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Conservative Leader Pierre Poilievre on Thursday promised to reverse the Liberal government’s controversial changes to capital gains taxes if he takes power in the next federal election.
He made the pledge in a post on X, claiming the proposal was “outright insanity” and would cost Canadian jobs.Capital gains refer to proceeds from the sale of an asset like stock or a piece of property. In the 2024 federal budget, the Liberals proposed to raise the inclusion rate — the portion subject to tax — on the sale of capital gains to two-thirds from one-half for all corporations and many trusts.Individuals will continue to pay the 50 per cent inclusion rate on capital gains up to $250,000 in a year, but proceeds realized above that threshold will face the higher 66.7 per cent rate. The Liberals billed the changes as a move to promote “tax fairness” and close a loophole that helped the wealthiest Canadians avoid taxes on capital gains.But some business groups pushed back against the changes as penalizing farmers in the process of succession planning and doctors who incur capital gains as part of their practices.
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While Canadians’ primary residences remain exempt from capital gains taxes, those with a secondary property such as a cottage may face the higher inclusion rate in a given year.The Liberal government never formally passed the capital gains tax changes into law amid a Conservative filibuster in the fall and the prorogation of Parliament at the start of this year. But because the measures were tabled in a notice of ways and means motion last year, the Canada Revenue Agency said it intends to administer the changes according to the Liberal proposal in the upcoming tax season.
If the legislation is abandoned when Parliament resumes in the spring or after a federal election — the latest one can take place is October — the CRA will cease administering the changes, spurring some confusion for taxpayers preparing their 2024 returns.The Canadian Chamber of Commerce also said earlier this week that Ottawa ought to pre-emptively scrap the capital gains changes to give taxpayers clarity before they file this year.The capital gains changes were expected to bring in $19.4 billion annually, a key pillar funding other spending plans in the federal budget. The parliamentary budget officer said the actual proceeds from the measures could be billions less than the Liberals expected.
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