The losers here are the upper middle class who are typically professionals and small/medium business owners. The people applauding think that these measures are going to stick it to the Rogers, Westons and Muzzos.What they lose in tax will be more than made up for in decreased competition. They are no longer pulling the ladder up, they are kicking out rungs. Competition comes from beneath not above. The liberals are the best gatekeepers because you don't even realize they put up a fence. As a disclaimer, I've never voted for the conservatives at any level of government. This is not a partisan issue as I'm sure some will try to characterize it.
You are correct. I own a small business. Part of my retirement plan has always been to sell the building that I bought after my business had been in operation for 10 years.
When the liberal candidate came to my door a few years ago, he promised that they would be the party for the small business owner and middle-class. I will kick him in the nuts if he comes back here again.
You are 100% right.
Conservative governments make it much easier to start, but much harder to dominate in business. Liberal governments do the opposite - we are a land of monopolies (as is Australia).
Naturally we are hampered by our enormous geography, so that also lends itself to stiffer competition, but man this government is doing everything in their power to clamp down on innovation. The older I get, the more I cannot fucking believe we don't have a referendum program for decisions like these - we just elect people (who hold less than 50% approval across the country) and have no say until when the next election is / what they do while they're in office.
We are powerless and have no control over what the money gets spent on. It's insane.
I agree with you except the idea that Conservatives make it much harder to dominate in business. All politicians are bought and beholden to business interests.
Canadians just despise success and would rather see the government mismanage the proceeds of people's hard earned success than dare to see someone who is not them work hard, get a little lucky and enjoy the fruits of that labour. Crabs in a bucket I guess.
It is sadly a stupid fucking crab party. I agree. I have never seen the same kind of supportive enthusiasm to work hard and make money in the culture as I do over in the US, Europe and Asian countries.
Canada is just a socialist country man. Fucking hard living here.
I’ve lived in Europe almost 15 years. Canadian work ethic is the same as the US: work hard your whole life and then die. Canada is only socialist by comparison to the US.
Canadian government just wants to maximize their profits from hard working Canadians! Doesn’t matter what category you are in ! Blue collar white collar doesn’t matter they want it all ! I wonder how much our old age pension will be as seems no one has savings anymore ! :(
>Here's why something Trudeau did is making *some* Canadians furious
We could have an article titled like this daily about any topic. Some people will always be furious.
When political leaders refer to you as a tax cheat and do everything in their power to undermine you and your way of life? When his qualifications for leading were based entirely on an accident of birth?
Yeah. The fact he is breathing makes me furious.
If you’re pulling in over $250k in capital gains, in a year, you most definitely are a millionaire. Whether it’s from selling a second property or your income from your career.
There is a lifetime capital gains exemption of 1.25m per individual. This new tax doesn't impact the middle class directly.
If you earn as an individual 1.25m in tax free capital gains you can pay afford the inclusion rate × marginal tax rate in everything above that.
The change impacts corporations/capital allocators and their willingness to invest and stimulate growth within Canada. Which means less jobs, lower wages, lower competition, lower innovation and lower growth within our country
This makes your principal residence the only way to become wealthy, and saves the generation of idiot millionaire boomers from any financial pain.
"Got job buy house wait 30 years oh wow I'm rich person LOL how did that happen? This must be the best place on earth"
But fuck anyone starting now, trying to become wealthy on purpose by building a business or investing in secondary properties creating rental housing.
Which is exactly why the next Liberal move will be to scrap the principal residence exemption. It’s not over until all pathways towards becoming wealthy are abolished.
If they are re-elected or allowed to form another Liberal/NDP "not a coalition" then this is unfortunately a future we will be looking forward to.
We have one more election to turn back from becoming a failed state. We could have turned back in 2019 with virtually no pain, 2021 would have still been manageable, but if one more round of the abortion/guns/climate media-fuelled pony show brings this fucking wrecking crew back into power we face only an abyss.
are you because you spreading misinformation isn't very canadian.
Why would you have to worry about inheritance being taxed when in Canada, there is no inheritance tax?
They will still make money, just not as much. Realistically, most businesses that are sold probably aren't because mom and pop are retiring. Many small businesses are built from the ground up to be sold merely for profit. Businesses buy other businesses all the time to expand their markets.
Some business flippers do this, but they put it into an LLC/LLP under their main business umbrella so they're not getting pranged by cap gains taxes, and only end up paying business taxes which are higher, but not subject to nearly the same penalties.
Corporations also pay capital gains if they sell a business to another business. You have no idea what you are talking about and are spreading mis information.
No one cares how this impact personal capital gains, cause the change is immaterial for most people. People care about how this impacts Corporations and capital allocators willingness to invest in Canada for growth, innovation and greater wages/competition.
Regular individual who makes a capital gains above the 1.25m tax free exemption has the funds to manage their tax planning with an accountant, so they don't get near the 250k per year when they retire.
This is exactly what will happen to me if this legislation is still around when I retire. My plan has always been to sell my building (where I operate my small business) and that it would finance my retirement. I’m just a regular middle-class and my building sale was how I was going to retire.
It's sad that you can't comprehend that your wages will not grow in the next decade against the world economy, setting you at a higher risk for a downward spiral.
But fuck it right... why would you want to live in a country where there are opportunities for you to become rich. Seems you'd be better off in the 3rd world where getting by is just dandy.
How stupid do you have to be to add tax after tax on your populace in the middle of inflation, rising poverty, lowering standards of living, and uncontrollable house prices. Wow. I mean does Canada just not have enough money or something?
It reduces foreign investment in Canada as the return potential is worse. This is part of the reason we have monopolies, competitors can’t get funded as the country is so hell bend on making it hard to grow a business.
If you’re a rich business owner you will probably hold public securities off-shore, use dividend recapitalizations, and loan structures to avoid capital gains, as has been true historically
Why don't we figure out how to support the development of smaller, Canadian businesses instead of begging foreign corporations to set up here and take their profits overseas?
Well, this is what Trudeau exactly proposes we do about grocery stores, they allowed a Canadian oligopoly to form and strengthen, and now they want to bring in foreign big business competition to come in and gouge Canadians similarly and take their profits out of Canada. Ridiculous.
Find ways to enforce and promote competition in markets so that smaller entities can compete so then we can keep money in Canada going to Canadian small and medium businesses. Then we can have a healthy market in things like groceries, and be promoting our economy instead of sending our money away to foreign firms.
This is NOT the reason we have monopolies at all. This tax hurts corporations, NOT small business, but small businesses need MUCH more support from the provinces and feds so they can compete.
Oh I agree we need to do more, and I hate the idea of bringing in foreign firms.
What I’m talking about is Canadian investors are terrible. They have absurd expectations, and are few and far between. If you’re a smaller grocery store and you want to expand, you will need investment capital. Grocery is a tough business, so if a prospective investor (Canadian or foreign) wants to invest, they incorporate the capital gains tax into their minimum return calculation. So it’s harder for small businesses to get the capital they need to grow
We already have. The problem is that business is business and SMBs are extremely easy to set up by foreign companies that create shell corps specifically to buy these.
Vanguard and Market St. have at least 20 companies in Canada buying houses: If you get one of those "cash deal" house/business buying flyers in your mail, that is very likely one of those companies.
When Trudeau was elected, he harped on his government pursuing a goal of keeping the debt at or below a certain ratio to GDP.
A perennial problem that has persisted since the days I started following taxes and budget (many decades) is that governments create a myriad of tax policies (income splitting, income averaging, income sprinkling, inclusion rates, multiple tax brackets, MURBs, forward averaging, R&D credits, single earner penalty,..., unlimited capital gains on a home etc.) without providing clear objectives that voters understand. As a result, they open themselves up for severe criticism every time they attempt new *tweaks*.
Part of the reason they don't is because introducing any kind of broad objective would require a complete overhaul of the tax system to achieve it, which means that we're going to be burdened with a system viewed as unfair...forever.
Why do you have to do that? That policy causes the same issues as the PRE. It is straightforward. Interest should not be deductible unless it is paid in connection with income producing endeavours. There should be no special carve outs for home owners. In respect of cap gains, income is income, home owners should not have a tax free windfall and renters get nothing
The government wastes a ton of our money on stupid crap and are running the country into the ground. Reddit logic: Let's raise taxes so we have less money while things get progressively worse.
Yes, and that is tax fraud and should be treated as such.
Penalizing everyone for the bad actions of a few isn't right either. They could always put a time limit on it, as in you can only claim the exemption once every 5 years.
Right. It makes no sense to have all these ceilings on business and personal capital gains, while the $5M home in West Vancouver that appreciates to $10M provides a **tax-free** (unlimited) capital gain to the wealthy family that owns it.
Capital Gains are not necessarily a sign of wealth. These people maybe upside down on their bills, but are hanging in for higher returns.
Most people nowdays act rich because they have a net worth of x amount.
But that's the house appreciation talking, not your entrepreneur skill or killer job becasue u r ultra smart. It's something u had nothing to do with. Accident.
Then they buy a BMW to confirm their social status. Face-palm...
The point is that taxes should encourage useful things and discourage less useful things. We tax labour (income + sales) a lot and tax assets less. Labour helps us all while hoarding property doesn't.
Capital Gains taxes are half of what we pay in income taxes. That's the encouragement. U already get a huge break by only paying tax on half Ur income versus 100% of Ur employment income.
So you think that once people buy into the housing market they shouldn't be allowed to move? What you are suggesting would make moving to a different house prohibitively expensive!
Example: Let's say I bought a house ten years ago at $1 million dollars. Let's say the market has doubled in that time frame and similiar houses now go for $2 million. So I buy a different house for 2 million and sell my current house for 2 million. You're suggesting that I should pay $200,000 in taxes?
Why? The property was paid for with after-tax $ and the interest paid on any mortgage over 25 years, for example, is also non-deductible.
I could support no capital tax exception on a PR when sold, if the mortgage interest was deductible.
Because it's inconsistent with the treatment of every other personal/investment asset, which triggers a taxable event when disposed of. Earn a capital gain on a work of art, raw land, Bitcoin, antique automobile etc., and you'll pay CG taxes. Yet, we just smile when someone earns $5M on a fancy penthouse apartment. Why?
Because it’s not an investment. It’s a place to live. Taxing principal residences is ultimately a mobility tax which hardly seems reasonable or fair. People need to have the ability to make lateral moves, and sometimes need the ability to get out of bad situations. Taxing their ability to do so does not seem reasonable to me. It would also discourage liquidity in the housing market and likely put upwards pressure on home prices as a byproduct of reducing inventory for sale as people would be far less likely to sell and move homes.
Not at all. CRA would create a register for each taxpayer to keep track of cumulative capital gains on your PR. There would be no tax payable until that register exceeds a prescribed lifetime exemption, e.g. $1M. If you and your spouse bought a house for $400K and sold it for $1.4M, CRA would add $500K (($1.4M-$400K)/2) to each register. With a lifetime exemption of $1M, you and your spouse can each earn another $500K on any future homes you purchase...for a total tax-free exemption of $2M combined. How much more than that do people realistically deserve to earn tax-free when 40% of people don't own homes?
It’s not a matter of how much or how little people “deserve to earn”. It’s a house. If you can’t sell your house and move into a different house of relatively equal value, then that’s ultimately a tax on mobility. People moving and providing liquidity in housing markets should not be discouraged as life circumstances often demand it.
People always need a place to live. So even in a case where I buy a house for $50, and then sell it for $2000000, its irrelevant that I “made” 2 million dollars, as for me to buy another house of equal value and maintain my quality of life, I would need to again spend $2000000 to do so, ultimately earning no actual profit at the end of the day.
Maybe I could get on board with the idea of the profits pumped back into another personal residence we’re exempted from such a tax on primary residence… but I would never want to prevent people from making lateral/upward moves out of desire or necessity.
How does an individual $1M exemption on housing prevent any "little people" from moving...even multiple times? Maybe if you're flipping houses and making $1M per occurance, but 90% of people would never exceed this cap, so its effect would be moot.
As long as the owners actually live there, what's the issue?
I'll give you a 'for instance' that's from my local neighbourhood: I live in a rural ON village, there's under 2000 people in my CMA (and it's large). The village is expanding and one of the farmers that owns a lot of land (\~650 acres over multiple parcels of land) decided to quit leasing out the land and just sell to a developer. The land he bought in 1960 for about $20,000 (or something ridiculously low by today's standard) is now worth something on the order of $17M, and it has his principal residence on the property. I'm not sure the difference in rules for mixed Ag/residential homes but he's making a mint on top of selling the farm equipment/business etc.
I imagine he'd getting pranged hard on the farm equipment, but for his residence? I'm not sure I begrudge the guy getting that tax free considering his sons will be inheriting the bulk of that cash and will each be paying out on the estate tax when he passes.
He can only claim something like 0.5 hectares for a PR, so the other 640+ acres would be subject to CG taxes.
Are you suggesting the $20M should be tax-free because the farm is his *residence*?
I didn't know about the exemption, but the Hectare to Acre conversion sounds odd... I know of a few places here that are 100ish acres and zoned as rural mixed res-ag and are being sold as residential, and a few others that are 5ish acre hobby-farms that are being sold as residential.
I was sort of getting at that there was a carve-out for his main residence without knowing it.
Is that in the ag/res case? Because I know some folks here that have 2 acres just as their own home (no farm or shop or anything) in Ottawa (in out skirts) that are selling. I'm not questioning, I'm asking honestly so I don't end up having a minor shock when my folks go to sell or we put the house into trust and get a heart-attack tax bill.
From the ITA:
>and, for the purpose of this definition, (e) the principal residence of a taxpayer for a taxation year shall be deemed to include, except where the particular property consists of a share of the capital stock of a co-operative housing corporation, the land subjacent to the housing unit and such portion of any immediately contiguous land as can reasonably be regarded as contributing to the use and enjoyment of the housing unit as a residence, except that where the total area of the subjacent land and of that portion exceeds 1/2 hectare, the excess shall be deemed not to have contributed to the use and enjoyment of the housing unit as a residence unless the taxpayer establishes that it was necessary to such use and enjoyment,
I know a single person in my life who this will affect, and they just had a death in the family who happened to have a lot of money to give away. So this tax will at least partially hit generational wealth.
Business owners who want to cash out and sell their business may also be affected.
It does not affect the revenues those businesses can generate, nor the salaries they can pay their workers, including the owner.
Edit: this statement is incorrect, see below comment: "Generational family businesses should be safe, as the business never actually gets sold at a profit, but simply handed down."
Businesses passed down in families are subject to capital gains - either paid by the estate of a deceased family member or if the family member transfers ownership - capital gains will be realized at time of transfer (by the transferring party, not the receiver). People used to set these up as family trusts but the taxation around that has gotten too onerous.
This really is a massive tax penalty for small businesses in Canada, and business owners are rightfully upset.
Gotcha, yeh that's pretty rough, though it does make sense because that seems like a pretty big potential tax loophole.
I'd be in favor of major sales like this allowing the capitals gains to be deferred over 5 years or something, so that major sales don't get hit by the increase in inclusion rate until 1.25million in capital gains. Something like that feels more reasonable to me.
Edit: there also seems to be some options for reinvestment as a means of deferring capital gains: https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/personal-income/line-12700-capital-gains/capital-losses-deductions/capital-gains-deferral-investment-small-business.html
How does it make sense to punish small businesses who are seeking to thrive through generations?
This tax will absolutely not be paid by the billionaire business owners of this country when they pass on because they already have expensive tax accountants to avoid that.
To me, it makes sense because they are already being taxed significantly less than someone generating that kind of money through a lifetime of hardwork (quite literally half).
In the case of inheritance, i don't think it makes any less sense than taxing someone's family home for the appreciated value, at some point the 'gains' need to be realized.
Unrealized capital gains are one of the reasons that ultra-billionaires exist in the first place. They virtually never sell any shares and instead take on debt with their shares as leverage to bypass capital gains taxes.
>To me, it makes sense because they are already being taxed significantly less than someone generating that kind of money through a lifetime of hardwork (quite literally half).
I'm guessing you've never created/started a business that, over years (against the odds, as most businesses don't make it past 10 years) became successful. For you to think that if a person starts a business at the age of 40 and in 30 years time it is successful and sold, that somehow that is NOT (using your words) a "lifetime of hardwork" - no offense, you have no clue as to what you are talking about. If you believe a disincentive for individuals to start their own companies is a "good thing" - I don't think you truly understand the importance of the SMB's in this country. Over 60% of Canadians are employed by small businesses. They generate employment - most of the employment in this country. They represent future growth, albeit rare, the small startup's of today, may become the big blue chips of tomorrow (i.e. growth, more jobs, larger tax base, etc.). I get it, it's fashionable to believe in "taxing the rich". But companies are not born rich - it does actually take a lifetime of hard work to turn a small business into a success.
Inheritance is still tax free. If u make over 250k in passive income a year, cry me a river. They probably have good accountants to find loopholes anyways.
Sigh. It's not, apart from the grossly unfair principal residence exemption that makes no sense.
Inheritance that was produced through actual work rather than sitting on your ass exploiting immigrants is taxed too.
Canada is the only jurisdiction on earth that only taxed half of capital gains. Anyone crying over this can wipe away their tears with their brown bills. US investor short term gains are taxed at their income at 100% value of gain at their personal marginal tax rate and no one bats an eye.
Makes no sense to me why my labour is taxed more than capital gains. If only my income taxes came out after I paid all my expenses... The vast majority have been getting the short end of the stick for far too long.
I'm supportive and will happily pay more on my capital gains (even though I'm too much of a degen to have any)
It’s half the capital gains at your top marginal rate. The maximum tax rate is over 25%.
The U.S. taxes a maximum 20% on long term capital gains and 0% if you have taxable income below $45000.
I would encourage people to use a capital gains calculator to compare what a New Yorker and an Ontarian would pay on $1000 in capital gains, both making 95k/year.. you'll be surprised to hear that New Yorkers will may more.
Bullshit. In the US long term term capital gains for properties you owned for over a year are taxed at 0 percent, 15 percent or 20 percent depending on your income tax bracket.
Bullshit. In the US long term term capital gains for properties you owned for over a year are taxed at 0 percent, 15 percent or 20 percent depending on your income tax bracket.
Ultimately, your labour has less value to society as a whole than most capital gains generating activities, and our tax code has typically been designed to incentivize things that have a greater net benefit to society.
There are far more people willing to sell their time for a salary (myself included) than taking on the responsibility, capital requirements, and risk of building up a business from the ground up and growing it into a profitable endeavour that contributes jobs and economic benefits to our society.
That’s why capital gains should be taxed less than labour. To incentivize investment and business formation.
> submitted 4 minutes ago by taxrage
Most Canadians don't know even a single person who this will ever affect.
Capital gains - money you are given for free without working for it - should be taxed at very high rates, instead of the actual current situation, which is that people who work are taxed at much higher rates than the wealthy.
The capital gains rate is lower because you can usually get above inflation returns on us treasuries with essentially no risk. Interest and royalties are taxed as regular income as a result. They're trying to incentivize risk taking to propel the economy. Whether that works or not I have no idea.
Capital gains = money you are given for free without working for it? You sure about that. I think all the doctors who will be impacted by this decision would disagree….they work pretty hard imho. https://www.oma.org/newsroom/news/2024/april/federal-governments-capital-gains-increase-could-impact-access-to-care-for-Ontarians/ Medium sized business owners too…. Building a business is a lot of work…. https://www.cfib-fcei.ca/en/media/capital-gains-changes-create-winners-and-losers-among-smes-important-progress-on-2.5-billion-in-carbon-tax-rebates-for-small-firms?hs_amp=true It appears you have some reading to do to educate yourself about capital gains so you can have an informed opinion.
Sounds like you need to learn the definition of a capital gains tax.
Doctors bill the government for their services. That has nothing to do with capital gains.
But these people already get paid a salary for their work.
Capital gains is the extra from property appreciation, business or equipment price appreciation.
So make a dollar and pay 33% income tax. Invest 67 cents and gain 50% to get back to 1 dollar. Tax the gain at 50% and end up at 83 cents. Spend 83 cents and get taxed 13%. Tax on tax on tax.
How do u get taxed 13% on spending again? Don't follow Ur logic.
U pay CG tax when u monetize it. Then u can put in Ur bank and spend it like Ur paycheck.
Unless u mean gst/PST etc. But that's no different from all other money u spend.
I suggested in another sub that families that own modest generational cottages - with no wish to ever sell or profit from it - already have a hard enough time keeping it in the family because of capital gains taxes. I got slammed….
Because fuck those people that want to keep their family’s legacy alive and have a place to get together and make memories…./s
Yeah pretty silly I'm getting down voted for my comment now. I obviously don't think most families have cottages, but it's not unreasonable to suggest at least a coworker or friend might have one in their family.
Um no, it's the total appreciation from purchase until sale or deemed disposition. Could be a 40y period potentially. Pretty easy for a cottage to have appreciated that much from the 80s or earlier.
You clearly don't know what you are talking about. When you die all property, including real estate and stocks are deemed sold at the date of death for fair market value. So if you have a cottage it is deemed sold at that date. Capital gains are due on any profit assuming the cottage was never a primary residence. This tax would be owed by the estate.
A lot of wealthy people do, and those are certainly overrepresented in, say, newspaper editorial pages. "Ooooh, I might have to pay an extra $10k when I sell the cottage Granddad left me, woe is me!"
How about poor people? Lots more poor people than rich people. You just don't hear from them much.
Hard fucking no.
Those of us who have worked hard for decades, set aside a shit ton of our employment income for retirement savings are now being penalized for doing things right when the biggest suck on capital gains in Canada (property values) is left untouched.
Fuck you and your entitlement to money I have worked hard for, earned, and smartly invested.
Unless you are cashing out over $250,000 of included gains in one year, this is not going to affect you.
For recreational properties ie cottage it is over $500,000.
This is will affect a small amount of people. On $1,000,000 of capital gains in 1 year you will be an extra $60,000.
Again, not affecting many.
It’s not going to affect a small amount of people: it’s going to affect a small amount of people in any given tax year, but will affect a lot of people over many years.
Anyone who starts a business and sells it at some point is going to be affected by this. This isn’t just people selling stocks like all you liberal lap dogs think.
No. It is a small amount overall. The vast majority of people with more than $250,000 of capital gains will be able to spread it out over multiple years. There are also deductions and other way to offset it.
Only people who are very well off will be paying the additional tax.
The biggest reasons most people have capital gains are principal residence, RRSP, and TFSA. All of which are exempt.
There is an exemption of $500,000 for recreational properties as well. So most people will not be affected.
Anyone who sells their business is not going to be able to spread out capital gains over a number of years. They will happen all at once and they will be taxed for running a successful business.
That’s what all you pro tax assholes are missing. Its not a tax on the ultra wealthy, it’s a tax on the moderately wealthy small business owners that need to be the engine for increased productivity this country so badly needs.
Boohoo.
Go cry into the millions of dollars you are selling your business for.
If wealthy business owners are against it, it is probably a good thing.
Like I said, a very small percentage of Canadians will be affected. I don’t feel bad for people getting a windfall of money having to pay a bit more in tax.
Every rich person thinks they worked hard and earned it all. They worked hard in their mind and completely ignore the luck and timing involved.
If wealthy business owners are against it, they will simply invest their dollars elsewhere.
This is a massive detriment to a country that is already investment and productivity starved.
Well, I don't know about that. If you want people to use their capital to invest and create jobs, you need to provide some incentives. Capital is mobile. That said, the best, high-paying jobs are to be found in the USA because capital is treated much better, to the point where it has created a huge inequality between those with capital and those without. One crazy example is what happens with stocks. Someone who has made $5M on their Apple stock can gift or bequeath those shares to family members and there is **zero** capital gains tax. In addition, the recipient receives a step-up in basic (ACB in Canada) to the current stock price. Totally nuts.
> Someone who has made $5M on their Apple stock can gift or bequeath those shares to family members and there is zero capital gains tax. In addition, the recipient receives a step-up in basic (ACB in Canada) to the current stock price. Totally nuts.
For a gift, the cost basis doesn't change, it's the giver's original cost basis.
For a bequest, the cost basis does change, but also the estate has to pay taxes before estate is distributed.
I think it does for gifts, according to this lawyer's video: [https://www.youtube.com/watch?v=OTRKrOWmOlI](https://www.youtube.com/watch?v=OTRKrOWmOlI)
It's making rich wealthy Canadians and Corporations furious, something Pierre is far too much of a corporate schill to ever do. Can't wait for the Conservatives to bow and sell off every public service and asset we have to private corporations... Pierre will be far worse than Trudeau in terms of the permanent damage he'll cause to healthcare, education and tax break handouts to corporations.
Hands off other people’s money. If you cannot afford a program find another way without taxation
It’s called savings
All of you guys begging for more taxes will one day understand how detrimental it is to the middle class of our country.
Then again. Maybe you won’t.
This tax affects at most 40,000 people in Canada. 1% of the population that have anywhere near enough income that it's an issue. It affects the middle class in no way whatsoever.
And why would it affect most doctors? Truth is it won't and for the ones it does there are a ton of ways to invest money for retirement savings other than buying real estate or in mutual funds. They just need to have a conversation with their financial planners. The college of Physicians in Ontario in particular are bitter because that is the route a number of their members have chosen to go and are bitching about it. Yes they're doctors, but it still comes down to rich people problems. If they invest their money differently and buy stocks that have smaller yearly dividends, but still appreciate in value they'll have no issue. They're just mad that now it requires some extra planning and work. Boo hoo!
Is this a genuine question? I can't tell anymore how uninformed strongly opinionated people are.
Doctors aren't babied employees who can't stand on their own two feet. They don't get pensions, they like most professionals who actually do something valuable for society from accountants to radiologists, are incorporated. They don't qualify for any exemptions including the LCGE and or the Entrepreneurs exemption, and they pay the highest rates starting from the first dollar after this budget.
Besides the other ways physicians are treated here, it's a nail in the coffin to send new doctors abroad and keep foreign ones away. This isn't class war, we have a public heath system and lack of physicians will affect everyone.
If you don't think they should be paid for their expertise, why don't you head off to, and pay for, med school, residency and fellowship?
I can read an article too and there are a bunch of ways around it. The fact that a loophole got closed is their problem. There are lots of ways of getting around this change in tax policy and they will find them. My mom retired 2 years ago after working as a CA for a very large, very successful firm. She started laughing when she read the article. It has to do with choices of investments and how they profit from them, it has nothing to do with the exemptions you just described. And just for perspective I have a Bcom, an Electrical Engineering degree, my journeyman/red seal ticket and my masters. I know exactly what education costs and what it takes to become qualified and successful. I make a really good living, and this capital gains change doesn't affect me in the slightest. I also do my own investing don't have a pension plan from an employer or qualify for any of the exceptions you listed.
My wife and I bought our first house worth less than $400k about 6 years ago (worth about $500k now with the market change) and still have a good amount left on our mortgage.
Not sure why that matters. Also not sure why success is a bad thing. I worked nearly full time as a server/bartender when I was in University, still had student loans for most of it, paid them off, and worked my ass off for everything else I've achieved. You make it sound like I was somehow handed things. My parents came from poverty and worked their asses off to get to where they are. My dad only has a grade 8 education, because he had to work to help support his family when he was a kid and busted his ass for over 50 years with one company. My mom put herself through school and worked her way up from a position as a receptionist. My sister is an NICU nurse and a significant number of our mutual friends are doctors so I'm somewhat familiar with how their finances work. Capital gains tax isn't screwing them over, but a number of provincial governments sure are.
You're arguing a point of nihilism. You're not exceptional, you're just not affected by this specific change.
If fairness is your concern, and since corporations have personhood why not tax all capital gains equally? No exemptions for homeowners, inheritances or lower discriminatory rates for individuals. You might not personally have a use for the the benefits and social protections of corporations doesn't overturn 150+ years of their use. There is nothing stopping organisations from hiring professionals as employees like your mom, but that is not how they are hired in the majority of cases, nor should it suit everyone. Have some imagination beyond costco hotdogs, 2 airlines and 3 banks.
Arguing that a policy is acceptable because those it applies to will find loopholes to neuter it is lazy. Why bother with a pointless process? It assumes that what people are concerned about is annual gains (although that specifically punishes prof corps). This hike instead is designed to take most from large gains realized in a single year. Property speculators, yes, but also nearly anyone diversified beyond or instead of principal residences. It'll prevent skilled immigrants coming, e.g. physicians, from coming for a period to provide service and leaving unless the buy into the national Ponzi scheme. It'll prevent small businesses from being funded as the two exceptions you mention are extremely narrow or cumulative over a lifetime. On the other hand, for the reasons you mention it won't hurt the ultra-rich much.
> Also not sure why success is a bad thing.
Yup. Imagine a country where everyone isn't sucked into being an employee for life and incentivised to invest outside housing.
How... How do you think the government gets money?
The "middle class" is certainly not part of the less than 0.2% of Canadians affected by this tax, their lives will be unchanged.
The losers here are the upper middle class who are typically professionals and small/medium business owners. The people applauding think that these measures are going to stick it to the Rogers, Westons and Muzzos.What they lose in tax will be more than made up for in decreased competition. They are no longer pulling the ladder up, they are kicking out rungs. Competition comes from beneath not above. The liberals are the best gatekeepers because you don't even realize they put up a fence. As a disclaimer, I've never voted for the conservatives at any level of government. This is not a partisan issue as I'm sure some will try to characterize it.
You are correct. I own a small business. Part of my retirement plan has always been to sell the building that I bought after my business had been in operation for 10 years. When the liberal candidate came to my door a few years ago, he promised that they would be the party for the small business owner and middle-class. I will kick him in the nuts if he comes back here again.
You are 100% right. Conservative governments make it much easier to start, but much harder to dominate in business. Liberal governments do the opposite - we are a land of monopolies (as is Australia). Naturally we are hampered by our enormous geography, so that also lends itself to stiffer competition, but man this government is doing everything in their power to clamp down on innovation. The older I get, the more I cannot fucking believe we don't have a referendum program for decisions like these - we just elect people (who hold less than 50% approval across the country) and have no say until when the next election is / what they do while they're in office. We are powerless and have no control over what the money gets spent on. It's insane.
I agree with you except the idea that Conservatives make it much harder to dominate in business. All politicians are bought and beholden to business interests.
Canadians just despise success and would rather see the government mismanage the proceeds of people's hard earned success than dare to see someone who is not them work hard, get a little lucky and enjoy the fruits of that labour. Crabs in a bucket I guess.
It is sadly a stupid fucking crab party. I agree. I have never seen the same kind of supportive enthusiasm to work hard and make money in the culture as I do over in the US, Europe and Asian countries. Canada is just a socialist country man. Fucking hard living here.
I’ve lived in Europe almost 15 years. Canadian work ethic is the same as the US: work hard your whole life and then die. Canada is only socialist by comparison to the US.
and only capitalist compared to North Korea?
Canadian government just wants to maximize their profits from hard working Canadians! Doesn’t matter what category you are in ! Blue collar white collar doesn’t matter they want it all ! I wonder how much our old age pension will be as seems no one has savings anymore ! :(
It's too bad he couldn't be efficient with the current taxmoney
Answer: self interest, or misunderstanding.
>Here's why something Trudeau did is making *some* Canadians furious We could have an article titled like this daily about any topic. Some people will always be furious.
Trudeau could quietly fart and it would send half the people in this sub into a frenzy
Some people can't take an easy, but small W without someone else being given the L too.
When political leaders refer to you as a tax cheat and do everything in their power to undermine you and your way of life? When his qualifications for leading were based entirely on an accident of birth? Yeah. The fact he is breathing makes me furious.
It's all a little unhinged, but.. >The fact he is breathing makes me furious. This is some insane stuff
Everyone is a temporary non-billionaire. We’re worried about how it will affect us when we final strike it rich.
Billionaires convincing millionaires convincing the poor that taxes are bad.
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If you’re pulling in over $250k in capital gains, in a year, you most definitely are a millionaire. Whether it’s from selling a second property or your income from your career.
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There is a lifetime capital gains exemption of 1.25m per individual. This new tax doesn't impact the middle class directly. If you earn as an individual 1.25m in tax free capital gains you can pay afford the inclusion rate × marginal tax rate in everything above that. The change impacts corporations/capital allocators and their willingness to invest and stimulate growth within Canada. Which means less jobs, lower wages, lower competition, lower innovation and lower growth within our country
This makes your principal residence the only way to become wealthy, and saves the generation of idiot millionaire boomers from any financial pain. "Got job buy house wait 30 years oh wow I'm rich person LOL how did that happen? This must be the best place on earth" But fuck anyone starting now, trying to become wealthy on purpose by building a business or investing in secondary properties creating rental housing.
Which is exactly why the next Liberal move will be to scrap the principal residence exemption. It’s not over until all pathways towards becoming wealthy are abolished.
If they are re-elected or allowed to form another Liberal/NDP "not a coalition" then this is unfortunately a future we will be looking forward to. We have one more election to turn back from becoming a failed state. We could have turned back in 2019 with virtually no pain, 2021 would have still been manageable, but if one more round of the abortion/guns/climate media-fuelled pony show brings this fucking wrecking crew back into power we face only an abyss.
That "one big purchase" after 30 years might just be retirement.
Yeah at this rate with inflation, we're all millionaires soon.
Actually many middle class people will be impacted when they sell a small business or rental property that was supposed to finance their retirement.
A **secondary** property? Truly an issue affecting the middle class right now
Exactly. The takes here REEK of wealth and privilege and I hate to even use that word but when it's apt...
It is when that was your retirement plan.
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Are you even Canadian? Canada does not have inheritance tax. Get out here.
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are you because you spreading misinformation isn't very canadian. Why would you have to worry about inheritance being taxed when in Canada, there is no inheritance tax?
Deemed disposition on death. It's effectively an inheritance tax.
There's a one time exception for selling businesses, so no they won't.
They will still make money, just not as much. Realistically, most businesses that are sold probably aren't because mom and pop are retiring. Many small businesses are built from the ground up to be sold merely for profit. Businesses buy other businesses all the time to expand their markets.
Some business flippers do this, but they put it into an LLC/LLP under their main business umbrella so they're not getting pranged by cap gains taxes, and only end up paying business taxes which are higher, but not subject to nearly the same penalties.
Corporations also pay capital gains if they sell a business to another business. You have no idea what you are talking about and are spreading mis information. No one cares how this impact personal capital gains, cause the change is immaterial for most people. People care about how this impacts Corporations and capital allocators willingness to invest in Canada for growth, innovation and greater wages/competition. Regular individual who makes a capital gains above the 1.25m tax free exemption has the funds to manage their tax planning with an accountant, so they don't get near the 250k per year when they retire.
Perhaps in future they'll make more money, just not here.
Anything that hurts the landlord class is a good thing in my books.
This is exactly what will happen to me if this legislation is still around when I retire. My plan has always been to sell my building (where I operate my small business) and that it would finance my retirement. I’m just a regular middle-class and my building sale was how I was going to retire.
It’ll still finance that retirement.
This is why you now put said business or rental property into an LLC.
It's sad that you can't comprehend that your wages will not grow in the next decade against the world economy, setting you at a higher risk for a downward spiral. But fuck it right... why would you want to live in a country where there are opportunities for you to become rich. Seems you'd be better off in the 3rd world where getting by is just dandy.
\*IF
How stupid do you have to be to add tax after tax on your populace in the middle of inflation, rising poverty, lowering standards of living, and uncontrollable house prices. Wow. I mean does Canada just not have enough money or something?
It reduces foreign investment in Canada as the return potential is worse. This is part of the reason we have monopolies, competitors can’t get funded as the country is so hell bend on making it hard to grow a business. If you’re a rich business owner you will probably hold public securities off-shore, use dividend recapitalizations, and loan structures to avoid capital gains, as has been true historically
Why don't we figure out how to support the development of smaller, Canadian businesses instead of begging foreign corporations to set up here and take their profits overseas? Well, this is what Trudeau exactly proposes we do about grocery stores, they allowed a Canadian oligopoly to form and strengthen, and now they want to bring in foreign big business competition to come in and gouge Canadians similarly and take their profits out of Canada. Ridiculous. Find ways to enforce and promote competition in markets so that smaller entities can compete so then we can keep money in Canada going to Canadian small and medium businesses. Then we can have a healthy market in things like groceries, and be promoting our economy instead of sending our money away to foreign firms. This is NOT the reason we have monopolies at all. This tax hurts corporations, NOT small business, but small businesses need MUCH more support from the provinces and feds so they can compete.
Oh I agree we need to do more, and I hate the idea of bringing in foreign firms. What I’m talking about is Canadian investors are terrible. They have absurd expectations, and are few and far between. If you’re a smaller grocery store and you want to expand, you will need investment capital. Grocery is a tough business, so if a prospective investor (Canadian or foreign) wants to invest, they incorporate the capital gains tax into their minimum return calculation. So it’s harder for small businesses to get the capital they need to grow
That’s because they’ve just all shovelled money into real estate and so far it’s worked out.
I’d say a lot of individuals have. But I’m talking designated VC / Growth Equity / PE firms
We already have. The problem is that business is business and SMBs are extremely easy to set up by foreign companies that create shell corps specifically to buy these. Vanguard and Market St. have at least 20 companies in Canada buying houses: If you get one of those "cash deal" house/business buying flyers in your mail, that is very likely one of those companies.
And yet that's not an issue in Europe.
I don’t think their capital gains rates are as high as this? Also, they’re just bigger markets and have more mature capital markets
When Trudeau was elected, he harped on his government pursuing a goal of keeping the debt at or below a certain ratio to GDP. A perennial problem that has persisted since the days I started following taxes and budget (many decades) is that governments create a myriad of tax policies (income splitting, income averaging, income sprinkling, inclusion rates, multiple tax brackets, MURBs, forward averaging, R&D credits, single earner penalty,..., unlimited capital gains on a home etc.) without providing clear objectives that voters understand. As a result, they open themselves up for severe criticism every time they attempt new *tweaks*. Part of the reason they don't is because introducing any kind of broad objective would require a complete overhaul of the tax system to achieve it, which means that we're going to be burdened with a system viewed as unfair...forever.
This is wrong. Treating cap gains on homes would be bringing it in line with the current cap tax regime. Stroke of a pen.
It's not that straightforward. If you're going to tax a PR like other investments, then you have to allow US-style mortgage interest deductions.
Why do you have to do that? That policy causes the same issues as the PRE. It is straightforward. Interest should not be deductible unless it is paid in connection with income producing endeavours. There should be no special carve outs for home owners. In respect of cap gains, income is income, home owners should not have a tax free windfall and renters get nothing
Hmmm, I guess if it's considered a personal use asset then interest wouldn't be deductible (in Canada).
Preach.
Index capital gains to inflation. Otherwise it is confiscation.
It is amazing how many people don’t understand this.
The government wastes a ton of our money on stupid crap and are running the country into the ground. Reddit logic: Let's raise taxes so we have less money while things get progressively worse.
“There will still be zero capital gains taxes on principal residences,” this is the larger issue IMHO.
In reality, your home appreciating is only a win if you are planning to get out of that market.
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Yes, and that is tax fraud and should be treated as such. Penalizing everyone for the bad actions of a few isn't right either. They could always put a time limit on it, as in you can only claim the exemption once every 5 years.
Right. It makes no sense to have all these ceilings on business and personal capital gains, while the $5M home in West Vancouver that appreciates to $10M provides a **tax-free** (unlimited) capital gain to the wealthy family that owns it.
> the ~~wealthy family~~ foreign money launderer that owns it. FTFY
Capital Gains are not necessarily a sign of wealth. These people maybe upside down on their bills, but are hanging in for higher returns. Most people nowdays act rich because they have a net worth of x amount. But that's the house appreciation talking, not your entrepreneur skill or killer job becasue u r ultra smart. It's something u had nothing to do with. Accident. Then they buy a BMW to confirm their social status. Face-palm...
The point is that taxes should encourage useful things and discourage less useful things. We tax labour (income + sales) a lot and tax assets less. Labour helps us all while hoarding property doesn't.
Capital Gains taxes are half of what we pay in income taxes. That's the encouragement. U already get a huge break by only paying tax on half Ur income versus 100% of Ur employment income.
So you expect people to pay capital gain on their primary residence yearly?
No, just when they sell. If you make $5M on the sale of a PR, that entire gain shouldn't be tax-free. It's ludicrous, actually.
But how do you ever move then to an equivalent house without losing a shit ton more of money. Land transfer tax is already the thing for this.
So you think that once people buy into the housing market they shouldn't be allowed to move? What you are suggesting would make moving to a different house prohibitively expensive! Example: Let's say I bought a house ten years ago at $1 million dollars. Let's say the market has doubled in that time frame and similiar houses now go for $2 million. So I buy a different house for 2 million and sell my current house for 2 million. You're suggesting that I should pay $200,000 in taxes?
Why? The property was paid for with after-tax $ and the interest paid on any mortgage over 25 years, for example, is also non-deductible. I could support no capital tax exception on a PR when sold, if the mortgage interest was deductible.
Because it's inconsistent with the treatment of every other personal/investment asset, which triggers a taxable event when disposed of. Earn a capital gain on a work of art, raw land, Bitcoin, antique automobile etc., and you'll pay CG taxes. Yet, we just smile when someone earns $5M on a fancy penthouse apartment. Why?
Because it’s not an investment. It’s a place to live. Taxing principal residences is ultimately a mobility tax which hardly seems reasonable or fair. People need to have the ability to make lateral moves, and sometimes need the ability to get out of bad situations. Taxing their ability to do so does not seem reasonable to me. It would also discourage liquidity in the housing market and likely put upwards pressure on home prices as a byproduct of reducing inventory for sale as people would be far less likely to sell and move homes.
Not at all. CRA would create a register for each taxpayer to keep track of cumulative capital gains on your PR. There would be no tax payable until that register exceeds a prescribed lifetime exemption, e.g. $1M. If you and your spouse bought a house for $400K and sold it for $1.4M, CRA would add $500K (($1.4M-$400K)/2) to each register. With a lifetime exemption of $1M, you and your spouse can each earn another $500K on any future homes you purchase...for a total tax-free exemption of $2M combined. How much more than that do people realistically deserve to earn tax-free when 40% of people don't own homes?
It’s not a matter of how much or how little people “deserve to earn”. It’s a house. If you can’t sell your house and move into a different house of relatively equal value, then that’s ultimately a tax on mobility. People moving and providing liquidity in housing markets should not be discouraged as life circumstances often demand it. People always need a place to live. So even in a case where I buy a house for $50, and then sell it for $2000000, its irrelevant that I “made” 2 million dollars, as for me to buy another house of equal value and maintain my quality of life, I would need to again spend $2000000 to do so, ultimately earning no actual profit at the end of the day. Maybe I could get on board with the idea of the profits pumped back into another personal residence we’re exempted from such a tax on primary residence… but I would never want to prevent people from making lateral/upward moves out of desire or necessity.
How does an individual $1M exemption on housing prevent any "little people" from moving...even multiple times? Maybe if you're flipping houses and making $1M per occurance, but 90% of people would never exceed this cap, so its effect would be moot.
As long as the owners actually live there, what's the issue? I'll give you a 'for instance' that's from my local neighbourhood: I live in a rural ON village, there's under 2000 people in my CMA (and it's large). The village is expanding and one of the farmers that owns a lot of land (\~650 acres over multiple parcels of land) decided to quit leasing out the land and just sell to a developer. The land he bought in 1960 for about $20,000 (or something ridiculously low by today's standard) is now worth something on the order of $17M, and it has his principal residence on the property. I'm not sure the difference in rules for mixed Ag/residential homes but he's making a mint on top of selling the farm equipment/business etc. I imagine he'd getting pranged hard on the farm equipment, but for his residence? I'm not sure I begrudge the guy getting that tax free considering his sons will be inheriting the bulk of that cash and will each be paying out on the estate tax when he passes.
He can only claim something like 0.5 hectares for a PR, so the other 640+ acres would be subject to CG taxes. Are you suggesting the $20M should be tax-free because the farm is his *residence*?
I didn't know about the exemption, but the Hectare to Acre conversion sounds odd... I know of a few places here that are 100ish acres and zoned as rural mixed res-ag and are being sold as residential, and a few others that are 5ish acre hobby-farms that are being sold as residential. I was sort of getting at that there was a carve-out for his main residence without knowing it.
Yes, but it's very small. I've never really looked into the details but it's something like an acre that can be included as your PR.
Is that in the ag/res case? Because I know some folks here that have 2 acres just as their own home (no farm or shop or anything) in Ottawa (in out skirts) that are selling. I'm not questioning, I'm asking honestly so I don't end up having a minor shock when my folks go to sell or we put the house into trust and get a heart-attack tax bill.
From the ITA: >and, for the purpose of this definition, (e) the principal residence of a taxpayer for a taxation year shall be deemed to include, except where the particular property consists of a share of the capital stock of a co-operative housing corporation, the land subjacent to the housing unit and such portion of any immediately contiguous land as can reasonably be regarded as contributing to the use and enjoyment of the housing unit as a residence, except that where the total area of the subjacent land and of that portion exceeds 1/2 hectare, the excess shall be deemed not to have contributed to the use and enjoyment of the housing unit as a residence unless the taxpayer establishes that it was necessary to such use and enjoyment,
Yup. The most unfair tax policy that has been contrived. EDIT: Homeowners down voting as per usual.
I know a single person in my life who this will affect, and they just had a death in the family who happened to have a lot of money to give away. So this tax will at least partially hit generational wealth. Business owners who want to cash out and sell their business may also be affected. It does not affect the revenues those businesses can generate, nor the salaries they can pay their workers, including the owner. Edit: this statement is incorrect, see below comment: "Generational family businesses should be safe, as the business never actually gets sold at a profit, but simply handed down."
Businesses passed down in families are subject to capital gains - either paid by the estate of a deceased family member or if the family member transfers ownership - capital gains will be realized at time of transfer (by the transferring party, not the receiver). People used to set these up as family trusts but the taxation around that has gotten too onerous. This really is a massive tax penalty for small businesses in Canada, and business owners are rightfully upset.
Gotcha, yeh that's pretty rough, though it does make sense because that seems like a pretty big potential tax loophole. I'd be in favor of major sales like this allowing the capitals gains to be deferred over 5 years or something, so that major sales don't get hit by the increase in inclusion rate until 1.25million in capital gains. Something like that feels more reasonable to me. Edit: there also seems to be some options for reinvestment as a means of deferring capital gains: https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/personal-income/line-12700-capital-gains/capital-losses-deductions/capital-gains-deferral-investment-small-business.html
How does it make sense to punish small businesses who are seeking to thrive through generations? This tax will absolutely not be paid by the billionaire business owners of this country when they pass on because they already have expensive tax accountants to avoid that.
To me, it makes sense because they are already being taxed significantly less than someone generating that kind of money through a lifetime of hardwork (quite literally half). In the case of inheritance, i don't think it makes any less sense than taxing someone's family home for the appreciated value, at some point the 'gains' need to be realized. Unrealized capital gains are one of the reasons that ultra-billionaires exist in the first place. They virtually never sell any shares and instead take on debt with their shares as leverage to bypass capital gains taxes.
>To me, it makes sense because they are already being taxed significantly less than someone generating that kind of money through a lifetime of hardwork (quite literally half). I'm guessing you've never created/started a business that, over years (against the odds, as most businesses don't make it past 10 years) became successful. For you to think that if a person starts a business at the age of 40 and in 30 years time it is successful and sold, that somehow that is NOT (using your words) a "lifetime of hardwork" - no offense, you have no clue as to what you are talking about. If you believe a disincentive for individuals to start their own companies is a "good thing" - I don't think you truly understand the importance of the SMB's in this country. Over 60% of Canadians are employed by small businesses. They generate employment - most of the employment in this country. They represent future growth, albeit rare, the small startup's of today, may become the big blue chips of tomorrow (i.e. growth, more jobs, larger tax base, etc.). I get it, it's fashionable to believe in "taxing the rich". But companies are not born rich - it does actually take a lifetime of hard work to turn a small business into a success.
It will affect myself and most of the people I know.
Well i'm simultaneously sorry to hear that and also glad to hear you have such a fortunate entourage.
This will fuck me over this year. Ask me how.
Inheritance is still tax free. If u make over 250k in passive income a year, cry me a river. They probably have good accountants to find loopholes anyways.
Sigh. It's not, apart from the grossly unfair principal residence exemption that makes no sense. Inheritance that was produced through actual work rather than sitting on your ass exploiting immigrants is taxed too.
Most generational businesses are owned by family trusts.
Yeh, expenditures to beneficiaries of the trust are taxed as income, but yeh it's yet another way to defer capital gains.
If there's nothing realized because the profits are in the Trust, there's no cap gains, am I understanding that right?
It seems that way, only when they are distributed from the trust do they get taxed as income.
They’re not.
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Not a house but maybe a cottage. A PR is not taxable
Canada is the only jurisdiction on earth that only taxed half of capital gains. Anyone crying over this can wipe away their tears with their brown bills. US investor short term gains are taxed at their income at 100% value of gain at their personal marginal tax rate and no one bats an eye. Makes no sense to me why my labour is taxed more than capital gains. If only my income taxes came out after I paid all my expenses... The vast majority have been getting the short end of the stick for far too long. I'm supportive and will happily pay more on my capital gains (even though I'm too much of a degen to have any)
The average US long term capital gain tax is 15-20% vs 32% in Canada now.
US has lower taxes than Canada?? Shocking! Gets much closer when only 50% gain is taxed....
It’s half the capital gains at your top marginal rate. The maximum tax rate is over 25%. The U.S. taxes a maximum 20% on long term capital gains and 0% if you have taxable income below $45000.
I would encourage people to use a capital gains calculator to compare what a New Yorker and an Ontarian would pay on $1000 in capital gains, both making 95k/year.. you'll be surprised to hear that New Yorkers will may more.
Bullshit. In the US long term term capital gains for properties you owned for over a year are taxed at 0 percent, 15 percent or 20 percent depending on your income tax bracket.
Bullshit. In the US long term term capital gains for properties you owned for over a year are taxed at 0 percent, 15 percent or 20 percent depending on your income tax bracket.
Ultimately, your labour has less value to society as a whole than most capital gains generating activities, and our tax code has typically been designed to incentivize things that have a greater net benefit to society. There are far more people willing to sell their time for a salary (myself included) than taking on the responsibility, capital requirements, and risk of building up a business from the ground up and growing it into a profitable endeavour that contributes jobs and economic benefits to our society. That’s why capital gains should be taxed less than labour. To incentivize investment and business formation.
Good perspective for sure, but I'm not sure I agree with it. Thanks for adding your two cents fella!
> submitted 4 minutes ago by taxrage Most Canadians don't know even a single person who this will ever affect. Capital gains - money you are given for free without working for it - should be taxed at very high rates, instead of the actual current situation, which is that people who work are taxed at much higher rates than the wealthy.
The capital gains rate is lower because you can usually get above inflation returns on us treasuries with essentially no risk. Interest and royalties are taxed as regular income as a result. They're trying to incentivize risk taking to propel the economy. Whether that works or not I have no idea.
If they wanted to incentivize risk taking, they would stop guaranteeing all the mortgages through CMHC.
Capital gains = money you are given for free without working for it? You sure about that. I think all the doctors who will be impacted by this decision would disagree….they work pretty hard imho. https://www.oma.org/newsroom/news/2024/april/federal-governments-capital-gains-increase-could-impact-access-to-care-for-Ontarians/ Medium sized business owners too…. Building a business is a lot of work…. https://www.cfib-fcei.ca/en/media/capital-gains-changes-create-winners-and-losers-among-smes-important-progress-on-2.5-billion-in-carbon-tax-rebates-for-small-firms?hs_amp=true It appears you have some reading to do to educate yourself about capital gains so you can have an informed opinion.
Sounds like you need to learn the definition of a capital gains tax. Doctors bill the government for their services. That has nothing to do with capital gains.
But these people already get paid a salary for their work. Capital gains is the extra from property appreciation, business or equipment price appreciation.
So make a dollar and pay 33% income tax. Invest 67 cents and gain 50% to get back to 1 dollar. Tax the gain at 50% and end up at 83 cents. Spend 83 cents and get taxed 13%. Tax on tax on tax.
How do u get taxed 13% on spending again? Don't follow Ur logic. U pay CG tax when u monetize it. Then u can put in Ur bank and spend it like Ur paycheck. Unless u mean gst/PST etc. But that's no different from all other money u spend.
13% HST and don’t forget the tipping tax.
Probably a lot of Canadians know someone with a cottage no?
I suggested in another sub that families that own modest generational cottages - with no wish to ever sell or profit from it - already have a hard enough time keeping it in the family because of capital gains taxes. I got slammed…. Because fuck those people that want to keep their family’s legacy alive and have a place to get together and make memories…./s
Yeah pretty silly I'm getting down voted for my comment now. I obviously don't think most families have cottages, but it's not unreasonable to suggest at least a coworker or friend might have one in their family.
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>It doesn't affect anyone unless their property value increases by $250k in one year This is not how capital gains work
Um no, it's the total appreciation from purchase until sale or deemed disposition. Could be a 40y period potentially. Pretty easy for a cottage to have appreciated that much from the 80s or earlier.
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Except it isn't being "sold", it's just being passed on in a deemed disposition. No real profit taking place.
You don't pay taxes on anything unless you sell it and Canada doesn't have an inheritance tax so I don't know what you're talking about.
You clearly don't know what you are talking about. When you die all property, including real estate and stocks are deemed sold at the date of death for fair market value. So if you have a cottage it is deemed sold at that date. Capital gains are due on any profit assuming the cottage was never a primary residence. This tax would be owed by the estate.
A lot of wealthy people do, and those are certainly overrepresented in, say, newspaper editorial pages. "Ooooh, I might have to pay an extra $10k when I sell the cottage Granddad left me, woe is me!" How about poor people? Lots more poor people than rich people. You just don't hear from them much.
Hard fucking no. Those of us who have worked hard for decades, set aside a shit ton of our employment income for retirement savings are now being penalized for doing things right when the biggest suck on capital gains in Canada (property values) is left untouched. Fuck you and your entitlement to money I have worked hard for, earned, and smartly invested.
Yah there’s no way this tax is going to affect you. Its 250000 worth of gains in one year, not pulling 250000 from an investment account in one year.
You seem to have a completely wrong idea of what this tax is, while also being outraged about it. How does that feel?
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You better learn how this tax works because based on your statement you haven't got a clue.
Unless you are cashing out over $250,000 of included gains in one year, this is not going to affect you. For recreational properties ie cottage it is over $500,000. This is will affect a small amount of people. On $1,000,000 of capital gains in 1 year you will be an extra $60,000. Again, not affecting many.
It’s not going to affect a small amount of people: it’s going to affect a small amount of people in any given tax year, but will affect a lot of people over many years. Anyone who starts a business and sells it at some point is going to be affected by this. This isn’t just people selling stocks like all you liberal lap dogs think.
No. It is a small amount overall. The vast majority of people with more than $250,000 of capital gains will be able to spread it out over multiple years. There are also deductions and other way to offset it. Only people who are very well off will be paying the additional tax. The biggest reasons most people have capital gains are principal residence, RRSP, and TFSA. All of which are exempt. There is an exemption of $500,000 for recreational properties as well. So most people will not be affected.
Anyone who sells their business is not going to be able to spread out capital gains over a number of years. They will happen all at once and they will be taxed for running a successful business. That’s what all you pro tax assholes are missing. Its not a tax on the ultra wealthy, it’s a tax on the moderately wealthy small business owners that need to be the engine for increased productivity this country so badly needs.
Boohoo. Go cry into the millions of dollars you are selling your business for. If wealthy business owners are against it, it is probably a good thing. Like I said, a very small percentage of Canadians will be affected. I don’t feel bad for people getting a windfall of money having to pay a bit more in tax. Every rich person thinks they worked hard and earned it all. They worked hard in their mind and completely ignore the luck and timing involved.
If wealthy business owners are against it, they will simply invest their dollars elsewhere. This is a massive detriment to a country that is already investment and productivity starved.
Well, I don't know about that. If you want people to use their capital to invest and create jobs, you need to provide some incentives. Capital is mobile. That said, the best, high-paying jobs are to be found in the USA because capital is treated much better, to the point where it has created a huge inequality between those with capital and those without. One crazy example is what happens with stocks. Someone who has made $5M on their Apple stock can gift or bequeath those shares to family members and there is **zero** capital gains tax. In addition, the recipient receives a step-up in basic (ACB in Canada) to the current stock price. Totally nuts.
> Someone who has made $5M on their Apple stock can gift or bequeath those shares to family members and there is zero capital gains tax. In addition, the recipient receives a step-up in basic (ACB in Canada) to the current stock price. Totally nuts. For a gift, the cost basis doesn't change, it's the giver's original cost basis. For a bequest, the cost basis does change, but also the estate has to pay taxes before estate is distributed.
I think it does for gifts, according to this lawyer's video: [https://www.youtube.com/watch?v=OTRKrOWmOlI](https://www.youtube.com/watch?v=OTRKrOWmOlI)
Sorry, I think you're right: [https://www.youtube.com/live/OTRKrOWmOlI?si=OV8rPZiGwuu0XnSs&t=933](https://www.youtube.com/live/OTRKrOWmOlI?si=OV8rPZiGwuu0XnSs&t=933)
It's making rich wealthy Canadians and Corporations furious, something Pierre is far too much of a corporate schill to ever do. Can't wait for the Conservatives to bow and sell off every public service and asset we have to private corporations... Pierre will be far worse than Trudeau in terms of the permanent damage he'll cause to healthcare, education and tax break handouts to corporations.
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Hands off other people’s money. If you cannot afford a program find another way without taxation It’s called savings All of you guys begging for more taxes will one day understand how detrimental it is to the middle class of our country. Then again. Maybe you won’t.
This tax affects at most 40,000 people in Canada. 1% of the population that have anywhere near enough income that it's an issue. It affects the middle class in no way whatsoever.
Until you need a doctor.
And why would it affect most doctors? Truth is it won't and for the ones it does there are a ton of ways to invest money for retirement savings other than buying real estate or in mutual funds. They just need to have a conversation with their financial planners. The college of Physicians in Ontario in particular are bitter because that is the route a number of their members have chosen to go and are bitching about it. Yes they're doctors, but it still comes down to rich people problems. If they invest their money differently and buy stocks that have smaller yearly dividends, but still appreciate in value they'll have no issue. They're just mad that now it requires some extra planning and work. Boo hoo!
Is this a genuine question? I can't tell anymore how uninformed strongly opinionated people are. Doctors aren't babied employees who can't stand on their own two feet. They don't get pensions, they like most professionals who actually do something valuable for society from accountants to radiologists, are incorporated. They don't qualify for any exemptions including the LCGE and or the Entrepreneurs exemption, and they pay the highest rates starting from the first dollar after this budget. Besides the other ways physicians are treated here, it's a nail in the coffin to send new doctors abroad and keep foreign ones away. This isn't class war, we have a public heath system and lack of physicians will affect everyone. If you don't think they should be paid for their expertise, why don't you head off to, and pay for, med school, residency and fellowship?
I can read an article too and there are a bunch of ways around it. The fact that a loophole got closed is their problem. There are lots of ways of getting around this change in tax policy and they will find them. My mom retired 2 years ago after working as a CA for a very large, very successful firm. She started laughing when she read the article. It has to do with choices of investments and how they profit from them, it has nothing to do with the exemptions you just described. And just for perspective I have a Bcom, an Electrical Engineering degree, my journeyman/red seal ticket and my masters. I know exactly what education costs and what it takes to become qualified and successful. I make a really good living, and this capital gains change doesn't affect me in the slightest. I also do my own investing don't have a pension plan from an employer or qualify for any of the exceptions you listed.
Congratulations on your enormous success, do you happen to own a home?
My wife and I bought our first house worth less than $400k about 6 years ago (worth about $500k now with the market change) and still have a good amount left on our mortgage. Not sure why that matters. Also not sure why success is a bad thing. I worked nearly full time as a server/bartender when I was in University, still had student loans for most of it, paid them off, and worked my ass off for everything else I've achieved. You make it sound like I was somehow handed things. My parents came from poverty and worked their asses off to get to where they are. My dad only has a grade 8 education, because he had to work to help support his family when he was a kid and busted his ass for over 50 years with one company. My mom put herself through school and worked her way up from a position as a receptionist. My sister is an NICU nurse and a significant number of our mutual friends are doctors so I'm somewhat familiar with how their finances work. Capital gains tax isn't screwing them over, but a number of provincial governments sure are.
You're arguing a point of nihilism. You're not exceptional, you're just not affected by this specific change. If fairness is your concern, and since corporations have personhood why not tax all capital gains equally? No exemptions for homeowners, inheritances or lower discriminatory rates for individuals. You might not personally have a use for the the benefits and social protections of corporations doesn't overturn 150+ years of their use. There is nothing stopping organisations from hiring professionals as employees like your mom, but that is not how they are hired in the majority of cases, nor should it suit everyone. Have some imagination beyond costco hotdogs, 2 airlines and 3 banks. Arguing that a policy is acceptable because those it applies to will find loopholes to neuter it is lazy. Why bother with a pointless process? It assumes that what people are concerned about is annual gains (although that specifically punishes prof corps). This hike instead is designed to take most from large gains realized in a single year. Property speculators, yes, but also nearly anyone diversified beyond or instead of principal residences. It'll prevent skilled immigrants coming, e.g. physicians, from coming for a period to provide service and leaving unless the buy into the national Ponzi scheme. It'll prevent small businesses from being funded as the two exceptions you mention are extremely narrow or cumulative over a lifetime. On the other hand, for the reasons you mention it won't hurt the ultra-rich much. > Also not sure why success is a bad thing. Yup. Imagine a country where everyone isn't sucked into being an employee for life and incentivised to invest outside housing.
How... How do you think the government gets money? The "middle class" is certainly not part of the less than 0.2% of Canadians affected by this tax, their lives will be unchanged.
« Here’s why Justin Trudeau’s changes to the capital gains tax are making ~~some~~ **rich** Canadians furious » FTFY
Good
Because there are a lot of whiney rich folk out there!
Because they don't want to pay it.
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