Canada: Tax increase to capital gains deferred to 2026

Taxpayers will not need to account for the proposed increase in 2024 tax filings. 

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February 3, 2025

The Department of Finance on January 31, 2025, announced that the implementation date for the proposed increase in the capital gains inclusion rate will be deferred to January 1, 2026, from the previously scheduled date of June 25, 2024. This means taxpayers will not need to account for the proposed increase in their 2024 tax filings.

Initially proposed in the 2024 federal budget, the capital gains inclusion rate was set to rise from 1/2 to 2/3 for corporations, trusts, and individuals on capital gains exceeding CA$250,000. This threshold will now also take effect on January 1, 2026.

However, the increase to the Lifetime Capital Gains Exemption to CA$1.25 million for small business shares and farming and fishing property is still proposed to be effective June 25, 2024. Additionally, the Canadian Entrepreneurs’ Incentive is set to commence in 2025, with a maximum increase of CA$400,000 annually, reaching CA$2 million by 2029.

Read a January 2025 report prepared by the KPMG member firm in Canada

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