The results of the 2021 Federal election have left many Canadians wondering, ‘What Changes?’ While there may have been a few surprises and changes from the election results, the overall picture looks very much the same – the Liberal party forming a minority government, a Conservative party opposition, and the BQ or NDP holding enough seats to possibly boost the Liberal agenda provided they can work together to do so.

Each of these parties has made promises throughout the campaign and has laid out some key tax-related priorities. The minority government will require additional support, so the upcoming months will determine how Canada’s elected officials will work together (or not) to shape and implement these priorities. The Liberal government has promised to extend COVID-related programs, including the Canada Recovery Hiring Program (CRHP), to March 31, 2022, along with introducing wage and rent subsidy programs for businesses in the hard-hit hospitality industry. Several new clean-energy-related tax credits have also been promised, along with a variety of personal tax credits and programs with some focus on a home purchase or renovation.

The Liberal platform targets banks and insurance companies with higher corporate income tax rates and imposing the ‘Canada Recovery Dividend’ to generate an estimated $2.5 billion from these companies to help fund COVID-related programs.

Real estate profits are another proposed attack point and tax revenue source, with the Liberal platform including several potential taxes or penalties targeting:

  • Landlords who charge excessive rent post-renovation
  • Speculators and house flipping, with requirements to hold property for at least 12 months (though with some exceptions for specific events or life changes)
  • Large corporations and speculators profiting from ownership of Canadian housing
  • Vacant or underused housing owned by non-resident, non-Canadians

Making these changes will almost certainly require some collaboration and compromise for the Liberal minority. The NDP may be the most willing collaborator but would surely want to include some of their priorities which, based on campaign platform and promises, could include:

  • Corporate tax increases, including 3% general corporate income tax rate increase, a 15% excess profits tax on large corporations which had windfall profits during the pandemic, but with no increase to the small business tax rate
  • Continuing small business wage and rent subsidies
  • Increase capital gains inclusion rate from 50% to 75%
  • 2% personal tax rate increase for the top federal tax bracket (currently over $216,511)
  • 1% wealth tax for taxpayers with over $10 million
  • 20% foreign buyers tax on residential property purchases

Should the BQ take the role of collaborator, their priorities may be woven into the Liberal tax changes instead. While details for their platform have been sparse, BQ has indicated their desires to see several tax changes implemented, including:

  • A wealth tax on high net worth Canadians
  • 3% tax increase on large digital companies operating in Canada
  • Tax on real estate speculation
  • Increased funding to fight tax havens
  • Independent tax administration for Quebec