GST and Other Taxation Impact

By: Paul Young, CPA, CGA

GST/HST by provinces

GST Impact

Household Spending

Hiking GST

Party stance on GST

• CPC do not plan to hike GST• LPC in 2012 said hiking GST was an option, but since have back

pedaled to say hiking GST is not on the table• NDP has said nothing on hiking GST

CPP Hikes

• Harper will move CPP up by the cost of inflation (i.e. changing the threshold - http://www.tax-services.ca/cpp-ei-maximum-2015/• Mulcair has said he like to see benefits increased• Justin Trudeau supports enhancing CPP

CPP impact by party

Carbon Pricing/Tax

• Harper does not support a carbon tax/Price for carbon• Mulcair supports a carbon/price for Carbon• Justin Trudeau supports Carbon Pricing

Impact of Carbon pricing

Impact at the pump (Ontario) / example

Impact of Carbon Pricing

• Toronto Sun quote “

Income Tax (Personal)

• Harper has provided family tax credit relief ($1200/per family) - http://www.slideshare.net/paulyoungcga/taxation-policies (see slide 30)• Both Justin Trudeau and Thomas Mulcair want to kill the family tax

credit.• Justin Trudeau would provide relief to the middle class -

http://www.cbc.ca/news/politics/justin-trudeau-plan-taxes-top-1-to-cut-taxes-boost-benefits-for-middle-class-1.3060323

Income Tax Implication/family

Single Person

Single Parent with two kids

Seniors

• Harper made changes to RRIF, GIS, Pension Splitting• Mulcair talks about reinstating OAS to 65 as well as GIS/CPP

enhancement• Trudeau talks about CPP enhancement and reinstating OAS to 65

Seniors

Corporate Taxation

• Harper has said no to increasing Corporate Tax• Mulcair has been inconsistent with Corporate Tax • Justin Trudeau has said he would review corporate tax

Corporate Tax

• What is Corporate Tax?

How does income flow for a Corporation• Income from the Profit and Loss Statement flows• Corporate Taxation• Dividends• Retained Earnings

Canada Corporate Tax Ranking

How does Corporate Tax planning work• Many corporations have shareholder’s target as such will look at ways

to move income around via various ITA or deductions within a country• R&D Credits• Shared Services• Interest / Dividend payouts• Other ways to managed the income tax rates

How does Corporate tax impact

• If government decide to increase corporate taxation then number of options may have with companies:• Increase their selling prices to ensure the Net Income after Tax to adjust for

the rate changes• Reduced operating costs, i.e. headcount, re-organization, etc• Moved income around between jurisdiction via transfer pricing • Each rate increase can add about 1% to price consumer may feel when buying

goods and services.

Impact of Carbon Pricing and Corporate Taxation on Household spending

Policy Impact / family

• Harper • Mulcair• Trudeau

Single Person Impact

Single Parent

Seniors

Summary

• Harper’s plan has put priority to the families as well as leverage existing programs that will support different income growth. Harper acknowledge the need to keep low taxation (No hikes to Corporate tax and/or introduction of Carbon Tax/Price)• Mulcair plan has said little on taxation other than he proposes hiking

CPP/Corporate Tax as well as introducing carbon tax. Mulcair’s plan likely will add 8% overall cost to household budget. • Justin Trudeau has focus on modest cut for middle class, but he has not

dealt with issues of either Corporate Taxation or Carbon Taxation. LPC may reduced taxation, but they could hike costs via other policies changes.