Postponement of the increase in the capital gains inclusion rate to January 1, 2026
On January 31, 2025, the federal government announced the postponement of the increase in the capital gains inclusion rate, originally scheduled for June 25, 2024, to January 1, 2026.
As a reminder, the federal government had planned to increase the capital gains inclusion rate from 50% to 66.67% on all gains realized by taxpayers starting June 25, 2024. However, an annual relief was to apply for individuals and certain trusts, allowing the first $250,000 of capital gains to continue to be included at 50%.
Since the announcement of the prorogation of the Canadian Parliament until March 24, 2025, uncertainty has surrounded the coming into force of several bills, including the one concerning the increase in the capital gains inclusion rate.
Thus, on January 31, 2025, the Government of Canada announced its intention to introduce new legislation confirming:
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The postponement of the increase to 66.67% of the capital gains inclusion rate to January 1, 2026;
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The maintenance of the annual $250,000 relief on capital gains included at 50% for individuals and certain trusts, which would come into effect on January 1, 2026;
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The maintenance of the capital gains exemption for the principal residence;
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The increase of the lifetime capital gains exemption threshold to $1,250,000 on the sale of small business shares, farm property, or fishing property. This measure would be retroactive to June 25, 2024;
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The maintenance of the new incentive for Canadian entrepreneurs, which would come into effect during 2025.
For more information on the January 31, 2025 press release from the Department of Finance Canada, please contact your FBL representative.