How The New Liberal Government Will Affect Your Finances

How The New Liberal Government Will Affect Your Finances

After a feverishly emotional Federal Election, we ask what will happen next? If the Liberals follow through with all of their campaign promises then there will be quite a few changes affecting Canadians over the next four years. One of the big impacts will be to your household’s finances and these changes are exactly what we will be focusing upon today.

As always, thank you for reading and please share this with anyone that will benefit from the information. You can read more about The Friendly Financial Coach, Toronto’s only non-biased Financial Literacy Coach, here.

General Financial Policy Changes

One of the Liberals’ main platform focuses is on strengthening Canada’s middle-class. The biggest policy change is modifying the amount that Canadians pay in Federal Income Taxes. Soon, Canadians earning income between $44,700 and $89,401 a year will have their Federal Tax Rate reduced to 20.5% from 22%. Conversely, Federal Income taxes will be increasing from 29% to 33% for all Canadians earning over $200,000. The Liberals claim that middle-income individuals will save up to $670 a year from this tax reduction.

Also, the Tax Free Savings Account’s limit increases will be reverted back to an annual amount of $5,500 from $10,000. However, this is likely to take effect in 2016 as individuals have already been taking advantage of the increased limit.

There are also promises to reform Employment Insurance policies. EI premiums would decrease from 1.88% to 1.65% for all insured income (2015’s insurable limit is $49,500). There would also be a reduction in EI’s waiting period and other recent reforms will be repealed.

Increases in Government infrastructure projects will also affect households. Increases in public transit, social and green infrastructure will be made at the cost of $20 billion over ten years. Increases in social infrastructure will be manifested through increased spending on affordable housing, daycares and community centres. There will also be a focus on online communication improvements and crowdsourcing that increases the link between the Government and Canadians.

Financial Policy Changes For Families

Two big changes will affect the personal finances of families. The first is the replacement of the Universal Childcare Benefits with the Canada Childcare Benefit. This new benefit is tax-free and determined by a household’s annual income and number of children. The below chart from the Liberal website illustrates the fluctuating benefit. A calculator can also be found here to determine a household’s benefit amount.

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The other big change will be the elimination of Family Income splitting. No longer will families be able to transfer income to a lower income spouse to reduce total taxes paid.

Financial Policy Changes For Retirees (and Future Ones)

The big changes for retirees involve the Canadian Pension Plan and the Guaranteed Income Supplement. The Liberals are planning to reverse the recent policy that increased the age that Canadians would have to be to receive CPP, from 67 to 65 years of age. The Guaranteed Income Supplement will also be increasing by 10% for low, single-income seniors.

Financial Policy Changes for Students

The Liberals are promising to help low and medium income families pay for post-secondary tuition costs. They will also be increasing the income threshold for program qualification. An example given on their website is that a low-income student will receive a grant of $3000/year for full-time status and part-time student can receive up to $1,800/year.

Conditions for student loan repayment will also be softened. Repayment will not begin until the student earns over $25,000 a year. Until repayment begins, the government will pay all interest expenses (but not principle).

To help balance out these payment increases, the government will cancel the Education and Textbook tax credit.


Overall, we see a set of government policies that target medium and low-income households. As mentioned before, all these policies have not been passed yet and therefore can easily change or not occur at all. The new government has also stated that they are planning to run a spending deficit until 2019 and therefore this future gap will need to be eventually filled by decreased spending or increased revenue (can occur naturally or through increased taxation).

That’s it for this week, but if you any questions please contact me at or 647-289-0012. Also, don’t forget to subscribe to the newsletter below.

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