Reports of the capital gains tax hike’s death have been greatly exaggerated… for now, at least.
What happened: After Justin Trudeau resigned and prorogued Parliament, there was speculation the controversial hike to the capital gains inclusion rate had died alongside the prime minister’s tenure, as the amendment to the Income Tax Act was never signed into law.
- In case you forgot, last year the feds proposed taxing every dollar over $250,000 a person earns off an investment at a rate of two-thirds, up from the previous rate of one-half.
Yes, but: The Canada Revenue Agency (CRA) said it’s still applying the new rate for now, in keeping with the practice of adhering to legislation when it’s proposed rather than when it becomes law. It’s been collecting the additional tax since June and will continue to do so.
Why it matters: The hike still faces uncertainty. The CRA will no longer apply the new rate if the government doesn’t sign it into law and signals its intention to scrap it. Since there will almost certainly be an election before the hike can be passed, and the heavily favoured Conservatives have been adamantly opposed to the hike, it might really be donezo.—QH