{"id":1731,"date":"2025-01-10T16:31:02","date_gmt":"2025-01-10T16:31:02","guid":{"rendered":"https:\/\/advisor.wellington-altus.ca\/evolved-wealth-advisors\/?p=1731"},"modified":"2025-01-13T16:34:08","modified_gmt":"2025-01-13T16:34:08","slug":"tax-changes-proposed","status":"publish","type":"post","link":"https:\/\/advisor.wellington-altus.ca\/evolved-wealth-advisors\/2025\/01\/10\/tax-changes-proposed\/","title":{"rendered":"Prorogation Purgatory: What Parliament\u2019s Shutdown Means for Proposed Tax Changes"},"content":{"rendered":"
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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.<\/p>\n

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What does this mean for previously announced proposals?<\/h2>\n<\/div>\n<\/div>\n
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Any bill that hasn\u2019t become law by the time of prorogation is effectively canceled, and would need to be reintroduced when Parliament resumes\u2014unless the House votes to reinstate it.1<\/sup>\u00a0Given the government is expected to face a confidence vote soon after Parliament reconvenes, and opposition parties have stated they will vote down the government, there\u2019s uncertainty about whether any new or previously cancelled bills will be introduced before an election is called.<\/p>\n

Over the past year, several significant tax proposals have been announced, but not yet been included in a bill. With prorogation and the possibility of a spring election, the fate of these proposals is now unclear.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/section>\n

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Here are some key proposed tax measures you may be wondering about:<\/h2>\n<\/div>\n<\/div>\n
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1. Increase to the capital gains inclusion rate<\/h3>\n<\/div>\n<\/div>\n
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The\u00a02024 Federal Budget<\/a>\u00a0proposed to increase the capital gains inclusion rate from 50 per cent to 66.67 per cent for individuals\u2019 capital gains in excess of $250,000 and for all capital gains of corporations and trusts, starting on June 25, 2024. These proposals would effectively raise the tax rate on capital gains by seven to nine per cent depending on the jurisdiction.<\/p>\n

While draft legislation for these changes was included in a September 2024\u00a0Notice of Ways and Means Motion\u00a0<\/em>(NWMM), and reaffirmed in the\u00a0December 2024 Fall Economic Statement<\/a>, it still needs to be passed in a bill. If an election is called before such a bill is enacted, the future of this proposal will depend on the next government.<\/p>\n

However, the Canada Revenue Agency\u2019s (CRA) longstanding practice is to administer tax rules introduced in a NWMM even before they are formally enacted.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/section>\n

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CRA confirmed it will apply the new inclusion rate to capital gains realized on or after June 25, 2024, even if the rules haven\u2019t, and may never, become law.2<\/sup><\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/section>\n

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Impacted taxpayers preparing their 2024 tax returns will face a tough decision:<\/p>\n