COVID Recovery – Raise Taxes?
November 30th, 2020
Posted in: Tips & Insights
The coronavirus crisis isn’t over yet, but it’s never too soon to start preparing psychologically and financially for the economic aftermath of the multiple whammies of economic shutdowns, hundreds of thousands of people losing their jobs, many companies going bankrupt, and massive taxpayer-funded bailout plans. Here’s a video taking a look at how Canada has fared in the coronavirus crisis -
The Government Will Be Looking At All Options
This article takes a look at some of the things the federal government might be planning to help restore some balance after the crisis is over and re-building begins.
Some options that the government might be considering:
- Raise the GST. It was 7% originally, it was then lowered to 5% and stayed there for quite a while, but raising it again is an option.
- No more principal residence exemption. This would not be a popular option, but the Canada Revenue Agency (CRA) has started studying housing sales, in what some believe is preparation for starting to tax principal residences.
- Raise the inclusion rate for capital gains. 50% of capital gains are exempt from taxation at this point, but that could change in the future.
- Raise income taxes. This is a fairly standard method of raising revenue for governments.
- A wealth tax. Putting an extra tax on people who have a lot of money is on the table.
- Re-visit TFSAs (Tax Free Saver Accounts). This would also be a very unpopular option – taxing TFSA withdrawals, tax any profits made from TFSAs, or eliminate TFSAs altogether.
- Keep increasing the carbon tax. Increase federal government revenues under the cover of environmentalism?
- Raise corporate taxes. Another commonly used tool in the government revenue-increasing arsenal.
This pandemic has been very difficult for Canadian citizens and businesses, and the aftermath of the huge economic stimulus packages to keep things afloat during the crisis means high government debt and the burden of re-payment on taxpayers. There is a tremendous bill that is going to come due in a few years – how do you protect your business? How does your business stay solvent during this crisis and in the debt-heavy economic aftermath?
Six Ideas To Start Preparing For The Aftermath
This article has six very useful ideas for how to prepare for what is brewing:
- Start a home-based business.
- Split income with family members.
- Reconfigure your portfolio.
- Own your home.
- Make interest deductible.
- Take non-taxable benefits at work.
Start Your Financial Planning Right Away
Contact Shaw & Associates Chartered Accountants for accounting help you can count on. We can start planning for how your business will handle the current crisis and the future rate increases right away. One complimentary meeting with us will put you and your business on a more profitable and positive path.