May 30th, 2024

Capital gains tax changes not included in Freeland’s proposed budget legislation

By Nojoud Al Mallees, The Canadian Press on April 30, 2024.

Deputy Prime Minister and Minister of Finance Chrystia Freeland waits for the start of a TV interview after tabling the federal budget on Parliament Hill in Ottawa, on Tuesday, April 16, 2024. Freeland tabled a motion to introduce the federal budget in the House of Commons today, but the document does not include the government's proposed capital gains tax changes. THE CANADIAN PRESS/Justin Tang

OTTAWA – Finance Minister Chrystia Freeland intends to ask Parliament to approve proposed changes to capital gains taxation in a stand-alone bill – a move that will force the federal Conservatives to take a specific position on the measure.

The most controversial announcement from her recent federal budget is not included in the motion she tabled Tuesday to introduce budget legislation in the House of Commons.

It includes many other measures announced in the April 16 spending plan, including the national school food program, updates to programs that help first-time homebuyers and tax changes for people who own short-term rentals.

It does not say anything about the proposal to adjust the proportion of capital gains that get taxed, known as the inclusion rate.

Right now, the government taxes 50 per cent of capital gains, or profits made from the sale of assets, including stocks and secondary properties.

Freeland is proposing to increase that to two-thirds of all capital gains realized by corporations, and any amount in excess of $250,000 in one year for individuals.

The changes are expected to come in a separate piece of legislation.

Hiving it off will force opposition parties to take a specific position on capital gains, rather than a laundry list of budget policies that are subject to a single vote.

The federal Conservatives have not taken a position yet on the proposed capital gains tax changes, despite coming out against the budget overall.

During a news conference on Tuesday, Freeland would not explain the absence of the capital gains tax changes in the proposed budget legislation.

She said the government needs to raise more tax revenue to pay for priorities like housing.

“Our view is it is absolutely fair to ask those in our country who are at the very top, to contribute a little bit more. And that is why we put forward a plan, which we are absolutely committed to, to increasing the capital gains inclusion rate,” Freeland said.

“And I look forward to tabling implementing legislation.”

When asked point-blank if the reason was to force the Conservatives to take a position on the changes, Freeland said: “No.”

At a time when younger Canadians are increasingly disgruntled about their home ownership prospects, the Liberal government has framed the proposed tax change around the idea of generational fairness.

To help get more homes built and restore economic hope for generation Z and millennials, Prime Minister Justin Trudeau has argued that wealthier Canadians need to pitch in a bit more.

The increase to the inclusion rate is expected to generate more than $19 billion in tax revenues over five years, which will help the Liberals pay for a slew of new spending on things like housing and national defence.

The changes have sparked pushback from businesses, entrepreneurs and doctors who expect to pay more in taxes as a result of the changes.

Trudeau and Freeland have dismissed the pushback.

This report by The Canadian Press was first published April 30, 2024.

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