Canada's Next Steps | Mackenzie Investments

Canada's Next Steps

On October 19, 2015, the Liberal Party of Canada was elected to lead the next government.

The following are key points from our recent advisor conference call, featuring Todd Mattina, Chief Economist and Strategist on the Mackenzie Asset Allocation Team and Frank Di Pietro, Director of Tax and Estate Planning.

Elections 2015: Predicting the Liberals’ Impact

Photo of Todd Mattina

Todd Mattina
Chief Economist and Strategist, Mackenzie Asset Allocation Team

With the election of a majority Liberal government, many investors are asking how the new government’s policies will impact the Canadian economy and markets. Effective implementation of the Liberal government’s new economic program could set the stage for a helpful shift in the macroeconomic policy mix, potentially boosting domestic demand and longer run productivity. Immediate market reaction has been relatively limited and we expect this to continue going forward.

The focal point of the Liberal platform was deficit financing of higher infrastructure investments. In the short term, these investments will boost domestic demand and stabilize the economy, although the impact could be relatively limited given the envisaged size of the budget deficits. As other analysts have also remarked, a return to modestly sized fiscal deficits may reduce pressure at the margin on the Bank of Canada to further lower interest rates to stimulate the economy, reducing some downward pressure on the Canadian dollar. Longer term, budget deficits are unlikely to increase permanently, which avoids the risk of excessive government borrowing, a lower credit rating or reduced economic growth. Higher capital spending will decline naturally as investment projects are completed and is easier to reduce in the future than social spending. The market should also be able to absorb additional AAA-rated government bonds of a country with the lowest net general government debt in the G-7, particularly given the glut of global savings.

Photo of Frank Di Pietro

Frank Di Pietro, Director of Tax and Estate Planning

Elections 2015: Weighing Potential Tax Changes

Here are some of the proposed tax changes that may impact your clients:

Changes to personal tax rates

  • Tax rate cut for middle income tax brackets from the current 22% tax rate to 20.5%. This will cut taxes for those with income above $44,700 and up to income of $89,400.
  • A new income tax bracket of 33% for those who earn more than $200,000. Investors who live in provinces that have introduced increased tax rates on high income earners will likely be more affected.


  • Some clients’ marginal tax rates will start to exceed the 50% barrier, meaning that more than $0.50 of every dollar of income earned will go to income tax. This will occur for higher income earners in Manitoba, Ontario, Québec, PEI and Nova Scotia. Residents of New Brunswick, whose income exceeds $250,000, will have a marginal tax rate of 58.75%.
  • Clients within marginal tax rates in excess of 50% may start considering the use of aggressive tax planning techniques to try and reduce their tax burden. Investable money may also start to move offshore to avoid the high Canadian tax environment.

This should not be construed to be legal or tax advice, as each client’s situation is different. Please consult your own legal and tax advisor.

This document includes forward-looking information that is based on forecasts of future events as of October 22, 2015. Mackenzie Financial Corporation will not necessarily update the information to reflect changes after that date. Forward-looking statements are not guarantees of future performance and risks and uncertainties often cause actual results to differ materially from forward-looking information or expectations. Some of these risks are changes to or volatility in the economy, politics, securities markets, interest rates, currency exchange rates, business competition, capital markets, technology, laws, or when catastrophic events occur. Do not place undue reliance on forward-looking information. In addition, any statement about companies is not an endorsement or recommendation to buy or sell any security.

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