Canada’s Proposed Capital Gains Tax Hike: What It Meant — And What Happened
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Keywords: capital gains tax Canada, capital gains inclusion rate, 2024 Federal Budget, capital gains reform, Canadian tax updates, income tax planning
In 2024, the federal budget included a plan to increase the amount of your capital gain that gets taxed — a proposal that caused concern among investors, entrepreneurs, and small business owners. That proposal has since been withdrawn, but it’s worth understanding what was once on the table — and why it matters.
What Was Proposed (in 2024)
- The plan would have increased the capital gains inclusion rate from 50% (½) to 66.67% (⅔).
- For individuals, the new rate would have applied only to capital gains exceeding $250,000/year; gains up to the first $250,000 would remain subject to the 50% rate.
- For corporations, trusts and other non-individual entities, the ⅔ rate would have applied to (nearly) all capital gains realized on or after June 25, 2024.
- The proposed changes would also have affected related rules, including:
- Employee stock-option benefits
- Loss carry-forward calculations
- Corporate capital dividend account rules
- Allowable business investment losses
Overall, many Canadians would have seen higher taxes on gains from investments, real estate sales, or business share dispositions.
What Happened: The Hike Was Cancelled
As of March 21, 2025, the government officially cancelled the proposed increase. The capital gains inclusion rate will remain at 50% for now.
A previous update in early 2025 had already delayed implementation to January 1, 2026, but ultimately the government decided not to proceed with the measure.
This means:
- Capital gains continue to be taxed at a 50% inclusion rate.
- The related proposed tax rule changes will not take effect.
- Other budget items, including changes to the lifetime capital gains exemption, may still move forward.
What This Means for Investors, Entrepreneurs, and Business Owners
The cancelled hike provides relief for many Canadians, but the experience highlights how quickly tax policy can shift. Individuals and businesses with significant investments or potential future asset sales should continue to monitor upcoming budgets and draft legislation.
If you own corporations, real estate, or investments — or if you plan to dispose of business assets — it remains important to:
- Track gains and losses carefully
- Review tax implications before major transactions
- Stay in touch with a tax professional to anticipate future changes
Need Guidance on Capital Gains or Tax Planning?
Canadian tax rules continue to evolve, and keeping up with proposed changes can be challenging.
If you’d like help:
- Planning asset sales
- Structuring your business for tax efficiency
- Understanding how future legislation could impact you
Get in touch with us today. We can help you navigate uncertainty and plan confidently for the future.
