Canada's capital-gains tax hike faces heat from business groups
Some of Canada’s biggest business groups are urging Prime Minister Justin Trudeau to reverse his government’s plan to raise the tax inclusion rate on capital gains.
The government should cancel the proposed tax hike, six major industry associations, including the Canadian Chamber of Commerce and the Canadian Venture Capital and Private Equity Association, wrote in a letter Thursday to Finance Minister Chrystia Freeland.
“We are calling on the government to heed the advice of many of Canada’s most respected leaders and commit to scrapping the ill-advised inclusion rate increase,” the groups wrote.
In last month’s budget, Freeland unveiled plans to tax Canadian companies and individuals on two-thirds of their realized capital gains, up from half currently. The government said the changes, which are scheduled to come into effect June 25, would impact just 0.13 per cent of Canadians and 12.6 per cent of businesses. For individuals, only gains over $250,000 are taxed at the new, higher rate.
The industry groups dispute the government’s estimates, arguing that one in five Canadians will be “directly impacted over the next 10 years and the effects of this tax hike will be borne by all Canadians, directly or indirectly.”
The letter adds to a chorus of groups criticizing the planned tax increase. The Canadian Medical Association also opposes the changes, saying the many doctors that incorporate their practices will face a higher tax burden. More than one in 10 Canadians owns an investment property, according to a report by Royal Lepage, and they’ll pay more if they sell for a large gain. Primary residences are exempt from capital gains taxes in Canada.
“If enacted, this change will have significant knock-on impacts, including
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