Conservatives call on government to back off capital gains changes due to legislative limbo

The call from the Conservatives to halt the collection of tax on capital gains at the increased inclusion rate set by the Liberals has sparked a heated debate in Parliament. Conservative finance critic Jasraj Singh Hallan argues that the higher inclusion rate should not apply as it was never officially passed into law by Parliament. In a letter addressed to Finance Minister Dominic LeBlanc, Singh Hallan emphasized the importance of obtaining consent from Parliament before implementing such tax changes, stating that the current situation has created a tax-filing nightmare for hard-working Canadians.

The inclusion rate on capital gains was raised in April’s federal budget, increasing it from one-half to two-thirds on capital gains above $250,000 for individuals, as well as on all capital gains earned by corporations and trusts. However, the legislation to officially introduce these changes was left pending in the House of Commons and is now essentially dead following Prime Minister Justin Trudeau’s prorogation of Parliament.

Despite the lack of formal approval from Parliament, the Canada Revenue Agency continues to collect tax on the increased inclusion rate based on a “ways and means” motion passed by the government. The Department of Finance justifies this decision by citing parliamentary convention, which dictates that taxation proposals take effect once a notice of ways and means motion is tabled.

While the Liberals argue that only a small percentage of Canadians are affected by the increased inclusion rate, economist Jack Mintz estimates that as many as 1.26 million Canadians could be impacted. Business groups, including the Canadian Federation of Independent Business, have raised concerns about the lack of clarity surrounding the future of the inclusion rate, calling it unfair and disrespectful to taxpayers.

The Department of Finance suggests that the only way to revert to the original inclusion rate is to wait for the next session of Parliament. Until then, the CRA will continue to administer the increased rate. The uncertainty surrounding the issue has left many Canadians in limbo, with no clear timeline for resolution.

As the debate rages on in Parliament, it remains to be seen how the government will address the concerns raised by the Conservatives and business groups. The impact of the increased inclusion rate on capital gains continues to be a contentious issue, with both sides presenting conflicting arguments about its necessity and fairness. Only time will tell how this tax hike will ultimately affect Canadians across the country.