Capital gains tax change won’t appear in the coming budget implementation bill, here’s why

Deputy Prime Minister and Finance Minister Chrystia Freeland will be tabling yet another omnibus bill to pass a sweeping range of measures promised in her April 16 federal budget, though left out of the legislation will be the government’s proposed capital gains tax change.

 

On Tuesday, the senior Liberal cabinet minister offered an early preview of what the budget bill will contain, when she tabled notice of what’s known as a “ways and means motion” in the House of Commons.

 

This motion, spanning 663 pages, outlines all of the tax and legislative measures that the government plans to include in the bill – titled the “Budget Implementation Act, 2024, No. 1″— coming to the Commons soon, if MPs allow.

 

Speaking about the incoming bill and the next phase of the government’s economic plan at a press conference on Parliament Hill, Freeland framed the legislative package as “about ensuring fairness for every generation.”

 

Absent from this package, though, is Freeland’s plan to rake in $19.3 billion over the next five years by increasing the inclusion rate on capital gains from 50 per cent to 67 per cent for individuals earning more than $250,000 in capital gains in a year, and for all corporations and trusts.

According to a federal official speaking on background, the government’s intention is to advance the capital gains change through a separate piece of legislation that would move through Parliament on its own timeline. Of note, the budget had vowed that this tax change would apply to capital gains realized on or after June 25, 2024.

 

 

Asked why she’s decided to ask parliamentarians to vote on these tax reforms separately, and whether it was to force Conservative Leader Pierre Poilievre and his caucus to take a definitive position on the proposal, Freeland demurred.

 

“I do want to be very clear with everyone that the major elements of the capital gains move were clearly laid out in the budget, including in the tax annex,” Freeland said.

 

She also would not offer specifics on the timing of introducing this stand-alone piece of legislation, which Canadian doctors, businesspeople and entrepreneurs have raised concerns over.

 

“We are very committed to the capital gains measures,” Freeland said, acknowledging this major new revenue stream is helping the government pay for its suite of new spending measures. “And I look forward to tabling implementing legislation.”

 

“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… to increase the capital gains inclusion rate.”

What is in the budget bill?

From tax code and housing policy changes, to criminal and health law amendments, the legislation runs the gamut of reforms and while most is tied to the federal budget, the Liberals are also incorporating some outstanding promised reforms left out of their last major piece of economic legislation.

 

Among the economic policies and promises this bill will seek to implement are:

Launching a national school food program through a series of bilateral funding agreements;
Enacting the new Canada Disability Benefit with considerations around jurisdiction and appeals;
Increasing the Home Buyers’ Plan withdrawal limit from $35,000 to $60,000 for first-time buyers;
Advancing Criminal Code reforms aimed at auto theft and the technology these criminals use;
Establishing a new consumer-driven banking framework while tamping down predatory lending;
Rolling out the “Canada Carbon Rebate for Small Businesses” returning past proceeds from the federal pollution price to small businesses through a new refundable tax credit;
Implementing an automatic enrolment in the Canada Learning Bond (CLB) for eligible children whose families do not open a Registered Education Savings Plan (RESP); and
Following through on the previously promised crackdown on income tax deductions related to short-term rentals such as AirBnB and Vrbo properties operating in regions with restrictions, in order to expand the long-term rental supply nationwide.

Latest ‘priority’ economic bill

In a subsequent technical briefing, finance officials speaking on background told reporters the budget bill will also propose measures to establish a right to disconnect, put into effect investment tax credits, implement an Indigenous loan guarantee program, and strengthen consumer telecommunications protections.

 

While a bill of this size and wide-spanning scope can be considered omnibus by definition, the Liberals have consistently rejected the characterization of their budget bills as being omnibus, citing their central economic theme and focus.

 

This new piece of legislation will be joining the list of priority government bills the Liberals are pushing to make law, including the yet-to-pass Fall Economic Statement Implementation Act meant to make portions of the fall financial update a reality.

 

While the Senate is conducting a pre-study on Bill C-59 – to help expedite its movement through the upper chamber once it lands there – the legislation remains many stages away from full passage as it is still undergoing clause-by-clause review at the House committee phase.

 

Freeland said Tuesday that the government would be pushing for quick passage of the new budget bill in Parliament.

 

 

 

This article was first reported by CTV News