Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
How Trudeau’s Exit Will Impact Capital Gains Tax Policy
Capital Gains Tax | Jan 6, 2025
Image courtesy of AI
Trudeau's Resignation and Prorogation Create Uncertainty for Capital Gains Tax Changes
Yesterday, Prime Minister Justin Trudeau resigned and prorogued Parliament until March 24, 2025 as the Liberal party of Canada seeks to elect a new leader under the threat of U.S. tariffs. These political developments have left taxpayers and financial professionals seeking clarity on the future of the Capital Gains tax reforms but the CRA has yet to provide any guidance, and the Finance Minister has confirmed Canada will still collect capital gains taxes at the higher rate despite the suspension.
Capital Gains Tax Policy Background
In April 2024, the feds announced plans to increase the taxable portion of capital gains from 50% to 66.7% for corporations and for individuals with capital gains exceeding $250,000. The government said the new tax revenue would generate about $19.4 billion over five years to fund affordable housing initiatives. The final changes took effect on June 25, 2024, so the CRA has been collecting tax revenues per the new policy since then.
Impact of Parliament Suspension
However when PM Trudeau resigned on Jan 6 and announced prorogation, it left many proposed bills including the capital gains tax changes in limbo. This is due to a longstanding practice that the CRA collects revenues from proposed tax measures even before they are formally approved by Parliament. They effectively assume that the proposed tax legislation will eventually be enacted, especially if the bill is introduced by a governing party with a reasonable expectation of passing it.
CRA Position and Implications
As reported by Reuters, the CRA has indicated that they will continue to collect the proposed capital gains taxes during prorogation and in the event the government does not proceed with the measures it would then stop collecting revenues from the new measures. The agency did not clarify if they would provide refunds for any tax revenues collected during limbo status.
See: Guide: Lifetime Capital Gains and Entrepreneur’s Incentive
Suffice to say, if you are in the position of potentially paying a higher tax rate due to the proposed capital gains tax policy then you should hold off on selling any assets that may trigger capital gains taxes until the air is cleared. Since the new Liberal leader may move to cancel the controversial capital gains tax or possibly a new government administration will, too.
Conclusion
The future of the capital gains tax changes will depend on the new priorities of Trudeau’s replacement and the new government decides to focus on. Taxpayers are advised to work with tax professionals to manage uncertainty.
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