At Extreme Investor Network, we keep a close eye on the latest developments in finance and government policies that may impact the financial landscape. One such development making headlines recently is Canadian Prime Minister Justin Trudeau’s government’s proposed hike in the capital-gains tax inclusion rate.
Finance Minister Chrystia Freeland is set to present a motion in the House of Commons this week, outlining the planned reforms that would increase government revenue by billions of dollars. The proposed changes, which are set to take effect on June 25, will not affect the exemption for gains on the sale of primary residences.
Under the proposed reforms, the capital-gains tax on companies and individuals would increase for gains over C$250,000. Currently, half of those gains are subject to tax, but under the new rules, two-thirds of the gains would be taxed. Some exemptions and reductions will be available for owners of small businesses, farms, and fishing operations.
While the government argues that the tax increase is a way for the wealthy to contribute more to society, it has faced criticism from business groups who believe it will hinder Canada’s ability to attract investment and could worsen productivity issues. The budget estimates that the measure will generate nearly C$20 billion in new tax revenue over five years, but this figure relies on the assumption that some investors will sell assets before the new tax rate takes effect on June 25.
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