Canada’s contentious new capital gains tax inclusion rate is in effect today.
Many people are confused about the new rules, including a certain ChatGPT-wielding politician, so let’s clarify: for every dollar over $250,000 earned off an investment, two-thirds is now considered taxable income, up from the previous rate of one-half.
- Let’s say you make $600,000 in profit from selling a second property, like a cottage. You'll pay tax on 50%, or the inclusion rate, of the first $250,000 of those gains.
- But because of the changes, you'll now pay tax on 66.67% of the remaining $350,000. Gains from the sale of primary residences, however, are exempt.
Bottom line: The feds say the changes will drum up $19.4 billion over five years and affect 0.13% of the population. Critics and lobby groups argue it will kill innovation and hurt the middle class. The next few years will show if either side is right.—QH