Doug Bartmanovich

CRA has made clear today that it will continue to collect taxes based on the higher 66.7% capital gains inclusion rate, despite the lack of any legislation from Parliament. canada.ca/en/revenue-agency/… While I understand the original decision of CRA to levy the higher rate as of June 25th based on the budget proposal, the circumstances allowing CRA to use this convention has fundamentally changed. 1. Nearly 9 months after the April budget, no legislation was ever presented to Parliament. 2. The Minister of Finance resigned last month and the Prime Minister has announced his impending resignation. 3. Parliament has been prorogued. 4. Opposition parties have said they no longer have confidence in the government and will push for an election as early as possible. 5. Even assuming the current Liberal government (or even a new PM/Finance Minister) tries to introduce legislation as soon as Parliament reconvenes, it is hard to imagine this passing before an election. 6. As the Conservatives have stated that they oppose the increase in capital gains taxation, it seems unlikely a PM Poilievre would introduce such legislation upon taking office. But the CRA says: "Upon resumption of Parliament, if no bill is passed in the House of Commons, and the government signals its intent to not proceed with the proposed measures, the CRA would cease to administer them." So CRA will collect billions in capital gains taxes (with no legislation authorizing it) until a government officially tells it to stop. This means that it could be a LONG time before any clarity is provided to taxpayers. Even though I don't believe the Tories would put forward their own legislation to increase capital gains taxes, I'm not sure they will be in a rush to tell CRA they won't as one of their early acts - especially as it would mean even larger deficits. The Tories have said they will undertake a tax review, which could take months or years. And I can't see how the current Liberal government or one headed by a new PM or Finance Minister will find a window to proceed. I expect small business owners and Canadians with capital gains will not have clarity for another year or more. This is deeply unfair and disrespectful to Canadians that have important transactions ahead, not to mention those who rushed to sell businesses or assets in advance of June 25, 2024. This political purgatory is untenable. CFIB is looking at the legality of CRA's position to date and calls on the agency to revert to the earlier rules, pending a legislative change. CFIB is also calling on Finance Minister @DLeBlancNB to step in and immediately resolve this issue and calling on all opposition leaders to make clear what they will do should they take office. With all the political and economic uncertainty in Canada at this moment, governments should be working to provide as much clarity as possible - particularly to Canada's job creators.