QUESTION PERIOD — Finance
Budget 2024
April 30, 2024
Senator Gold, Canadians are seeking clarity about the government’s intention to increase the inclusion rate on capital gains realized annually above $250,000 from one half to two thirds.
Minister Freeland said that only 0.13% of Canadians, with an average annual income of $1.4 million, will pay more on their capital gains. However, we are hearing that up to 20% of Canadians may be impacted and the policy may capture many working professionals like doctors and real estate investors who have trusts or incorporated businesses.
Can you set the record straight? How many people will be affected? What data was used to make this determination? Many are extremely concerned that it will hinder investment in Canada.
Thank you for your question. Senator, based on information from the government, next year, 28.5 million Canadians are not expected to have any capital gains income and 3 million Canadians are expected to earn capital gains below the $250,000 annual threshold. That means that for 99.87% of Canadians, personal income taxes on capital gains will not increase. The government has shared that about 12% of Canada’s corporations would face the higher inclusion rate on their capital gains. However, increasing the capital gains exclusion rate is not expected to hurt Canada’s business competitiveness.
Corporations in most other countries, including the United States, pay corporate income tax on 100% of their capital gains. With a two-thirds inclusion rate, corporate taxation in Canada remains competitive.
Thank you, Senator Gold. As a quick follow-up, I’d like to ask about consultation. I’ve spoken to many individuals and entrepreneurs who were caught off guard by the announcement. Can you speak to us about the government’s consultation process? Who was consulted? What did you hear? What other revenue-generating policy may have been considered as an alternative to the capital gains tax increase?
Thank you for your question. All measures were undoubtedly considered in the lead-up to the budget. However, I do not have any information on the consultation process for this specific budget measure.
