With two days to go before the election, the promises of tax cuts and other
financial goodies have been flying fast and furious. But how do the changes
affect you? We've looked at some of the tax proposals promised by the Liberals
and Conservatives (the NDP and Bloc's tax proposals are minimal), and their
impact on two fictional Canadians: Dr. Tony Tory, a plastic surgeon living in
Calgary, and Ms. Gretta Grits, a retired senior in Halifax.
Dr. Tory earns about $300,000 a year. He estimates that he spends about
$60,000 on consumer goods and services. He makes charitable donations of about
$25,000 annually, and funds these gifts by selling appreciated shares from his
non-registered investment portfolio.
Dr. Tory also owns a ski chalet that has increased significantly in value. He
is considering disposing of it this year and reinvesting his proceeds in the
stock market. Dr. Tory is looking at a capital gain on this sale of around
If the Liberals get elected and follow through on their November promise to
cut the rate on the lowest income tax bracket from 16% to 15%, Dr. Tory would
save about $273 on the first $36,378 of his income, minus the proposed 2006
basic personal amount of $9,039. This new basic amount reflects a Liberal
government proposed increase of $700 from the current legislated amount,
resulting in an additional tax savings for Dr. Tory of $112.
The Tories have their own list of tax cuts. By reducing the GST he pays by
1%, Dr. Tory will pay $600 on his discretionary spending. Assuming Dr. Tory
plans to donate $25,000 worth of stock (that he originally bought for $15,000)
to various charities in 2006, the Conservative government's proposal to
eliminate capital gains tax on donations of listed stocks would result in a tax
savings to him of $725. That is explained in the following formula: $25,000
minus $15,000 x 25% x 29% (25% is the current inclusion rate for capital gains
on donations of listed securities, and 29% is Dr. Tory's top federal marginal
rate). Not to be outdone, the Liberals announced this week they would match this
The Conservatives' proposal to eliminate capital gains tax on the sale of
assets where the proceeds are reinvested within six months would save Dr. Tory
an additional $14,500 from the sale of his ski chalet.
Bottom line Dr. Tory would reap a benefit of $15,825 if the Conservatives
win, versus $1,110 if the Liberals win.
Ms. Grits, a retiree living on about $45,000 a year including a small
pension, would also save around $273 from the Liberal promises of income tax
rate reductions and an increase to the basic personal amount.
On the other hand, under the Conservatives' proposal to increase the amount
eligible for the pension credit from $1,000 to $2,000, she would save an
Bottom line assuming Ms. Grits' discretionary spending for 2006 is $9,000,
under the Tory proposals she'll save 1% GST on this amount or $90. She comes out
ahead under the Liberals' tax scheme, saving $385 versus $250.
GRAPHIC: Graphic/Diagram: Miller Daily Three Roman 5.3/10; National Post;
PROPOSED TAX SAVINGS: This chart shows the tax savings realized by two fictional
characters -- Dr. Tony Tory and Ms. Gretta Grits -- promised by the
Conservatives and Liberals.: (See print copy for complete graphic/diagram.)