Liberal tax promise tracker, post–capital gains edition

The earliest that implementing legislation can be officially tabled is September. The House of Commons resumes sitting on Sept. 16, and the Senate comes back the day after.

In the interim, below we review the state of the government’s major tax and estate-planning promises since our last update.

Proposals passed into law and moving forward

Bills C-59 and C-69 received royal assent at the end of June.

Bill C-59, which was first tabled in November 2023, contained legislation to implement the following key proposals:

• Changes to intergenerational business transfers that occur on or after Jan. 1, 2024. Two updates were made to the August 2023 draft legislation:
  • Parents looking to sell their business to their children no longer need to control the company immediately before the sale.
  • Business owners who sold all or part of their business to their child under the current rules, enacted under Bill C-208 in 2021, won’t be prevented from using the new framework to sell the rest of their business, or another business, to their child.
• Changes to the general anti-avoidance rule (GAAR). The penalty will now be calculated as 25% of the additional tax owing by a taxpayer as a result of the GAAR’s application.
• The 2% share buyback tax that applies as of Jan. 1, 2024, to the annual net value of equity repurchases by public corporations and certain public trusts and partnerships.
• Making planning that results in non-Canadian-controlled private corporation (CCPC) status a reportable transaction so the CRA can assess whether the corporation is a “substantive CCPC.”
• Permitting a qualifying family member to be a successor-holder of a registered disability savings plan following the death of that plan’s last remaining holder who was also a qualifying family member.
• Changes to the tax treatment of dividends on Canadian shares for financial institutions, a move that could increase fees for investment products.
• Employee ownership trusts, with an improved tax incentive. The 2024 federal budget also clarified some elements of EOTs, with those changes in Bill C-69.
• Tax changes to retirement compensation arrangements.

Bill C-69 was tabled in April and contained legislation to implement the following key proposals:

• Updates to the alternative minimum tax.
• Enhancements to the home buyers’ plan.
• Measures related to the Canada Disability Benefit.
• Autoenrollment to RESPs and the Canada Learning Bond.
• Provisions related to open and cheaper banking.
• Clarifications to employee ownership trusts. For example, the exemption amount is per business, not per business owner.
• Tax changes for people who own short-term rentals.
• Doubling the CPP death benefit for contributors who have no survivors and have never collected CPP. (See other CPP-related changes below.)
• A softer mandatory disclosure regime.
• Changes to the underused housing tax.
• A global minimum tax based on the Organization for Economic Co-operation and Development’s global anti–base erosion model rules (Pillar Two).

In addition, the Canada Revenue Agency’s automatic tax filing pilot will commence this summer.

Budget proposals not in legislation

On June 10, the government tabled a notice of ways and means to implement changes to the capital gains inclusion rate as of June 25. Draft legislation will be tabled later this month.

The other promise from the 2024 federal budget that hasn’t yet appeared in legislation is the Canadian Entrepreneurs’ Incentive.

Proposals with updates since our last check-in

Aging at home

Three promises from the Liberals’ 2021 election platform were highlighted in the final report from the National Seniors Council regarding aging at home, which was commissioned by the ministers of seniors and of health:

• Create an aging at home benefit
• Increase the guaranteed income supplement
• Make the Canada caregiver credit refundable

The latter two promises have appeared in mandate letters for relevant ministers, and none of the three promises has been proposed in federal budgets or legislation.

CPP review

The Liberals promised in their 2019 election platform to raise the CPP and QPP survivor’s benefit by 25%. The matter was studied as part of the 2022–2024 Triennial Review of the CPP.

Recommendations from the review appeared in the 2024 budget, but the change to the survivor’s benefit was not among them. The government did, however, propose doubling the CPP death benefit for contributors who have no survivors and have never collected CPP, which passed as part of C-69.

The change to the CPP “will come into force once the federal government and at least seven provinces, representing at least two-thirds of the population, have provided their formal consent,” a spokesperson for the Department of Finance stated in an email.

Other recommendations from the review that were passed in C-69 and still require provincial consent are:

• Create a new child’s benefit for dependent children aged 18–24 who attend school part time.
• Maintain eligibility for the disabled contributor’s child’s benefit in cases where the disabled contributor reaches age 65.
• Extend the CPP’s incapacity provisions to protect the date of application for the disabled contributor’s child’s benefit.
• Clarify the determination of the payee of the disabled contributor’s child’s benefit.
• Preclude entitlement to the survivor’s pension in cases where a survivor has received a division of unadjusted pensionable earnings in respect of their deceased separated spouse.

Proposals with no major updates

• Implementing a career extension tax credit for working seniors was promised in the 2019 election platform and mentioned in Finance Minister Chrystia Freeland’s 2021 mandate letter. It appeared in the 2024 pre-budget report of the Standing Committee on Finance but did not appear in the budget itself.
• Nothing has been announced regarding these other 2019 election promises:
  • increasing the Canada child benefit by 15% for kids younger than one year old
  • making EI maternity and parental benefits tax-exempt
  • doubling the child disability benefit