Capital gains inclusion rate hike remains up in the air, but you still have to prepare for it

financialpost.com:

Most people know that capital gains are preferentially taxed in Canada, like most countries, and for good reason: prosperous countries realize that investors, including entrepreneurs, take significant risks that can have extended long-term benefits to society and the economy.

That explains the concerns over Canada’s introduction of complex proposals earlier this year to increase the capital gains inclusion rate effective June 25, 2024. But for those who continue to mindlessly bleat out the “buck is a buck is a buck” line in support of the proposals, I’ll repeat something former finance minister Edgar Benson said in 1969:

“The government rejects the proposition that every increase in economic power, no matter what its source, should be treated the same for tax purposes. This proposition, put forward forcefully by the Royal Commission on Taxation, has often been summarized rather inelegantly as ‘a buck is a buck is a buck,'” he said.

“But although the government does not accept this theory in all its splendid simplicity, neither does it believe that the distinction between a so-called ‘capital gain’ and an income receipt is either great enough or clear enough to warrant the tremendous difference from being completely exempt and being completely taxable.”

I also often hear that “employment risk is absolutely the same as entrepreneurial and investor risk.” Hogwash. I challenge those people to put their money where their mouth is and put up their life savings — including their gold-plated pensions — to start a business. You think it’s easy? You think it’s a guarantee to riches? Do it. I dare you.

But the question remains whether the capital gains inclusion rate increase will become law given that there is not currently a bill