Capital gains taxes to be introduced before summer, Freeland says

Legislation implementing the federal government’s planned increase to capital gains taxes will be introduced before the House rises for summer, Finance Minister Chrystia Freeland said Tuesday, while also calling on Conservative Leader Pierre Poilievre to take a stand on the issue.

 

Ms. Freeland did not pledge that the legislation would be passed into law by summer, even though the 2024 budget said the changes will take effect as of June 25.

 

“In the coming weeks, and certainly before the House rises, we will begin the legislative process to implement our increase in the inclusion rate,” she said.

 

The House of Commons is scheduled to sit until Friday, June 21, before recessing until mid-September.

 

The federal government has historically implemented tax changes on a provisional basis even if related legislation has not been approved through all stages in Parliament.

 

The government’s plan to raise about $19-billion over five years through capital gains tax changes was the biggest new announcement in Ms. Freeland’s April 16 budget.

Yet when the government’s first budget implementation bill was tabled a couple of weeks later, the tax change was not included.

 

Ms. Freeland said at the time that the capital gains tax changes would be introduced separately. The plan was widely viewed as an effort by the governing Liberals to force Mr. Poilievre, who is leading in the polls, to take a clear position on the issue.

 

Mr. Poilievre has not provided a clear answer to date when asked for his view on the changes.

 

A capital gain is the profit an individual or a business earns when they sell an asset, such as stocks or property.

 

The budget said that as of June 25, the inclusion rate – the portion on which tax is paid – will rise from one-half to two-thirds on capital gains realized by companies. The increase will also apply to individuals, but only on capital gains above $250,000.

 

The budget also announced that the lifetime capital-gains exemption for Canadian small-business owners who sell their companies will rise from $1-million to $1.25-million.

 

Earlier this month, several major business groups signed a joint letter calling on Ms. Freeland to scrap the planned increase to the capital gains tax, warning it could harm Canadian competitiveness.

 

Prime Minister Justin Trudeau has showed no interest in backing down, recently promoting the plan in a video post on social media.

 

Ms. Freeland was asked Tuesday whether the delay in bringing forward a bill is an indication the government was having second thoughts.

“It’s important to get things right,” she replied.

 

She then said the revenue from the capital gains tax changes will be used to offset the cost of new spending in the budget in areas such as housing and health care.

 

“I have certainly observed over the past week the Conservative Leader equivocating, dodging, deflecting, when asked about his position on our plan for tax fairness. It is important for Canadians to insist on a clear answer from the Conservatives on tax fairness. And, you know, I think depending on what answer we get, Canadians will know whose side the Conservatives are really on,” she said.

 

Sebastian Skamski, director of media relations in the Opposition Leader’s Office, accused Ms. Freeland of making up the government’s cornerstone policy on the fly.

 

“The legislation you are asking about doesn’t exist yet due to Justin Trudeau’s incompetence, so it’s impossible for us to weigh in on the matter,” he said in an e-mail.

 

 

 

 

This article was first reported by The Globe and Mail