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Canadian Elections – How would Liberal Party or Conservative Party win affect your wealth?

Sam Leave a Comment

Following one of the shortest campaigns in Canadian political history, Election Day will be September 20. In an attempt to appeal to voters nationwide, political leaders have announced plans to restart the economy amidst a one-in-a-century public health and economic crisis. Each party has detailed measures on issues such as taxes, child care, and jobs, affecting businesses, the economy, and your wealth.

Jobs, Post-Covid-19 Recovery and Proposed Measures

Both the Liberals and Conservatives have pledged to create one million jobs that have been lost due to Covid-19. As part of the Canada Job Surge Plan, the Conservative Party promised to pay up to 50 percent of the wage of new hires for a period of six months. All Canadian businesses will be eligible to apply for this subsidy. The Conservatives also pledged to implement credit incentives, tax breaks, and child care tax credit to support low income households and to create more jobs through loan financing.

Similarly, the Liberal Party has pledged to give credits to businesses that bring on new hires, thus extending the Canada Recovery Hiring Program to March 31, 2022. The Liberals also promised to create work and training opportunities for some 28,000 people who would aid medium-sized and small enterprises in implementing new technology in the workplace. The Liberal’s election platform covers all announcements made on employment issues, including workers’ right to disconnect, extending the work-from-home tax, and a new Employment Insurance benefit for self-employed individuals.

Taxes

The Liberal Party has announced plans to raise corporate income tax on insurance businesses and financial institutions with annual revenue of $1 billion. The Conservative Party promised to strengthen the role of the Canada Revenue Agency to ensure it can combat wealthy tax evaders.

Child Care

The Liberals plan to invest $30 billion over a 5-year period into a national child care system, which is a major part of their spring budget. The government already signed deals with 8 territories and provinces to reduce fees to $10 per day. The goal is to cut fees by 50 percent for child care and early learning in 2022. The plan also extends $2.5 billion in funding toward Indigenous child care and early learning.

In contrast, the Conservative Party would allow the territories and provinces that signed deals to keep the funding and would introduce a refundable tax credit for low income families. To cover child care costs, families with an income of $50,000 would be entitled to get $5,200 while those with an income of $30,000 would receive up to $6,000.

How Both Parties Fare

Both the Liberal and Conservative platforms cover measures to support Covid-19 recovery, create new jobs, and support businesses. The Liberal Party’s proposed measures translate into $78 billion in new spending over the next 5 years, adding $70 billion to the federal debt. While Trudeau insisted that the plan is transparent, prudent, and responsible, there is no timeline to balance the budget. Additionally not all promises have been costed by the parliamentary budget office. The budget deficit starts at $156.9 billion in 2021 and is projected to fall to $32 billion in 2025 – 2026.

According to the Institute of Fiscal Studies and Democracy, the spending measures proposed by the Liberal Party are relatively straightforward to implement but there is no discussion on economic and fiscal risks in the platform.

The Conservative Party has pledged to run a disciplined government and balance the budget in 10 years. If they succeed in forming government, the deficit would start at about $168 billion and fall to $25 billion by 2025 – 2026. One item on the Conservative agenda that will help curb the deficit is their child care platform. Instead of the national child care system introduced by the Liberals, the Conservative Party proposes a refundable tax credit in place of the existing child care expense deduction. The measure will cover up to 75 percent of child care expenses for households in the lower-income bracket.

Additionally, analysis by the Parliamentary Budget Officer indicates that a Conservative government could recoup billions of dollars by extending additional funding to the Canada Revenue Agency to enforce international taxation and taxation of large corporations and multinational firms. Such measures would result in additional $3.5 billion in revenue.

An issue that voters across the political spectrum find important is fair taxation and tax increases for wealthy corporations. A new Abacus Data poll reveals that 89 percent of Canadians believe a wealth tax should be part of Canada’s post-Covid-19 economic recovery. The overwhelming majority or 92 percent of respondents also believe it is important to prevent large corporations from booking profits in tax havens.

Most Canadians, including half of the Liberal voters, share that the Trudeau government could have done more to ensure that large corporations pay their fair share, thus helping to reduce income inequality.

In a statement, press secretary Katherine Cuplinskas noted that the government has already taken steps to reduce stock option deductions, implement a luxury tax, introduce a tax on multinational digital corporations, and implement tax on non-resident unproductive use of Canadian domestic housing. Yet, it seems that voters largely feel the Liberal government has not done enough to introduce measures that support income equality and help protect their wealth. Over 30 percent of Canadians are unsure which party’s platform would best support action in this direction. According to program director for the Broadbent Institute Katrina Miller, many Canadians are waiting to see which party is ready to make a commitment that voters believe in. In this year’s election, taxing wealthy corporations and fair taxation is an issue that both Liberals and Conservatives “should be looking to double down”, as Miller concludes.

Uncategorized canada election 2021, conservative, credit, debt, elections, liberal, recovery, taxes, wealth

7 Financial Goals to Set in 2020

Sam Leave a Comment

Investing a little bit of effort and time in outlining your financial goals will help you to improve your financial situation in 2020. This will also help you to develop a sound long-term strategy for your financial future.

Do Your Taxes Early

Like it or not, the tax season is coming up quickly, and it pays to file your taxes before the deadline. Reporting your eligible expenses and income is far from fun but procrastinating will make it more stressful. The deadline for filing in Canada is April 30, 2020. Early filing also ensures that you receive credit and benefit payments such as the working income tax benefit, GST/HST credit, Canada child benefit, and guaranteed income supplement. Eligible taxpayers are also entitled to claim the Climate Action Incentive if living in New Brunswick, Ontario, Manitoba, and Saskatchewan.

Getting your taxes done early is easier if your income sources include:

  • Grants
  • Bursaries
  • Fellowships
  • Scholarships
  • Support payments
  • Social assistance
  • Employment insurance
  • Disability insurance

Completing your tax returns is not as easy if you have rental or business income, are self-employed, have declared bankruptcy during the previous or current year, or have capital losses or gains. In this case, it is important to get your taxes done early to ensure that you have plenty of time to gather all documents and pay taxes that you owe.

To file your taxes, you will need to provide information such as your home address, banking details, number of children, and marital status. You should also report income in the form of benefits, investments, and self-employment and employment income. Claim tax credits, expenses, and deductions to lower the amount you pay. You can complete your tax returns in different ways, including by phone, on paper, and by software.

Fix Your Credit

The first thing to do is plan to get your credit in check regardless of how much you owe. Start by listing all debts that you owe, including due dates, monthly payments, total amount, and creditors. Make sure you update your list to check on your progress and see where you stand. Making timely payments each month is obviously a must. Late and missed payments will affect your credit score and will make it more difficult to pay off your debts. If you have multiple debts, you may want to set alerts to help you avoid late payments. It is also important to decide which debts to pay off first. If you have multiple credit cards, start with the one that carries the highest interest rate. Make sure you make the minimum payment on your other accounts to avoid penalty interest and to stop your debt from growing.

Create a Financial Plan

Setting a budget will help you to stay focused on your financial goals and get control over your money. There are other benefits to setting a budget such as organizing your savings and spending and paying off debt faster. The first step to creating a budget is to look at your income or how much you can afford to spend on a monthly basis. Start by listing different sources of income such as your salary, wages, alimony, and benefit and credit payments. Other sources of income include rental and dividend income, royalty and interest income, and capital gains. Once you get an idea of how much money is coming in, you have to look at your expenses, including fixed and variable expenses. Examples of variable expenses include car maintenance, home repairs, and groceries. Fixed expenses, on the other hand, include things like credit card and loan payments, car insurance, utilities, rent, and service payments such as cell phone, Internet, and cable TV. Compare your income and expenses to see whether you need to adjust your spending to meet your expenses and save enough to achieve your goals. You can either try to increase your income or cut back on both fixed and variable expenses.

Settle Bad Debts

Paying off bad debts will help you to improve your credit score. Such debts are in collections because you are unable to pay them back. The best thing you can do is settle or pay the full outstanding balance. First contact your debt collector and try to negotiate a settled payment in exchange for deleting the account from your report. Offer an amount that is smaller than what you owe. If this doesn’t work, then offer a full payment to get the account removed.

Make a Long-term Savings Goal

The first step to making a savings goal for yourself is to actually name your goal. Examples of goals include creating an emergency fund, saving to pay off debt, and saving for down payment, your kid’s education, or retirement. Examine your goals to decide whether they are long-term, mid-term, or short-term. Long-term goals such as retirement and college education require a lot of money and careful planning and take several years to achieve. Mid-term goals such as paying off credit card debt or buying a new car do not take as long to achieve but certainly longer than short-term ones. Short-term goals, on the other hand, take one year or less and include things like buying a new washing machine or going on vacation.

Find a Financial Planner

If you lack basic knowledge of debt management, investment, and financial planning, you may want to use the services of a financial advisor. Advisors have expertise across a wealth of topics such as tax strategies, wealth management, insurance coverage, budgeting, and saving. They can help you to develop a financial plan and stick to it as to achieve your long-term and short-term goals. Your advisor will help you to choose from different types of insurance coverage such as disability, term life, and long term care. You may be asked to fill in a detailed questionnaire to help assess your financial situation. The questionnaire typically includes questions about your expenses, sources of income, assets and liabilities, and future income and retirement income sources. The answers will help your advisor to assess your financial strength and risk tolerance. The financial plan that you develop with your advisor will be based on your liquid capital, assets and liabilities, and net worth.

Ready to Invest?

Finding new companies to invest in can be tricky, especially if you have little or no experience. In this case, you may want to invest in companies across different sectors in S&P, including health care, consumer discretionary, industrial, consumer staple, energy, and material. Other sectors to look into are utility, real estate, telecom, technology, and financial. Choose companies that are good for growth or value investing. The approach that you choose to include companies in your portfolio depends on your financial goals and risk profile. If you have a low-risk profile, then consider dividend stocks. Growth stocks are a good option for those who wish to invest in long term growth while value investing is a preferable choice if you are looking for stocks that are trading below their book or intrinsic value.

Uncategorized budget, credit, credit card debt, debt, financial goals, investing, savings, taxes

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