A ways and means motion to increase the capital gains tax passed in the House of Commons by a 208 to 118 vote on June 11. The Liberals, NDP and Bloc Quebecois voted in favour of the motion, while the Conservatives voted against it.
The changes to Canada’s capital gains tax, set to take place on June 25, mean that Canadian companies will pay taxes 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 gains earned in the year, and 66.7 percent of any gain above that threshold under the new system.
While the change was first introduced in the April 2024 budget, the Liberals later separated the measure and promised to introduce it as a separate bill at a later date.
Ms. Freeland said on June 10 that the capital gains tax changes as a way to encourage “fairness” in Canada’s tax system. She said because of the way investment gains are currently taxed, “well-off” Canadians who make money through investments can end up paying a lower marginal tax rate than those who earn incomes, such as nurses or plumbers.
Ms. Freeland said the changes to the tax regime were a more “fiscally responsible” approach than the government taking on more debt. The changes to the tax are estimated to bring in $19.4 billion over the next five years, and the Liberals have said the changes will only impact the wealthiest 0.13 percent of Canadians. The Tories have argued the tax would impact a wider category of Canadians, many who are not wealthy.
During question period prior to the vote, Conservative Leader Pierre Poilievre argued the changes to the capital gains tax will exacerbate existing crises in the country.
“He [Prime Minister Trudeau] wants to tax away doctors when we have a doctor shortage. He wants to tax homebuilders when we have a housing shortage. He wants to tax farmers when we have a food price crisis, and he wants to tax small businesses when our economy is already shrinking,” Mr. Poilievre said.
“The good news is, if you’re a billionaire, you won’t pay it. The prime minister has given you two full months to sell your assets and get your money out of Canada to go build a business south of the border, or in some faraway place.”
