Prime Minister Trudeau’s recent resignation as leader of the federal Liberal Party, alongside his decision to prorogue Parliament until March 24, 2025, has significant implications for proposed legislative changes. Prorogation, the temporary suspension of Parliament, means all bills that have yet to become law, and legislative activity before the House of Commons and Senate are terminated until Parliament reconvenes on March 24, resetting the legislative agenda.
Prorogation has cleared the Order Paper in Parliament and removed the Ways and Means motion that introduced the April 2024 capital gains tax changes.
Although the capital gains tax motion had not passed Parliament, the Canada Revenue Agency (CRA) has authority to collect the tax due to parliamentary convention that dictates taxation measures become effective immediately once a notice of Ways and Means motion is presented.
The proposed changes to the capital gains inclusion rate have increased from one-half to two-thirds for capital gains exceeding $250,000 annually for individual Canadians. This change also applies to all capital gains for corporations and most types of trusts. Importantly, primary residences remain excluded from capital gains taxation.
In a joint statement, the CRA and the Finance Ministry clarified that they will halt administering the policy once Parliament reconvenes and the government indicates it will not proceed with reintroducing the proposed changes to the capital gains tax.
TRREB is closely monitoring the situation and will provide updates as new developments occur.
Disclaimer: This is for information purposes only. We encourage Members to seek advice from a legal or accounting professional.
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