Earlier in 2024, the Liberal government proposed significant changes to Canada’s capital gains tax rules. The plan aimed to increase the capital gains inclusion rate from 50% to 66.67% for corporations and trusts and introduce a higher inclusion rate for individuals on annual capital gains exceeding $250,000. The changes were set to take effect starting June 25, 2024.

However, the resignation of Prime Minister Justin Trudeau and the prorogation of Parliament have stalled the legislative process required to implement these changes. As of now, the proposed adjustments have not become law. This legislative pause has created uncertainty for taxpayers, especially those preparing for year-end financial planning.

Initially, the Canada Revenue Agency (CRA) signaled that it would apply the proposed rates to capital gains realized after June 25, 2024. With Parliament effectively reset, any motions related to the tax changes would need to be reintroduced when the House of Commons resumes. In the meantime, tax professionals advise individuals and corporations to prepare for the possibility of increased capital gains taxes, with the potential for refunds should the legislation fail to pass.

Until the government provides further clarification, taxpayers are encouraged to consult their financial advisors to ensure their investment and tax strategies align with both current rules and potential changes.

For personalized guidance on navigating uncertain times, contact me at info@financerx.ca.