Business Associations Petition Freeland to Reverse Capital Gains Tax Adjustment
Prominent business associations in Canada are urging Ottawa to abandon its proposal to increase the tax inclusion rate on capital gains, deeming the measure as “shortsighted.”
The organizations are urging the government to reverse its decision to raise the capital gains tax inclusion rate to 66.7 percent on profits exceeding $250,000.
The letter was also endorsed by the Canadian Manufacturers and Exporters, the Canadian Venture Capital and Private Equity Association, the Canadian Franchise Association, and the Canadian Canola Growers Association.
Ms. Freeland announced the government’s intention last month as part of budget 2024 to tax Canadian companies on 66.7 percent of their realized capital gains, up from the current 50 percent. Individuals will pay tax on 50 percent of the first $250,000 of capital gain earned in the year, but 66.7 percent of any gain above that threshold under the new system.
Ottawa has stated that the changes will affect only 0.13 percent of Canadians and 12.6 percent of businesses.
The business groups expressed disagreement in their letter, stating that increasing the tax inclusion rate on capital gains will have a cascading effect that will impact one in five Canadians over the next decade.
“This proposed tax hike will only serve to undermine the government’s stated policy objectives: bolstering health and dental care for Canadians, attracting and retaining skilled professionals, increasing investment and innovation, and helping small businesses thrive,” the letter reads.
