Here’s how capital gains tax changes will work after Parliament prorogued
The federal government has provided clarity on how proposed changes to capital gains taxes will work after Prime Minister Justin Trudeau prorogued Parliament without passing legislation to put the new tax rules into law.
Back in the 2024 budget last spring, the Liberals introduced plans to raise the inclusion rate — how much of the proceeds from an asset’s sale are subject to tax — to two-thirds, up from 50 per cent, on all capital gains earned over $250,000 annually. That inclusion rate would also rise to two-thirds for all gains made by corporations and many trusts.
The changes were set to affect all capital gains realized after June 25, 2024. Capital gains can result from the sale of an asset like a stock or a secondary property such as a cottage, but Canadians’ primary residences remain exempt from capital gains taxes.
The measures were billed as a way to improve tax fairness and were a pillar of the budget, allowing the Liberals to fund other proposed spending plans.
The Liberals separated the capital gains tax changes from other items in the budget bill and tabled the proposals as a notice of ways and means motion in September. But the minority government failed to pass the formal legislation enshrining the capital gains tax changes in law amid a Conservative filibuster in the fall.
Trudeau’s move to prorogue Parliament until March 24 — suspending the business of lawmaking as the Liberals seek a successor to the outgoing prime minister — leaves all unpassed legislation in limbo.
A Department of Finance official told Global News in an email on Tuesday that the Canada Revenue Agency will continue to administer the capital gains changes as directed by the September tabling.
“Parliamentary convention dictates that
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