The new Tory government has been sworn in and Canadians are wondering what this government can do to fulfill their campaign promises. During the election, Steven Harper campaigned on reducing taxes. What does this mean for us?

Some of the campaign promises include exempting capital gains tax on the sale of investment assets, provided the proceeds are reinvested within six months. This is great news for people who want to exchange certain investments for others. Under the current system, taxpayers sometimes feel forced to hold investments, such as rental or vacation property, longer than they would like, just to avoid paying the tax.

Under the proposed system you will pay the tax eventually, but you will be able to defer that payment to a future date. When Canadians buy or inherit cottages, they will be able to sell the property and reinvest the profits back into the economy without taking a tax hit. In addition, the capital gains proposal is to eliminate the current 25% inclusion rate for securities donated to charity.

The capital gains proposals appear to be good news for Baby Boomers, and a real advantage to planning their retirement and estate issues. It will also help young investors in developing their non-registered savings plans.

They didn’t forget small business and promised the reduction of the small business tax rate to 11% over five years and increasing the small business deduction to $400,000 from $300,000 currently. For students, they talked about exempting the first $10,000 of scholarship and bursary income from taxation and allowing a $500 tax credit on the purchase of textbooks. They want to introduce a monthly transit pass tax credit and, of course, reduce the GST.

This sounded good enough for the Canadian public to give the Conservatives a minority government. If all promises are kept, it could be good news for Canadian investors. For now we’ll have to wait for confirmation of the proposals in the upcoming Tory budget, expected to be tabled sometime in April.

This is a monthly article on financial planning. Call or write to Rick Sutherland CLU, CFP, FDS, R.F.P., of Fundex Investments with your topics of interest at 798-2421 or E-mail at rick@invested-interest.ca.