QUESTION PERIOD — Finance
Capital Gains Inclusion Rate
May 30, 2024
My question is for the government leader regarding the Canadian entrepreneurs’ incentive announced in Budget 2024. According to official government documents, entrepreneurs with eligible capital gains of up to $6.25 million will be better off under the government’s changes because of this incentive. This is, in effect, an admission that companies that scale beyond this level will be penalized under the new regime. These are the scale-up companies that Canada so desperately needs to grow our economy.
Senator Gold, Canada is dead last in the G7 when it comes to private non-residential business investment. If the new capital gains inclusion rate — by the government’s own admission — will adversely impact business investment, why have they decided that now is the right time to implement this policy?
Thank you for your question. The measures in the budget — and the measures that will be forthcoming in separate legislation that we expect with regard to capital gains — are being studied, and will continue to be studied, by the Senate. We are currently engaged in pre-studies, as you know, and most colleagues are participating in one form or another in those pre-studies. Ministers and officials have been, and will continue to be, available to answer questions. I’m going to defer to the process that is under way, and to the relevant ministers and officials in order to answer those questions with greater precision.
Thank you, Senator Gold, but could you elaborate on consultations or studies undertaken by the government prior to making this announcement on altering the capital gains tax inclusion rate for business investment? In particular, was there consideration on how this measure may impact founders from establishing businesses in Canada by imposing extra taxes on potential business assets?
I’m not in a position to comment on the consultations or considerations, although the government certainly considers, to the best of its ability, all the potential impacts — positive and negative — of any measure that it introduces. Again, I encourage these questions to continue to be asked to those officials and ministers, where appropriate, who will continue to be available to us.
