Days before he’s expected to call a federal election, Prime Minister Mark Carney is confirming he won’t move ahead with a key Liberal tax policy.
The Prime Minister’s Office says a plan to hike the inclusion rate on capital gains, first pitched in the federal budget last year, will not move forward.
The proposal was set to take effect on June 25 of last year and would have seen all businesses and individuals reporting more than $250,000 in capital gains in a year pay more tax on those proceeds.
The tax change drew sharp criticism from some tech leaders and professional groups and the Liberals never passed legislation to enact it.
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Conservative Leader Pierre Poilievre promised in January to reverse the changes to capital gains taxes if he takes power in the next federal election.
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Carney said after securing the Liberal leadership earlier this month that nixing the capital gains change would encourage Canadian business owners to take risks.
The Liberals say they still plan to raise the lifetime capital gains exemption for sales of small business shares and farming and fishing equipment to $1.25 million, up from $1 million, though legislation would have to come after the election.
The Canada Revenue Agency had planned to follow a long-standing precedent and administer the change even before it was law — until then-finance minister Dominic LeBlanc announced in January he would delay the measure.
The CRA said any businesses or individuals who overpaid capital gains taxes will be reassessed to address the issue.
The Liberals had expected the proposed capital gains changes — a pillar of the government’s 2024 federal budget — would generate roughly $19.4 billion in tax revenue over five years.
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