The federal government says the Canada Revenue Agency will continue to administer the capital gains tax changes proposed in the budget last year, even though they haven’t passed in Parliament, which is prorogued until March 24.
Definition prorogued (past tense) · prorogued (past participle)
- discontinue a session of (a parliament or other legislative assembly) without dissolving it:”James prorogued Parliament in 1685 and ruled without it”
- (of a legislative assembly) be discontinued without being dissolved:”the House was all set to prorogue”
The Finance Department says parliamentary convention dictates that taxation proposals such as the capital gains taxation measures the Liberals introduced last year are effective as soon as the government tables a notice of ways and means motion.
The Liberals tabled in September a notice of a ways and means motion that introduced a bill meant to raise the portion of capital gains on which companies pay tax to two-thirds from one-half. The policy would also apply to individuals with capital gains earnings above $250,000.
Despite the current prorogation, the Finance Department says the CRA will issue taxpayer forms in accordance with the proposed capital gains rules by Jan. 31.
The department says the CRA will stop administering the policy if Parliament resumes and the government signals it will no longer proceed with the proposed changes to capital gains taxation.
The department’s update on capital gains comes a day after Prime Minister Justin Trudeau announced his resignation and the proroguing of Parliament, which wiped the House of Commons docket of bills and motions that had yet to receive royal assent and caused confusion around the capital gains proposal.
This report by The Canadian Press was first published Jan. 7, 2025.
How many Canadians effected and how much will it cost?
The Canada Revenue Agency (CRA) will continue to implement the proposed changes to the capital gains tax despite Parliament’s prorogation[1][2][4]. The key points of these changes are:
- The capital gains inclusion rate will increase from 50% to 66.67% (two-thirds)[1][2].
- For individuals, this new rate applies to capital gains exceeding $250,000 annually[3][5].
- For corporations and most trusts, the new rate applies to all capital gains[5][6].
- The changes are effective for capital gains realized on or after June 25, 2024[8].
Regarding the number of people affected and how:
- Exact numbers are not provided in the search results, but the changes will impact:
- High-income individuals with annual capital gains over $250,000[3][5].
- Businesses and corporations of all sizes[1][5].
- Most types of trusts[5][6].
- The impact on affected taxpayers includes:
- Paying taxes on 66.67% of capital gains instead of 50%[1][2].
- Potential reassessments if the legislation is not passed[6].
- Uncertainty in tax planning due to the current political situation[5][9].
- The business community has expressed concerns about the policy being a potential drag on investment and innovation[5].
It’s important to note that while the CRA is administering these changes, they are still subject to parliamentary approval[2][6]. The CRA plans to issue forms for filing under the new rules by January 31, 2025[1][2][8].
Citations:
[1] https://vancouver.citynews.ca/2025/01/07/cra-to-move-forward-with-capital-gains-tax-change/
[2] https://www.investmentexecutive.com/news/industry-news/finance-confirms-cra-will-administer-capital-gains-tax-changes/
[3] https://www.cbc.ca/news/business/capital-gains-tax-changes-1.7424896
[4] https://www.ctvnews.ca/politics/cra-to-continue-with-capital-tax-changes-despite-prorogation-finance-department-1.7167151
[5] https://www.krp.ca/capital-gains-inclusion-rate-changes-to-be-administered-by-cra
[6] https://enrichedthinking.scotiawealthmanagement.com/2025/01/10/parliament-prorogations-impact-on-the-proposed-capital-gains-inclusion-rate-increase/
[7] https://www.doanegrantthornton.ca/insights/how-does-this-impact-tax-proposals/
[8] https://www.canada.ca/en/revenue-agency/news/newsroom/tax-tips/tax-tips-2025/top-changes-affecting-business-taxes-2025.html
[9] https://www.moneysense.ca/news/how-prorogation-will-impact-capital-gains-tax-changes-in-canada/
[10] https://globalnews.ca/news/10938083/tax-changes-2025-canada/
[11] https://www.bnnbloomberg.ca/investing/2025/01/07/cra-to-continue-with-capital-tax-changes-despite-prorogation-finance-department/
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