Feds reverse capital gains hike for political expediency

Delaying the collection of capital gains will likely kill the tax increase, if followed by a snap election.

The federal government announced Friday it will walk back the unpopular tax hike on capital gains, following pushback from entrepreneurs, corporations and trust funds.

Finance Minister Dominic LeBlanc finalized the deferral until January 1, 2026 after ordering the Canada Revenue Agency (CRA) to stop collecting the new taxes for now.

Should the incoming government not cancel the tax grab, the inclusion rate will to jumps from 50% to 67% on capital gains over $250,000 for individuals, and on all gains for corporations and trusts.

Prior to the cabinet order, the CRA had full authority to implement tax hikes before a cabinet bill receives Royal Assent, permitting that relevant legislation eventually passes. This is standard parliamentary practice, the agency told CBC News.

MP Chrystia Freeland, in a ways and means motion last year, pushed for a higher inclusion rate on capital gains, though no tax bill ever followed. The prorogation of Parliament renders any bill useless until after a majority vote, which the Liberals cannot secure.

Delaying collection will likely kill the tax increase, based on current polling of the current government. Conservative Leader Pierre Poilievre intends to scrap the tax, should he become prime minister.

MP Chrystia Freeland earlier announced she would also scrap the tax hike if chosen to succeed Trudeau, following pushback from entrepreneurs and trusts, and fear of a brain drain to low tax jurisdictions.

“We certainly welcome this policy shift; however, we shouldn't have been here in the first place,” wrote Deborah Yedlin, president of the Calgary Chamber of Commerce in an emailed statement to CBC News.

“Increasing the capital gains inclusion rate is a negative signal for investment,” wrote Yedlin, adding that higher taxes de-incentivize future investments.

Meanwhile, a second Donald Trump presidency and looming trade war complicates matters further, as businesses consider their options.

“The capital gains tax hike will punish Canadian doctors, entrepreneurs and people saving for their retirement,” said the Canadian Taxpayers Federation. It will “blow a huge hole in Canada’s economy” taxpayers can ill-afford.

Hiking the inclusion rate will cost 400,000 jobs at minimum and shrink Canada’s GDP by nearly $90 billion, according to a CD Howe Institute report. That will intensify with 25% tariffs on Canadian exports.

In conjunction, that will “lead to a depreciation of the Canadian dollar,” while cutting corporate profits and raising costs. That subsequently lowers production and intensifies layoffs, according to the Bank of Canada.

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Alex Dhaliwal

Calgary Based Journalist

Alex Dhaliwal is a Political Science graduate from the University of Calgary. He has actively written on relevant Canadian issues with several prominent interviews under his belt.

COMMENTS

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  • Shaun Morrison
    commented 2025-01-31 21:46:46 -0500
    Bruce,

    Kinda like pictures of Carney in the pool with Epstein (picture unvetted) , Carneys wife with Epstein’s wife.
  • Bruce Atchison
    commented 2025-01-31 21:32:23 -0500
    Sneaky politicians hate it when reporters expose their schemes and scams. It’s why we must keep bombarding our MPs with complaints about government trickery.
  • Shaun Morrison
    commented 2025-01-31 21:04:05 -0500
    Speaking of taxes, The Comox Vally here in BC is secretly trying to increase property taxes by 5% I hear to make all home owners pay for the homeless and drug addicts. Given the tiny tiny add the City posted in the paper would indicate an intention to keep/hide this from the tax payers without tax payer consultation and input.