2025-Jan-10
Capital Gains Tax Changes are in Limbo but CRA is Still Collecting
The recent resignation of Prime Minister Justin Trudeau and the prorogation of Parliament have left several tax changes in limbo, including proposed changes to the capital gains tax. The 2024 federal budget had proposed an increase to the capital gains inclusion rate from 50% to 66.67% on gains greater than $250,000 realized on or after June 25, 2024. However, the Canada Revenue Agency (CRA) has confirmed it will continue to manage the tax under the proposed rules included in the Notice of Ways and Means Motion tabled on September 23, 2024 and will be issuing forms to allow taxpayers to file in accordance with the new capital gains rules by January 31, 2025.
For now, taxpayers have two options:
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Pay capital gains tax at the higher inclusion rate
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To avoid potential arrears interest and penalties, taxpayers can pay their capital gains tax at the higher inclusion rate. If the proposed changes don’t become law, they’ll be entitled to a tax refund, along with refund interest.
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Follow existing legislation
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Taxpayers who believe the proposed changes won’t become law can report their 2024 capital gains with a 50% inclusion rate, but the CRA may charge retroactive penalties if the draft legislation eventually becomes law.
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GBA encourages you to consult a tax professional for personalized advice on how to navigate this situation and to understand your best course of action. As this situation develops, we will continue to inform members of any significant updates.
Read more here.
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