Federal Government Defers Capital Gains Inclusion Rate Increase to 2026

January 31, 2025

Federal Government Defers Capital Gains Inclusion Rate Increase to 2026

Today, the Minister of Finance and Intergovernmental Affairs, Dominic LeBlanc, announced that the federal government will postpone the implementation of the proposed increase to the capital gains inclusion rate—from one-half to two-thirds. Originally set to take effect on June 25, 2024, the new proposed implementation date is now January 1, 2026.

While this announcement provides little solace to taxpayers who had already undertaken planning for the previous June 25, 2024 implementation date, it does offer clarity for individual taxpayers regarding their 2024 tax reporting.

Key Highlights from the Announcement:

Increase to the Lifetime Capital Gains Exemption (LCGE)

The proposed increase in the LCGE to $1.25 million on the sale of qualified property remains unchanged. Importantly, this measure is still proposed to come into effect as of June 25, 2024, and will not be deferred to January 1, 2026.

$250,000 Annual Threshold for Individuals

The government reaffirmed its commitment to introducing an annual $250,000 threshold for individuals, meaning only capital gains exceeding this threshold amount will be subject to the higher inclusion rate. This measure is now proposed to take effect on January 1, 2026.

Canadian Entrepreneurs’ Incentive

The Canadian Entrepreneurs’ Incentive, which was announced alongside these measures in the 2024 Federal Budget, will proceed as planned, taking effect starting on January 1, 2025 and will not be deferred to January 1, 2026.

For additional information on the previously announced measures, be sure to check out the AWPG article titled “2024 Federal Budget Highlights” found HERE.

Impact on Administration and Tax Filings:

Previously, the Canada Revenue Agency (CRA) stated that it would cease to administer the proposed measure if no implementation bill is passed by Parliament, and the government signals its intent to not proceed with the proposals. Given today’s announcement, it is unlikely that the CRA will proceed with administering the proposed increase to the capital gains inclusion rate for the 2024 taxation year.

Corporations that have already filed tax returns based on the previously announced June 25, 2024 implementation date for the capital gains inclusion rate increase may need to amend their returns to recover any excess taxes paid.

The official news release can be found on the Department of Finance website HERE.

Recent Posts

Prorogation Purgatory: What Parliament’s Shutdown Means for Proposed Tax Changes

On January 6, 2025, Prime Minister Justin Trudeau resigned, effective upon selection of a new leader of the Liberal Party of Canada, and requested that Parliament be prorogued. The Governor General consented to the request, terminating all parliamentary activities until March 24.

THE DIGITAL GOLD RUSH: How Bitcoin Became America’s Unlikely Saviour

“If you are going to put a legend on the greenbacks, I would suggest that of Peter and Paul, ‘Silver and gold I have none, but such as I have I give to thee.” – Abraham Lincoln [1]

In our fast-paced world, we often overlook the long arc of evolution. With a new administration set to take control in Washington, it’s timely to reflect on the evolution of the U.S. dollar.

December Market Insights: THE BEST OF TIMES, THE WORST OF TIMES: A Year in Review

As we reflect on the market journey from late 2023 to the present and look ahead to 2025, the resilience and dynamism of the global economy stand out as defining characteristics. Throughout this period, a bullish outlook has been maintained, often swimming against the tide of mainstream opinion. This perspective has proven valuable as markets navigated through economic and political terrains, embodying the Dickensian sentiment of the best, and worst of times.

U.S. Election Special Market Insights: American System 2.0

We stand at a pivotal juncture as we transition from a wartime to peacetime economy. The U.S. Federal Reserve’s shift towards a more proactive monetary policy aligns with the new Trump administration, introducing uncertainties that could profoundly impact risk assets. The longstanding strategy of interest rate cuts and increasing liquidity, prevalent since the late 1980s, is now under scrutiny as we enter this new era.

The information contained herein has been provided for information purposes only. The information has been drawn from sources believed to be reliable. Graphs, charts and other numbers are used for illustrative purposes only and do not reflect future values or future performance of any investment. The information does not provide financial, legal, tax or investment advice. Particular investment, tax, or trading strategies should be evaluated relative to each individual’s objectives and risk tolerance. This does not constitute a recommendation or solicitation to buy or sell securities of any kind. Market conditions may change which may impact the information contained in this document.  Wellington-Altus Private Wealth Inc. (WAPW) does not guarantee the accuracy or completeness of the information contained herein, nor does WAPW assume any liability for any loss that may result from the reliance by any person upon any such information or opinions.  Before acting on any of the above, please contact your financial advisor.