7 hours ago
4
Canadian prime minister
Mark Carney
announced cancelling the proposed increase to the amount of capital gains subject to taxation. The move reversed a major element of the
2024 federal budget
, to support small businesses and encourage private investment.
"Cancelling the hike in
capital gains tax
will catalyze investment across our communities and incentivize builders, innovators and entrepreneurs to grow their businesses in Canada," Carney said in a statement.
While scrapping the tax hike, the liberal government will maintain its planned increase to the lifetime capital gains exemption limit. This means small business owners, as well as those selling farming and fishing properties, will still benefit from a higher exemption of $1.25 million. The government has pledged to introduce legislation to formalise this change “in due course.”
The decision to scrap the increase followed a previous delay introduced by former PM Justin Trudeau, who had postponed its implementation until New Year's Day 2026. If the hike proposal was implemented, individuals earning more than $250,000 in capital gains per year would have seen two-thirds of those gains taxed, up from the current rate of 50 per cent. The same two-thirds tax rate would have applied to capital gains earned by corporations and trusts.
Earlier the capital gains tax hike had faced opposition from various sectors, including businesses, farmers, and the medical community.
The conservatives criticised the policy as a "tax on health care, home-building, small businesses, farmers, and people's retirements." Doctors also raised concerns, warning that the increased taxation could make it harder to recruit and retain physicians at a time when 6.5 million Canadians are struggling to access primary care, according to CBC.
The Canadian medical association (CMA) pointed out that many doctors incorporate their practices and rely on investment income for their retirement. The proposed changes, they argued, would have disproportionately affected them.
Farmers and independent business owners also pushed back. A coalition of Canadian agricultural associations had written to the federal government urging them to abandon the increase, while the Canadian Federation of Independent Business (CFIB) reported that 72 per cent of its members opposed the hike, fearing it would weaken investment.
