Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
Capital Gains Tax Delay to 2026 Amid CRA Legal Battles
Capital Gains Tax | Jan 31, 2025
Image: Freepik/pvproductions
Capital Gains Tax Increase Delayed Until 2026 as CRA Faces Legal Challenges
According to Reuters and CBC, the federal government is delaying the proposed increase to the controversial capital gains tax until January 1, 2026. This is good news (at least temporarily) for innovation and investment in Canada. The changes to the capital gains tax policy received immense push back from many business groups, economists and the investment community, all warning the federal government that the policy would discourage investment in Canada and adversely affect economic growth.
See: Canada’s Fintech & Trade at Risk Amid U.S. Tariff Threat
The temporarily relief, also comes at a time when Canada is facing potential 25% tariffs from the U.S., and some tax payers are also challenging the Canadian Revenue Agency (CRA) legally, arguing that the the agency is enforcing tax changes when the changes have not yet been approved by Parliament.
With this delay, the decision on whether to implement the tax hike will now fall to the next government. The Conservative Party who is currently dominating the polls have already come out and said they strongly oppose the capital gains tax increase. Further, the Liberal Party of Canada leadership race front-runners have also come out and said they would reverse the proposed tax changes. Needless to say that the future of Canada's proposed capital gains tax policy is uncertain, it also wasted a lot of productivity in the process.
CRA Faces Court Challenges Over Premature Tax Collection
In case you missed it, Prime Minister Trudeau prorogued government until March 24, 2025 (he also resigned), and as a result the new tax policy wasn't legislatively approved by Parliament which meant that the policy was in limbo.
See: Trump’s Tariffs: Impact on Fintech and Canada’s Digital Tax
The problem was that the CRA decided to begin collecting the higher tax rate before it was formally enacted, leaving may taxpayers facing unwarranted burden. So multiple legal cases spawned challenging the CRA arguing taxpayer rights and the rule of law. Tax experts warn that if courts rule against the CRA, it could lead to refunds for those who overpaid taxes under the higher rate.
Conclusion
The fate of the proposed capital gains tax increase is now postponed to 2026 and will be decided by the outcome of the next federal election.
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