Taxpayer Group Takes CRA to Court Over Capital Gains Tax
The Canadian Taxpayers Federation has filed a legal challenge against the Canada Revenue Agency, seeking to block enforcement of a capital gains tax increase that hasn’t received parliamentary approval.
The case, Vorstfeld v. Attorney General of Canada, aims to prevent the CRA from implementing new inclusion rates scheduled for June 25, 2024, ahead of the April 30 tax filing deadline.
The legal action follows Prime Minister Justin Trudeau’s January 6 decision to prorogue Parliament, which terminated all unfinished business in the House of Commons, including the pending tax legislation. Despite lacking final approval, the CRA announced in November its intention to proceed with the changes.
The challenge centers on Mapleton, Ontario resident Debbie Vorsteveld, who sold a property with a secondary home last year. The CRA is demanding higher capital gains taxes on the sale under the proposed increase, despite the legislation not being passed into law.
“The government has no legal right to enforce this tax hike because it has not received legislative approval by Parliament,” said Devin Drover, CTF General Counsel.
With Parliament prorogued until March 24, 2025, and opposition parties threatening to defeat the Liberal government, the legislation faces an uncertain future. A recent C.D. Howe Institute report projects the tax increase would eliminate 414,000 jobs and reduce Canada’s GDP by approximately $90 billion.
Franco Terrazzano, CTF Federal Director, criticized the move as harmful to retirement savings, entrepreneurs, doctors, and workers. “The CRA must immediately halt its plans to enforce this unapproved tax hike, which threatens to undemocratically take billions from Canadians and cripple our economy,” he said.
The Vorstevelds, who had rented their secondary home to their adult children before selling when the children moved out, now face potential financial penalties if they don’t pay the increased tax rate.
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