The federal government is likely to reverse course on increases to the capital gains tax that were announced in the last federal budget, CBC News has learned.
The Liberal government could delay implementing those changes, according to a high-level source with knowledge of the government’s plans. CBC News is not naming the source because they weren’t authorized to speak publicly.
The exact plan hasn’t been finalized, but a key option on the table includes ordering the Canada Revenue Agency (CRA) to stop collecting the new taxes for now.
Delaying collection would likely push any final decision about the changes until after the next federal election, which could effectively kill the tax increase.
“It is a surprise,” said Dan Kelly, president of the Canadian Federation of Independent Business (CFIB). The industry lobby group had opposed the increase to capital gains taxes since they were first announced.
“But it is welcome news,” he said, adding that he said the CFIB are unclear on what exactly is being changed.
‘Fairness for every generation’
The changes had been considered a core part of the last federal budget, which was branded as a plan bringing “fairness for every generation.”
It proposed increasing taxes on capital gains above $250,000 for individuals, changing what is called the “inclusion rate” from one-half to two-thirds for them.
All capital gains for corporations and trusts would have increased to two-thirds as well.
When the measure was introduced, the finance minister at the time, Chrystia Freeland, said it was intended to address what she called issues of tax fairness. Freeland had previously said the government needed the revenue from the changes to fund programs like pharmacare, dental care, child care and the green energy transition.
Freeland has since disavowed her signature tax policy, as she seeks the Liberal leadership.
Canada’s capital gains tax increase comes into effect on June 25. Andrew Chang breaks down some misleading claims about the changes coming from both sides of the political aisle and explains who is likely to pay the new tax, how much and how often. Does it really just hit the ultra-rich?
But economist Jim Stanford criticized the potential walk-back on this policy.
“It was fair, and it would raise revenue that was needed for important things like affordable housing or dental care or pharmacare,” said Stanford, director of the Centre for Future Work in Vancouver.
“The only people who will benefit from the government backtracking on capital gains taxation is a tiny group of corporations and very wealthy investors,” he said.
If the increase in capital gains were to stay, he said it would be a “small” move toward a more fair tax system.
The proposed…
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