Capital gains tax increase comes into effect today

Today is the day (June 25) that the capital gains tax increase comes into effect, as promised by the federal Liberals in their recent budget. Before the budget, the capital gains “inclusion rate” was 50 percent. In other words, 50 percent of the profit from sales of an asset—for example a hardware store or building supply store—was taxed as income, while 50 percent was tax free.

Now that same capital gains tax will be applied to 67 percent of the sale of any capital gain, including stocks, secondary residences, and the sale of a business. Business groups have heavily criticized the hiking of the capital gains tax inclusion rate as disincentivizing business ownership in Canada.