Capital Gains Tax: Proposed Increase Raises Concerns
Key Points
- The federal government has proposed increasing the capital gains inclusion rate from 50% to 66.67%.
- Taxpayers would be subject to more tax on capital gains from the sale or disposition of capital property.
- The proposed change has raised concerns among investors, businesses, and financial experts.
Impact on Individuals
The proposed increase in the capital gains inclusion rate would have a significant impact on individuals who regularly invest in capital property. Such investments include stocks, bonds, mutual funds, and real estate. With a higher inclusion rate, more of the capital gain realized from the sale or disposition of these assets would be subject to income tax.
Implications for Businesses and Investment
The proposed change could also have a negative impact on businesses and investment in Canada. Increased capital gains tax liability may discourage investment and economic growth. Businesses may be less likely to sell or acquire assets, leading to reduced economic activity.
Concerns and Criticism
The proposed increase has drawn criticism from various groups, including the Canadian Federation of Independent Business (CFIB). The CFIB argues that the change would hurt small businesses and entrepreneurs who rely on capital gains to finance their operations and investments. The investment community has also expressed concern that the increase would make Canada less attractive for investment and could lead to capital flight.
Next Steps
The proposed increase in the capital gains inclusion rate is still under consideration by the federal government. It is not yet clear whether the change will be implemented and, if so, when it would take effect. However, it is important for taxpayers to be aware of the potential impact of this proposed change.
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