Mark Carney and Pierre Poilievre may not align on everything, but it seems they’re on the same page when it comes to the capital gains tax increase, which was introduced by the Liberals in April 2024 and would see the inclusion rate increased from 50% to 66.7%. For individuals, the higher inclusion rate would apply to gains over $250,000.
Carney, who was elected Liberal Party leader and Prime Minister of Canada on Sunday, touched on the increase in his acceptance speech, saying that his government will “immediately” scrap the change because “builders should be incentivized for taking risks and rewarded when they succeed.” Carney also said he would abandon the increase while campaigning for his current post in early February.
Conservative Party leader Poilievre has pledged to do the same. In post on X in mid-January, he said the increase “was a bad idea before President Trump’s tariff threat” and is “outright insanity now.”
“I do feel like it's dead in the water,” says Stefanie Ricchio, Chartered Professional Accountant and CEO of SRBC Inc. “So I think we can feel a general sense of there's no need to worry about this… when our two major political parties are saying that they’re not going to enforce it.”
Although the increase was initially supposed to apply to gains from June 25, 2024, onwards, the federal government announced in late January that it would be deferring implementation until January 1, 2026. This was just a few weeks after Justin Trudeau announced that he would be stepping down as Prime Minister, and the deferral was regarded as a way to “provide certainty to Canadians” during an economically turbulent time.
In any case, Ricchio says she’s not surprised that neither the Liberals or Conservatives, who are leading in the latest polling, plan to move forward with the increase.
“When this was announced... the narrative was that this would just affect the 1% and ‘tax the rich’ and that was the way to sell it and make it make sense. But in reality, this was always going to be something that also impacted the middle class,” she says. “I know a 70-year-old widow who has a cottage and purchased it decades ago for under $50,000, and obviously over time it's appreciated. She would be subject to this increase.”
In the context of what’s happening today, with a revolving door of new tariffs and trade complications, Ricchio underscores that an increase to the capital gains tax rate would discourage the investment and productivity Canada needs to prop up its economy.
“So I'm not particularly surprised that Mark Carney has said they're not going to implement this. And Chrystia Freeland also said the same thing, that she didn't support it and it wasn't the path forward,” she adds. “I think this trade war probably was the last nail in the coffin to say we cannot push this capital gains inclusion rate forward.”
With the 2025 tax season now in swing, Ricchio is advising Canadians that owe capital gains to be aware that the 66.67% inclusion rate “in no way, shape, or form comes into play.”
“The CRA still went forward and updated the forms so Canadians looking at their tax forms as they’re preparing their returns, or when they’re presented by their accountant or CPA, might notice that there’s still reference to ‘pre-June 25’ and ‘post-June 25,’” she says, “but the inclusion rate is still 50%.”
Ricchio also makes note of the extended deadline for T1 filers reporting capital dispositions. This is to allow the CRA time to reissue certain tax slips with consideration for the capital gains tax increase deferral.
“The CRA did say that they would be granting relief from penalties through June 2. But if you exceed that June 2 deadline, the clock goes back to the original filing deadline, April 30,” she says. According to the CRA, the penalty for late filings is 5% of your 2024 balance owing, plus an additional 1% for each month that you file after the due date.
