Liberals playing with inclusion rates is divisive politics at its worst
In a blaze of rhetoric that partisan politicians and their followers would be proud of, Finance Minister Chrystia Freeland finally released some of the legislative details about the proposed change to the capital gains inclusion rate from the current 50 per cent to two-thirds for corporations and most trusts as well as for individuals who have more than $250,000 of annual capital gains.
The detailed material is, not surprisingly, complex. It’s 56 pages of mathematic gymnastics and detailed technical proposals that confirm the basic announcement made in the April 16, 2024, federal budget. However, it clarifies a number of open questions that practitioners and taxpayers had, including:
The above short and incomplete summary does not do justice to how complex the detailed provisions and calculations are. The average Canadian — and even the most hardened tax specialists — will most certainly need to rely on good software to figure out the mathematics and rules. And there will be more to come.
The technical backgrounder on the detailed rules states there will be further technical changes added and updated by the end of July 2024. Oh goodie, a summertime treat.
The release of the details of the proposal will be remembered for two things.
The first is that the government ignored almost every single recommendation made about the proposals by very qualified people and great organizations. The Joint Committee on Taxation of the Canadian Bar Association and CPA Canada made some excellent technical recommendations. They were mostly disregarded.
Some organizations, such as the Canadian Medical Association (CMA), were very vocal about how damaging the proposals would be to their members. They were ignored. In response to criticisms
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