Anthony Layton MBA, CIM

Chairman & CEO, Portfolio Manager

Peter Guay MBA, CFA

Portfolio Manager
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  • Montreal, Quebec H3Z 3B8

Taxes and Benefits: How Will the Government’s Priorities Affect You at Tax Time?

In an unprecedented display of openness and transparency, Prime Minister Justin Trudeau recently released his ministerial mandate letters to the public. These letters contain the top priorities that he expects each Minister to accomplish during the 42nd session of Parliament.

So how do the priorities affect you?

A middle-class tax cut is – unsurprisingly - one of the Government’s top priorities. Government House leader Dominic LeBlanc has been quoted in the media as saying that it is the Prime Minister’s “hope and his intention that the tax measures could be in place for Jan 1.” The Liberal Party campaigned on a promise to cut the middle income tax bracket to 20.5% from 22%, which would provide tax relief of up to $670 on earnings between $44,700 and $89,400. To pay for this promise, the Liberal Party committed to introduce a new top tax bracket of 33%, up from 29%, for individuals earning more than $200,000. The Minister of Finance mandate letter is less specific, stating that a middle-class pay cut will be paid for by “asking the wealthiest one percent of Canadians to give a little more”. Whether ‘a little more’ will mean an additional 4% on every dollar earned over $200,000 remains to be seen.  It is safe to assume that the top 1% of earners will pay higher taxes starting in 2016.

A top priority for the Minister of Finance is to cancel family income splitting (the Family Tax Cut), which was introduced by the previous government in October 2014. This tax cut provided a credit of up to $2,000 for families with minor children, where one spouse earned more than the other. Of note, the mandate letter specifies that pension income splitting for seniors should be retained.

Enhancement of the Canada Pension Plan only received a short mention in the Minister of Finance’s mandate letter, asking only that the minister meet with provincial and territorial colleagues “to begin a process to enhance the Canada Pension Plan to provide more income security to Canadians when they retire.” This suggests that we won’t see changes to the CPP in the short term.

The Minister of Families, Children and Social Development has been tasked with increasing the Guaranteed Income Supplement (GIS) by ten percent, indexing Old Age Security (OAS) and GIS payments to a new Senior’s Price Index, and cancelling the increase in age of eligibility for OAS, which the previous government had legislated to delay until age 67 as of 2023.

One noticeable omission from the mandate letters is a commitment to cancelling the TFSA limit increase. Prime Minister Trudeau stated during the election campaign that he would roll back the annual contribution limit to $5,500 if elected. Even though there is no specific wording about cancelling the TFSA limit increase, the Minister of Finance mandate letter contains broad language about cancelling “other unfairly targeted tax breaks”. This likely refers to the TFSA limit increase.

After a long break, Parliament will be back in session on December 3rd, with the Speech from the Throne presented the next day. The Liberal Party’s election platform contained a number of campaign promises that would affect your taxes. Based on the contents of the ministerial mandate letters, apart from the noted exceptions, Trudeau intends to execute most of his platform sooner rather than later. The Speech from the Throne will further clarify his intentions.

For more information on how these upcoming changes could affect you at tax time, please do not hesitate to contact me.

The Ministerial Mandate Letters can be found at:

Minister of Finance Mandate Letter

Minister of Families, Children and Social Development Mandate Letter

By: Peter Guay | 0 comments

DIT Financial Planning: Building a Customized Plan

In my inaugural “Do It Together” (DIT) post, I emphasized that an ideal client/advisor relationship helps you concentrate on the details that contribute to your financial well-being and ignore the ones that do not. But where do you begin? How do you make sure those details come together to create a better life for you and your family?

The answer is planning. The best way I know to get started is by developing a comprehensive life plan, created in a DIT partnership with an adviser who has been there, done that, for families like yours.

A Blueprint for Success

When people ask me to assist them with their financial affairs, they often want to dive straight into the action: What investments should I buy?

While this is important, it can only properly be answered in the context of your goals and circumstances. That’s why I prefer to begin with a conversation about your lifelong plans. What makes you tick? What big-ticket items do you need to fund in the near- and long-term? These run the gamut: wedding, home, children, higher education, work, play … and eventually, a satisfying retirement.

With this information, we can roll up our sleeves and build your life plan in its proper context. It should include investment-specific components as well as strategies for your wider interests and the many moving parts involved, such as: tax optimization; income protection (life and disability insurance); estate structuring (efficient transfer of your assets); and charitable-giving.

Here are just a few of the planning issues that clients and I have discussed and dealt with together:  

Tax Optimization

  • Positioning investments across taxable and tax-sheltered accounts for maximum tax efficiency
  • Dividing income between spouses (if one makes less than the other)

Income Protection

  • Identifying risks to your family’s income and the extent to which they may occur. For example, what worst-case scenarios should you be prepared for? Can you afford to self-insure if something happens to you tomorrow?

Estate Structuring

  • Ensuring your will is synchronized with the rest of your financial objectives
  • Determining whether additional structures such as a trust or holding company are warranted
  • Using insurance to enhance a tax-efficient transfer of funds to your children

Charitable Giving

  • Maximizing the impact of your donations to ensure that your legacy lives on through the causes you care about

Of course you and the world around you are constantly on the move. Your life plan requires ongoing maintenance if you want to keep it relevant and practical.

Next up, we’ll talk about DIT investment planning, another essential tool for keeping your well-built money management plans on course over time, through our ever-volatile markets.

By: Peter Guay | 0 comments