Canadians need more time to digest new capital gains inclusion rules

financialpost.com:

It’s almost the summer season, when we get to enjoy BBQs, camping, swimming outdoors and working on our tans for a very short period of time. But wait. Isn’t there an important June date coming up that affects the taxation pocketbook of millions of Canadians?

Indeed, there is. June 25, 2024, to be exact. That is the day the capital gains inclusion rate will increase from the current 50 per cent to two-thirds for corporations and trusts and any individual who has annual capital gains in excess of $250,000, as the government announced in its April 16 budget.

Unfortunately, the budget did not have detailed draft legislation to specifically lay out how this proposal will work and we still do not have such details.

From April 16 to June 24, the government has banked and budgeted on the fact that Canadians would frantically trigger early gains on capital properties so as to lock in their gains under a lower inclusion rate. The budget documents estimate that the amount of extra tax revenue the government will collect by doing this will be approximately $7 billion.

Besides finding that number egregious, I find it horrible that the government is expecting Canadians to let the tax tail wag the investment dog. That flies in the face of every foundational investment theory and is against what I have preached in all my years of being a tax adviser. In other words, yes, tax is important, but it’s only one consideration when deciding whether to monetize or artificially trigger gains. Break-even and payback-period analyses are also very important.

Since April 16, tax practitioners have fielded an unending number of questions from people wondering what they should do. Unfortunately, tax practitioners and their clients are planning in the