The federal government says it is deferring the implementation of a hike to the capital gains inclusion rate to next year and plans to introduce new exemptions to ensure most middle-class Canadians do not pay more tax if the rate becomes official.
The deferral announced by Finance Minister Dominic LeBlanc on Friday delays the implementation of the change from June 25, 2024 to Jan. 1, 2026.
LeBlanc promised to table legislation related to the capital gains inclusion rate changes along with an increase to the lifetime gains exemption and a new incentive for entrepreneurs “in due course.”
“The deferral of the increase to the capital gains inclusion rate will provide certainty to Canadians, whether they be individuals or business owners, as we quickly approach tax season,” LeBlanc said in a statement.
“Given the current context, our government felt that it was the responsible thing to do.”
The hike being deferred is meant to raise the portion of capital gains on which companies pay tax to two-thirds from one-half. The policy would also apply to individuals with capital gains earnings above $250,000.
While the hike was proposed in the Liberals’ latest federal budget and introduced later as a ways and means motion, it hasn’t passed in Parliament, which is prorogued until March 24.
However, the Canada Revenue Agency had already started to administer the changes because parliamentary convention dictates that taxation proposals are effective as soon as the government tables a notice of ways and means motion.
The tax agency previously said it would only stop administering the policy if Parliament resumes and the government signals it will no longer proceed with the proposed changes to capital gains taxation.
That policy placed
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