Canada's new prime minister Mark Carney has announced that the federal government will cancel the proposed increase in the capital gains inclusion rate.
The tax changes, first announced in the 2024 Budget under Carney’s predecessor Justin Trudeau, triggered significant backlash from various sectors concerned it would curb 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, creating more higher paying jobs,” Carney said in a statement.
It has been proposed the capital gains inclusion rate would increase from 50% to 66.67% for corporations and trusts.
For individuals, the inclusion rate was proposed to increase from 50% to 66.67% on capital gains realized annually above $250,000.
The Liberals will maintain the increase in the Lifetime Capital Gains Exemption limit to $1.25 million from approximately $1 million on the sale of small business shares and farming and fishing property. Legislation will be introduced “in due course.”