps high income earners is patently false—it’s a much better program than the RRSP. The increase to the limit will remain $10,500 this year, then roll back to $5500 either 2016 or 2017, so be sure to top up.
  4. Goodbye, Family Tax Cut: The income splitting is taken away. Not a happy thing.
  5. A new Canada Child Benefit: They’re spending a lot more money on this than the existing regime does. Promotes families having children (in concept), so a good thing.
  6. OAS at 65: Given health and life expectancy, I think moving the OAS to 67 was a good idea, and a major tax saving. Keeping at 65 is expensive—should transition just as CPP is doing.
  7. CPP Enhancement: We will see what happens with this. I don’t like the idea of the government imposing their forced savings regime on us—we should be more responsible for our retirement savings, and manage for ourselves. But if it’s voluntary, then by all means.
  8. Expansion of the RRSP Home Buyers’ Plan: This is a very bad idea—encourages people to undermine their retirement to over-buy their house. Now you’ll be able to do repeatedly. Bad concept, and seems to contradict #7 above. Also seems to fly in the face of the Bank of Canada and Finance Department concerns that housing market is overheated. And the ultimate political promise that buys you with your own money.
  9. Student loans: The government eating the interest payments until you are earning $25k is reasonable. And incentivizing lower-income folks to go to school is good.

 

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