Capital gains are going to be taxed more, and these economists say it's a good thing

OTTAWA — The Liberal government is going to change how capital gains are taxed in Canada, which will affect corporations and the country’s wealthiest individuals.

The federal budget presented Tuesday proposes taxing two−thirds rather than one−half of capital gains — which refers to profit made on the sale of assets.

The increase in the so−called inclusion rate would apply to capital gains above $250,000 for individuals, and all capital gains realized by corporations.

Business groups are not happy with the changes, arguing that making companies pay more in taxes will ultimately hurt productivity.

But Trevor Tombe, an economics professor at the University of Calgary, is one of several experts pointing out that the changes would actually help productivity by bringing capital gains taxation in line with other taxation, such as for dividends.

Michael Smart, a tax policy expert and economics professor at the University of Toronto, says the changes will level the playing field and encourage businesses to make the best investment decisions, rather than the ones that are the most advantageous for taxes.

This report by The Canadian Press was first published April 17, 2024.

The Canadian Press