The Liberal government has announced its intention to introduce legislation to implement the proposed changes to the capital gains tax before the House adjourns for the summer break.
Deputy Prime Minister and Finance Minister Chrystia Freeland said that the legislative process will commence in the coming weeks to increase the “inclusion rate” from one-half to two-thirds on capital gains above $250,000 for individuals.
The capital gains tax change, which was initially announced in the budget, has been separated from the budget implementation bill. The government plans to introduce a separate bill that will require its own vote.
However, the change was detailed in the budget’s tax annex, allowing the Canada Revenue Agency (CRA) to enforce the change provisionally until the legislation is passed. Prime Minister Justin Trudeau has announced that the tax change will take effect on June 25.
The proposed changes to the capital gains tax are expected to bring in up to $19 billion in new revenue. Once implemented, 50% of the first $250,000 in capital gains earned by an individual taxpayer will be taxed, while two-thirds of every dollar beyond $250,000 will be taxable.
The government data indicates that only 0.13% of Canadians, with an average income of about $1.4 million a year, are expected to pay more in personal income tax on their capital gains as a result of the change.
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