Capital gains: federal government announces delayed implementation and exemptions
News
Following Justin Trudeau's announcement (resignation and prorogation of Parliament until March 24), the situation surrounding the application of the increased capital gains inclusion rate has been a source of ambiguity.

As the deadline for tax returns approaches, the federal Minister of Finance issued a press release on Friday, January 31, to clarify the situation surrounding capital gains.
It should be remembered that the federal government had planned for the measure to come into force on June 25, 2024, by passing a ways and means motion. At the beginning of January, the Canada Revenue Agency (CRA) had chosen to implement this measure, although no bill had yet been passed by Parliament. However, it is important to note that a ways and means motion becomes inapplicable if Parliament is dissolved. While the opposition parties (Conservative, Bloc Québécois and NDP) have indicated their willingness to bring down the next government to call a spring election, the passage of a bill by Parliament would have been necessary to allow the CRA to continue applying the measure. The current Minister of Finance has stated that the next government will introduce legislation “in due course” to implement the increased capital gains inclusion rate, the exemption and the introduction of the incentive for Canadian entrepreneurs. |
Highlights of the Minister of Finance's announcement
- The increase in the capital gains inclusion rate will be deferred by 18 months. It will apply as of January 1, 2026.
- Some exemptions are renewed and others are created:
- Maintain the principal residence exemption. All profits from this sale will remain tax-free.
- Introduce a new $250,000 annual threshold for Canadians, effective January 1, 2026, to ensure that those with modest capital gains continue to benefit from the current one-half inclusion rate. The $250,000 annual threshold will apply to capital gains, such as those from the sale of a second home.
- Increase the lifetime capital gains exemption to $1.25 million, effective June 25, 2024, from the current maximum of $1,016,836 on the sale of small business shares, and farm or fishing property.
- Offer a new incentive to Canadian entrepreneurs to encourage entrepreneurship.
- Maintain the principal residence exemption. All profits from this sale will remain tax-free.
What's next? Subject to the next few weeks and the election, it's possible that these changes won't see the light of day.
- Chrystia Freeland, former Finance Minister and candidate for the leadership of the Liberal Party of Canada, recently indicated that she would cancel this increase if elected leader of the Party - partly because of the tariffs imposed by the U.S. President on all Canadian products.
- Pierre Poilievre, leader of the Conservative Party, has indicated that he will abolish this measure if he wins the next federal election.
- The Bloc Québécois had expressed concern about the impact of this measure on small Quebec property owners.
This announcement is good news for Quebec landlords. CORPIQ has been working on this issue for months (briefs, hearings, media interviews, a petition with 51,000 signatories, raising awareness among elected officials and political parties, etc.). Our mobilization is continuing in the run-up to the next federal election, by raising awareness among the teams of the various candidates to ensure that Quebec property owners are exempt. |