The Liberal government plans to take the first legislative step to increase the capital gains tax rate on Monday.
Finance Minister Chrystia Freeland highlighted the timing on Sunday, saying the government is taking action to improve tax fairness for Canadians.
Freeland announced the capital gains tax changes as part of her April budget, but left the new inclusion rate out of the budget legislation.
The government proposes to make two-thirds of capital gains taxable.
Currently, only half of the profits from the sale of assets – such as shares or second homes – are taxed.
The Liberals must table a motion in the House of Commons before they can introduce actual capital gains tax legislation. The government says the change will come into effect on June 25, even though no legislation has been passed yet.
The higher tax rate applies to all corporate capital gains, while the higher individual tax rate applies only to capital gains over $250,000.
Lobby groups representing companies and doctors who are likely to be affected by the changes have called on the government to reconsider increasing the inclusion rate.
However, the Liberals defended the de facto increase in capital gains tax by arguing that Canada needs to raise more revenue to finance things like housing and health care.
The government expects the higher inclusion rate to generate $19.4 billion over the next five years.
This report by The Canadian Press was first published June 9, 2024.
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