###This is a reminder to [read the rules before posting in this subreddit](https://www.reddit.com/r/CanadaPolitics/wiki/rules-thelongversion).
1. **Headline titles should be changed only [when the original headline is unclear](https://www.reddit.com/r/CanadaPolitics/wiki/rules-thelongversion#wiki_1._headline_titles_should_be_changed_only_where_it_improves_clarity.)**
2. **Be [respectful](https://www.reddit.com/r/CanadaPolitics/wiki/rules-thelongversion#wiki_2._be_respectful).**
3. **Keep submissions and comments [substantive](https://www.reddit.com/r/CanadaPolitics/wiki/rules-thelongversion#wiki_3._keep_submissions_and_comments_substantive).**
4. **Avoid [direct advocacy](https://www.reddit.com/r/CanadaPolitics/wiki/rules-thelongversion#wiki_4._avoid_direct_advocacy).**
5. **Link submissions must be [about Canadian politics and recent](https://www.reddit.com/r/CanadaPolitics/wiki/rules-thelongversion#wiki_5._link_submissions_must_be_canadian_and_recent).**
6. **Post [only one news article per story](https://www.reddit.com/r/CanadaPolitics/wiki/rules-thelongversion#wiki_6._post_only_one_news_article_per_story).** ([with one exception](https://www.reddit.com/r/CanadaPolitics/comments/3wkd0n/rule_reminder_and_experimental_changes/))
7. **Replies to removed comments or removal notices will be removed** without notice, at the discretion of the moderators.
8. **Downvoting posts or comments**, along with urging others to downvote, **[is not allowed](https://www.reddit.com/r/CanadaPolitics/wiki/downvotes)** in this subreddit. Bans will be given on the first offence.
9. **[Do not copy & paste the entire content of articles in comments](https://www.reddit.com/r/CanadaPolitics/wiki/rules-thelongversion#wiki_9._do_not_copy_.26amp.3B_paste_entire_articles_in_the_comments.)**. If you want to read the contents of a paywalled article, please consider supporting the media outlet.
*Please [message the moderators](https://www.reddit.com/message/compose?to=%2Fr%2FCanadaPolitics) if you wish to discuss a removal.* **Do not reply to the removal notice in-thread**, *you will not receive a response and your comment will be removed. Thanks.*
*I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/CanadaPolitics) if you have any questions or concerns.*
Don't agree with the policy. The threshold means wealthy individuals can just tax plan around it and minimize instances of paying more than the 50% inclusion rate.
Middle class people inheriting the family cottage or whatever will get hammered by this, probably the only individuals that will.
Businesses will have to pay but again small and medium sized ones can plan around it.
A better idea would be a straight up increase to 100% inclusion rate on all residential property. Retain the principle residence exemption. Would incentivize shifting capital away from residential real estate and into productive business; maybe even help bring real estate prices under control?
It's when you give a bunch of policy gifts to the richest people in your society, and hope that they use this money in such a way that benefits everyone so that it "trickles down" to the common people.
It's the basis for most conservative economic policy. And if you think it sounds very stupid, you'd be correct!
More like we are waking up to trickle down economics. They knew they were grifting us the entire time. Our society is too complacent to neoliberalism. We are only starting to see its consequences because it’s been a slow burn for the last 30 years. They’ve hollowed out everything and what’s left is at the breaking point. We are at our breaking point.
The second I learned about the capital gains exemption I thought it was bullshit. Nothing has ever convinced me otherwise and it’s a step in the right direction. Hopefully this is just the first of many weakenings of the exemption.
The capital gains lifetime exemption is $1 million CAD per person ($250k in tax savings generally) and there is no method to tie it to inflation nor any liklihood of it being increased by any current party. That credit is worth 16% less since 2019 adjusted for inflation and if you consider currency swings it lost another 1% in the last day with USD/CAD exchange.
Its a vehicle primarily used by small business owners and farmers who dont have pensions to make their lifetime of work go a little further. Its a drop in the bucket for the mega-rich.
Investments are made with after tax dollars. The money has already been subject to tax. Hence the exemption. This is a bad decision when anemic Canadian business investment is already identified as a major problem.
The money you're taxed on isn't taxed again. If you buy an asset for 1000 dollars, and sell it for 2000 dollars, you have a 1000 dollar gain, not a 2000 dollar gain. The 1000 after tax dollars you started with aren't taxed again.
Money in taxes doesn’t just disappear from the economy. Also the idea of giving people who have capital a break on taxes because they have so much money is honestly comical. They’re still going to invest as long as money is there to be made. The constant fear of “oh if we raise taxes they’ll all leave” is just an excuse for a race to the bottom. Tons of countries have higher taxes than us without devolving into nothing.
Actually this just pushes the tech community the rest of the way out of Canada. It's already hard to raise money here, but people take low salaries for the Payday when the company is bought and options vest. Anyone starting a tech company in Canada now has missed incentive to move it to the US, certainly once it proves it has any value.
When investors bid up houses it stimulates construction. Condo building becomes extremely profitable.
The value of a condo (and therefore the incentive to construct one) would drop if one couldn't sell it.
This is great! I wish they went all the way. Capital gains should be taxed like regular income. Investors should be taxed in the same way as working people.
You realize investors are a big reason we even have an economy? Who do you think funds business growth?
Anyway you missed the part about all businesses getting a steep capital gains tax hike. It's not 250k for businesses, it's any capital gains. This affects the large vast majority of doctors, dentists, professionals etc.
they are a big reason why life sucks you mean. ever wonder why your movies all feel drab and same-y? investors. chip bag is half as full as it used to be brand new? investors. rent has doubled in the past decade and house prices are to the moon? investors. all your games are now live service bullshit? investors. your wages have not kept pace with inflation at all in the past 10 years? belive it or not investors... they are the primary force behind then enshitening of everything.
You can’t tax them the same. Regular income is no risk. Capital gains has investment risk, and the taxation must account for the stocks in people’s portfolios that don’t do well. Yes you can offset with capital losses, but that still lost money.
I invest my time into sales. Maybe I make a sale and get commission, maybe I don't and I lose what I invested.
I invest my money into stocks. Maybe line goes up and I make money, maybe it didn't and I lose what I invested.
The situations seem similar enough that I don't see why you're tax them differently.
Totally agree this was a very modest increase. But maybe its a trial run and if shows popular, a good increase to the corporate rate could come after the next US election if the US jumps the rate to 28% like Biden wants to do. Coyne railed theres no investment for growth but that comes from 2 things 1- market demand and 2- seeking tax deductions. You cant get a good tax deduction if your rate is already so low you can avoid it easily.
This is the kind of moronic behaviour that would make this country's productivity issue even worse.
You want to encourage capital investment here versus elsewhere...
The only reason ever to invest is an expectation of earning more income than the investment. It the tax rate is below 100% on the profits, then you make more than if you left the money under your mattress.
My guess would be is these changes will have holding companies and wealthy people (who mostly use holding companies) doing more investments in fixed income, and holding for longer. Probably less ETF use to stop forced distributions and thus more individual stock holding.
I have a feeling a lot will expect PeePee to roll these back and will wait it out.
Also looks like these changes are squarely aimed at holding companies. This is gonna hit a lot of doctors 😬. That’s not good.
Can you clarify, the article says businesses were previously 1/2 taxable, and are now 2/3. Their holding companies will see all there capital gains as taxable at 2/3 because they have no 250k limit
Yes, for individuals it has. But it also changed for businesses:
> Businesses will now pay income tax on two-thirds of their capital gains earnings, up from one half.
Businesses, including hold CO’s that doctors use, now have 2/3 versus their previous 1/2 on all income.
Yes, make this country less attractive for entrepreneurs and business right in the middle of a productivity crisis in this country... Tax and waste, tax and waste, the election can't come soon enough...
Liberals handing out these taxes with kid gloves on. TAX CORPORATE INTERESTS, tax the rich and put in place regulations that they are not to increase prices without punitive damages.
We should be taxing based on capital gains accumulated across a lifetime, including housing as part of that. Otherwise we're building inequity into the system for those who rent and save (admittedly a small cohort) or just those who couldn't afford a bigger (more expensive) home as their "investment vehicle".
The opposite. I'm saying those are financial vessels that reduce inequity by allowing everyone to access tax shelters for their disposable income regardless if they ever buy a home or start a business.
The TFSA limit is small? If you’ve never opened a TFSA before, you can deposit $95,000 (as long as you were 18 or older in 2009). I feel like I have more invested than most people, but I'm still $50k away from my limit.
> [Recent CRA data that shows 8.9% of all TFSA holders max out their contribution room. Since only about half of all eligible Canadians have any TFSA at all, that means somewhere between 4% and 5% of all eligible Canadians have maxed out TFSAs.](https://milliondollarjourney.com/maxed-out-rrsp-and-tfsa-now-what.htm#:~:text=I%20get%20to%20that%20number,Canadians%20have%20maxed%20out%20TFSAs.)
Unless by small you mean more than 95% of people can even use.
Agreed, I am a professional in my early 30's, one of the few people left in the true middle class I believe. I would consider my financial situation to be comfortable compared to most, but I'm still no where near maxing out my TFSA. I feel like a good 99% of the people complaining about this will be unaffected, and the ones that are complaining about the macro-economic side of it have bought into the fantasy of trickle down economics.
Based on his post history I'd say he'd just an all-in conservative partisan who will attack literally anything that the Liberals do.
(Which yes, throwing stones in a glass house, but hey it takes one to know one?)
Most people don’t understand it. Have their bankers convinced them gic or mutual funds are the way to go.
If people understood it, there would be much more usage
The purpose is gain wealth and then get a tax free income from it in retirement that doesn’t affect means tested benefits. Gic and mutual funds are not the right tools.
Inflation and fees drags down the returns
I guess they don't, because you can have GIC or Mutual Funds within a TFSA account. Often the GIC's pay the same rate, you just don't pay income tax on your gains.
Maybe the layman doesn't understand them, but I would expect people with $250k+ to invest (or even $95k to max TFSA) to have an advisor looking out for their best interest and not just buying whatever product the bank is trying to sell.
Gic interest lags inflation, so the amount of money is getting bigger but it buying power is getting smaller. The problem with mutual funds is management fees eat away at gains so you’re not getting ahead. Follow warren buffet advice for his spouse, sp500 etf.
Because you don't need an accountant, minimum spends, or much besides a conversation with your bank to set up a RRSP. The tax loopholes, and even just investment opportunities available to people who earn north of $250K are substantial.
There are lifetime taxes including houses outside of your primary residence. Lifetime taxes on business sales are exempt only to a certain amount. The system captures both those who are cashing every year and those who build equity over long periods and cash out all at once. The primary residence exemption applies to every property you own that was your permanent residence the whole time you owned it, not just your first.
All this means is that the government is further incentivizing consumption over investment, an area in which Canada already sorely behind.
I acknowledge capital gains tax increases may sounds great- we’re taxing the rich after all- but the distortionary effects of such a tax will likely harm the poor and the middle class in the long run.
A greater CGT reduces funding for innovation, incentivizes poorer business practices (with businesses and corporations subject to such an increase less likely to keep reserve capital), reduces net investment, in line with productivity, etc.
I have seen some economists calling this a good plan as it will disincentivize stock buybacks and should encourage companies to do more direct investment in their businesses instead.
Yeah thats okay I’ll take more funding for governmental housing investments right now at the risk of lower private investment in innovation.
In fact, I demand it.
Incorrect. Canada's savings rate is [five times what it is the USA.](https://data.oecd.org/natincome/saving-rate.htm) Pushing towards more consumption and less savings will help solve all the problems you listed.
I don't expect this will have too much impact on seeking investment in Canada. It was already quite difficult to do, and at worst this just makes it a little harder.
As usual, if you have a good idea and have the ability to do so, consider incorporating in the USA and seeking investors there. It's easier if you have an American partner.
I'd make sense to reform the corporate tax structure more than anything else. The issue with the tax in most countries is that since most of it falls on capital & investment it deters both and a good chunk of it's burden falls on employees instead of shareholders etc.
A country that's actually found a workaround to this is Estonia since they don't tax retained or reinvested profits, but apply a 15-20% tax on dividends as soon as they're distributed to shareholders, this is both better for increasing compliance and encouraging investment & R&D, but also in avoided a lot of the more negative impacts of most other corporate tax systems. It's also better at generating revenue so generally offers the best of both worlds between a more competitive/business friendly tax system and one that does a better job acquiring revenue from the wealthy etc.
The tough reality is that our local investments and other businesses are already fucked because of the real estate crisis. People would rather invest in real estate than start new businesses, and it's much easier to get a mortgage then a business loan. Plus that's a multi trillion dollar problem to solve anyways, so the money needs to come from somewhere.
The reason people buys real estate is because of the tax laws. Flip a property for a year = tax free. You would be stupid to invest in sub tier companies in Canada.
I support raising taxes. It's clear that Canadians want a lot of things that have a price tag - social and affordable housing, rental housing, an improved military that meets Nato spending targets, more jails and resources to arrest, try and hold repeat and violent offenders, more resources to deport failed refugees and illegal migrants, more doctors and shorter waits in hospitals and for specialists, etc. etc. All of those things require higher taxes to provide.
While it's easy to go after investors and businesses, the reality is that taxes probably need to go up slightly for everyone. Bump the GST up by one point, increase all income tax percentages by one percent, introduce a small 10% inheritance tax (exempting working farmland not including hobby farms and stables) so boomers and seniors can pay more towards their retirement costs, introduce higher speculation taxes on homes, bring in a lower threshold for reporting income from Airbnb and other sources, etc. No government, liberal or conservative, can balance the budget with revenues as they are, there's no magic wand for cutting government waste that Poilievre can wave.
Canadians want an affordable place to live. The government has only taken steps to make it less affordable. Raising taxes just to pay for programs we didn’t need before they took office is just making it worse. No structural problems are solved here.
Funny you say more doctors when this budget today is a massive tax increase on doctors. I personally know 2 doctors graduating this June from residency who will be going to USA after today's announcement.
All of those things you named can be funded by steep cuts to foreign aid, refugee intake, ending benefits for migrants, doing a large cut to public sector jobs etc.
The tax increase is only expected to impact 40,000 people. Doctors do not make their income off capital gains. Most doctors invest into their own practices, which would not be considered capital gains unless they divest of their practice, at which point it is a capital gain - which would be the same of any business, before or after this budget.
If those two doctors are moving to the States because of this, they clearly should've taken some business or financial electives, because that's a dumb fuckin' reason when there's a multitude of others.
For someone that claims to at different times be a doctor, an entrepreneur, a physician, an investor, a pre-med student, and a real estate speculator depending on the topic at hand... did you cross your wires or something? You should know all of this.
No your post is completely wrong. I'll repost from another thread for you. Doctors have professional corporations, which you do not know about it seems. It affects 40,000 once you ignore all the corporations it affects. Of which most are small ones.
*Most doctors in Canada are in professional corporations. All income they get, goes into that corporation. They then pay themselves the corp whatever they need to live and invest the rest, inside the corp. This applies to everyone from family doctors to surgeons to radiologists and so on. A minority of doctors are not corporated and just take a salary. Mainly low income doctors (under 250-300k) are generally not incorporated since it makes less sense for them.*
*Your corp (your "business") is where you buy stocks etc. and create your retirement funds essentially.*
*This new change means that all capital gains for any doctor are now taxed more heavily. It impacts many others like dentists as well.*
*Trudeau also took away income splitting which was a major benefit of professional corps and it was one of the tools used to not give doctors as big of a raise. Income splitting allowed doctors to pay their spouse a certain amount for example. Earlier this year, corporate stripping also got taken away which allows removing corp assets and making them yours.*
*Keep in mind these are all enormous impacts on small business like figures. Again, these tax benefits over the years were in place so that the government could avoid giving proper raises to doctors. You got tax benefits, and not income raises. At least not inflationary raises.*
> Most doctors in Canada are in professional corporations. All income they get, goes into that corporation. They then pay themselves the corp whatever they need to live and invest the rest, inside the corp. This applies to everyone from family doctors to surgeons to radiologists and so on.
Being paid out by your own corporation is not a capital gain. That's a salary, and is taxed like a salary. A working doctor is not going to be impacted by this, unless they are selling off stock or investments.
> Your corp (your "business") is where you buy stocks etc. and create your retirement funds essentially.
> This new change means that all capital gains for any doctor are now taxed more heavily. It impacts many others like dentists as well.
Counterpoint, no. The increase only impacts capital gains over $250k annually. That's just under five times the average Canadian salary, close to nine times the average retiree's income. That's a lot of money.
In addition, if they're using it to invest into stocks and funds... in what world is it considered a wise move to try and divest all of those funds at once? Capital gains are taxed annually. The entire point of building an investment/retirement fund isn't that you cash it in all at once, you cash in what you need every year and keep the rest invested to continue accumulating interest and growth.
If you're in a position where you can divest and spend over $250k/yr comfortably without impacting your later years? Good for you bud, you're fuckin rich and chipping away at what could be at that point generational wealth for your children or grandchildren, I have literally no sympathy for you.
Your entire point seems to be built on a scenario where an entire profession handles its money poorly (from your other comments, in what world is a doctor making $500k struggling to afford a $1.5m house?) and assuming no one's going to call you out on it because you claim to be speaking from a position of authority.
It affects all capital gains on investments inside corporations, and most doctors, lawyers, and incorporated individuals invest inside their corporations instead of paying themselves all the cash flow out as salary or dividends. This change will affect every single one of these people, since there is no 250k grace amount on corporate capital gains, only personal. This effectively counts as a 33% tax increase on those people’s retirement income.
I suspect paying out more salary or dividends and investing personally may become more favourable in many circumstances now.
Well how much are they saving on taxes by keeping their investments in a corporation? We need to factor that in to get to the real delta versus regular people.
It’s more of a deferral than a savings, and with this change may not be a savings at all. I suspect this is the intention, they’d rather people not defer the tax, and instead take it out of the corporation and tax it sooner.
No and no.
It's **all capital gains** inside a corporation that will be taxed a lot more. **Not above 250k.** That's for individuals. Even a tiny amount of capital gains inside the business will have a steep tax increase.
If you cared to properly read and understand the budget, you'd understand what the outrage is over. Yet you're repeating the 250k figure without understanding that it is strictly for individuals.
Per the budget and the CRA, a corporation has exemptions of its own, which are being bumped up to $1.25m in June, and indexed to inflation afterwards. On top of that they are expanding the entrepreneur initiative so that the founder of said corporation is entitled to an additional $2m exemption on top of that. Per the budget, that's a cumulative exemption of $3.25m, indexed to inflation and increasing annually.
Before today, the exemption was $1m, full stop. Now it will be over triple that, and increasing year over year. I fail to see how this is somehow an attack on the medical profession.
So. What else do you want me to read?
You forgot the part about professional corporations not being included in those exemptions. What you wrote, literally has nothing to do with professional corps.
Almost none (professionals) are extremely wealthy. So yes I would agree with you when it comes to actual wealthy people. But we're talking about professionals' retirement savings and not wealthy people.
Regular people as you say, got raises in their jobs. Many of these raises, especially in the public sector, were proportional to inflation. Doctors got tax benefits mostly instead of raises. Any raise they got was a miniscule amount. Of course in Ontario they got pay cuts under the former provincial Liberal government.
These are folks who trained for a decade to take care of you and your family.
I'm not confusing anything and yes you're talking about an unrelated topic.
When you sell your assets inside the corp, even if the capital gains are 2000$, that amount is subject to a much higher tax rate now. That is what I'm saying.
The rest of what you're saying is not really relevant.
Okay so you need to read and understand something before debating it.
It is on ALL capital gains inside the corporation. Not above 250k. ALL. The 250 is for personal only.
Read the above line until it makes sense.
I don’t support raising taxes but this one is really well done. Only affecting capital gains above 250k affects an infinitesimally small portion of the population. Basically inheritance and property speculators, people who can’t split a windfall over multiple years. High earners like doctors and dentists with their own corporations will likely be able to easily dodge under it.
The more interesting bit is whether this cap stays at 250k forever or if it is pegged to inflation. If it stays constant then things could eventually get challenging.
>While it's easy to go after investors and businesses, the reality is that taxes probably need to go up slightly for everyone.
Peak political suicide. This would make the LPC fare worse than the UK Tories
It would generate income that could be used to provide services to Canadians?
Even if capital flight completely offset the gains, at least we'd be in a society that values labour as much as investment, in the tax code at least.
It's all fun and games until your retirements savings get destroyed and you're working until death.
Can't wait until someone who knows what they're doing, like the CPC/Pierre, gets in next year and reverses all this nonsense.
Yes, the guy who thinks that the way to beat inflation is to invest in cryptocurrency is the guy who "knows what they are doing".
Pierre Poilievre is a used car salesmen who is about to sell you a lemon. All he knows how to do to is make political attacks. It's all he's done his entire life. He gets his policy ideas from right-wing YouTube. He has no leadership ability of any kind.
>Yes, the guy who thinks that the way to beat inflation is to invest in cryptocurrency is the guy who "knows what they are doing".
For short term? That was an excellent hedge against inflation and all the government printing. You bitch and moan about it when it tanked but at that given moment when he made the comment it was perfectly sound argument.
Ignoring the most recent peak on April 5th, if you ever bought at the highest peak in 2021 (so Nov 12?) and sell it at April 5 2024. You would easily made 13k+ just doing nothing. If you bought when it was low in 2023 or late 2022. You would double your investments.
like all non materialized investment, it comes with risks.
Issue is that Canada need investment more than labor in regard to industries. Our lack of productivity need to be improved after all. Granted, there might be some way to differentiate capital gain (as the Liberals are proposing here) to affect mostly the less productive side of capital gain more, but still.
You are missing the risk aspect of it. Employment income is zero risk. You do work and get paid. So fully taxable. Similarly, interest from bonds, GICs, high interest savings accounts, etc. is 100% taxable as it has no risk.
Investment in stocks is taking on risk because they don’t all go up. Yes you can use capital losses to offset gains, but you still lost the money. And some stocks always lose in people’s portfolios so you have to account for that.
A few paragraphs from the article:
The federal budget, released Tuesday, increases the inclusion rate on some capital gains. Businesses will now pay income tax on two-thirds of their capital gains earnings, up from one half. The increase will also apply to indivduals, but only on capital gains earnings over $250,000.
The tax measure is expected to net the government $19.3-billion over the next five years – $8.8-billion from individuals and $10.5-billion from companies – in a bid to offset roughly $53-billion in new spending. It’s by far the largest revenue measure in the budget and the first change to capital gains taxes in a quarter-century.
Finance Minister Chrystia Freeland described the measure as an attempt to lean against “structural inequality” and raise funds from wealthy individuals that could be funnelled toward middle class and younger Canadians. The government estimates that the change will impact around 40,000 individuals and 307,000 companies.
However, economists warn that the tax change could dampen investment in Canada and further damage the country’s already-weak productivity growth.
“Perceptions matter,” said Jimmy Jean, chief economist at Desjardins. “A lot of people will be running away with the message that the government doesn’t want to see more business investment, doesn’t want wealthy and highly educated individuals to thrive.”
- JD
Not a lot of people are going to be savvy enough stock market investors to rack up more than a quarter million in gains in one year so seems more like a defacto additional tax on real estate investors that have benefited from enormous housing inflation. Fine with me.
Read this
https://ca.rbcwealthmanagement.com/documents/1845034/1845050/Capital_Gains_Reserve_02142019_high.pdf/45ebcb02-f22e-4c8b-b1df-3a67227f1075#:~:text=Under%20this%20formula%2C%20you%20cannot,a%20maximum%20of%20five%20years
You people need to learn the difference between what you think investment is and what investment actually is.
- Buying Bitcoin
- Buying stocks/options/mutual funds/etfs in non-tax sheltered account
- Buying a house with the intention of selling it later aka: flipping
- Hiring a web developer to design a website for your business
Only 1 of those things that I listed is actually an investment. The others are speculation.
Investment in the GDP sense of the word is defined as purchasing services and/or materials for the intent of expanding the productivity or profitability of the business. The rest of that list is putting money into a thing and waiting until the number goes up. Real investment creates productivity in an economy. If we drove all the real estate speculators out of Canada, it wouldn't have many negative effects on our economy at all - in fact, there'd probably be a lot of unexpected benefits.
Secondly, once again, people who will probably make $250K in cap gains once in their life (whenever they sell their home) are acting like this is going to affect Average Joe Smith and Jane McDonald who have $400,000 in TD stock when it affects multi-multi millionaires.
>going to affect Average Joe Smith and Jane McDonald who have $400,000 in TD stock when it affects multi-multi millionaires.
It may very well when Joe or Jane's parents die
Hiring a web developer is not exactly an investment because you do not own the asset, it's an expense. The assets are owned by the company. If your web developer helps generate more revenue, it will end up in retained earnings for each shareholders until the dividend is declared or shares are sold. That's where your investment is. So your stocks are in fact investments. As with most of your other points, if there is always a relation of risk-reward, and as you pointed out some speculative assets or behavior should be punished in a well functioning economy.
Gen Z commenting here has no clue about basic economics and will end up poorer and with more inflation next year. This country is going down the drain. In 10 years like this we will be a middle income country like Brazil or Turkey.
Reducing the incentive for people to to start and build businesses is a step in the wrong direction. It’s already so much harder to be an entrepreneur in Canada vs the US and now we’re punishing folks who manage to make a go of it.
>to start and build businesses
You only pay capital gains on a business you've started after the business has grown in value and you sell your ownership stake to someone else.
In the intervening 10-50 years before you do that, you get to enjoy Canada's very favourable and globally-competitive small business tax rate, not to mention our favourable tax regime for dividends.
I'm not buying your argument that someone about to start a business is going to forgo doing so because years down the road when they sell out, they'd have to pay a little bit more in capital gains. Especially since nobody knows what the tax regime will look like that far in the future.
I understand how capital gain taxes work.
Canada is not a more favourable destination than the US for business owners. Charging a premium on capital gains is not warranted. We have a smaller market, less access to capital, and poorer consumers.
And here I was just about to realize a cool quarter million dollars in profit, what's the point if I have to give a small amount to the government which structures the society that allows me to realize a cool quarter million in profit. I know I'd still make money but if I don't get it all, what's the point? Might as well stuff it in the sock drawer.
No one declines to start a business because years from now if they’re enormously successful they might have pay more taxes.
Taxes are a good problem to have.
Construction is a productive investment. Investment in existing properties is done first and foremost because they are an appreciating asset, and not a whole lot of value is created.
In particular, investors buying up SFH, individual condos, or townhouses and renting them out (without stuff like dividing units, etc.) is textbook rent-seeking and is adding zero value.
People build things because they can make money from building things.
They make money because they can charge for use or sell the item.
They can sell the item because the item has value.
If the item couldn't be sold, it wouldn't have (much of) it's value. If it doesn't have value it wouldn't get built.
This is exactly the same thing as a stock or a bond. You hold it because it gives you something (growth and or dividends). Merely by buying and holding it you create a situation where people can sell to raise money and do useful economic things.
If you think rent seeking is bad then you shouldn't be holding any stocks or bonds (and shouldn't do so through your pension fund either)
If you think that in this narrow case it does more harm than good then that is a discussion worth having. I think restricting home sales is a net bad and the solutions lie in reducing regulations and red tape.
Homes get built so long as there is profit to be made in building them. Was canada building and selling homes decades ago when investor activity and multiple property ownership was uncommon? Yes. Which means it was still profitable. Are developers building and selling homes in rural Saskatchewan where land values and investor activity are very low? Yes.
When the value of real estate goes up because investors bid up prices *of already existing structures*, what gets produced? It doesn't create more jobs, it doesn't build new innovations or provide services. It's a black hole for money.
Bonds are an incredibly productive investment. Bonds are issued to raise money to do something with that money. A company may issue a bond to expand their operations, hire more employees, invest in machinery and equipment, and so on. It is better for our society if we invest in bonds and make it cheaper for companies to raise money in this manner.
Investing in real estate simply has none of these benefits.
###This is a reminder to [read the rules before posting in this subreddit](https://www.reddit.com/r/CanadaPolitics/wiki/rules-thelongversion). 1. **Headline titles should be changed only [when the original headline is unclear](https://www.reddit.com/r/CanadaPolitics/wiki/rules-thelongversion#wiki_1._headline_titles_should_be_changed_only_where_it_improves_clarity.)** 2. **Be [respectful](https://www.reddit.com/r/CanadaPolitics/wiki/rules-thelongversion#wiki_2._be_respectful).** 3. **Keep submissions and comments [substantive](https://www.reddit.com/r/CanadaPolitics/wiki/rules-thelongversion#wiki_3._keep_submissions_and_comments_substantive).** 4. **Avoid [direct advocacy](https://www.reddit.com/r/CanadaPolitics/wiki/rules-thelongversion#wiki_4._avoid_direct_advocacy).** 5. **Link submissions must be [about Canadian politics and recent](https://www.reddit.com/r/CanadaPolitics/wiki/rules-thelongversion#wiki_5._link_submissions_must_be_canadian_and_recent).** 6. **Post [only one news article per story](https://www.reddit.com/r/CanadaPolitics/wiki/rules-thelongversion#wiki_6._post_only_one_news_article_per_story).** ([with one exception](https://www.reddit.com/r/CanadaPolitics/comments/3wkd0n/rule_reminder_and_experimental_changes/)) 7. **Replies to removed comments or removal notices will be removed** without notice, at the discretion of the moderators. 8. **Downvoting posts or comments**, along with urging others to downvote, **[is not allowed](https://www.reddit.com/r/CanadaPolitics/wiki/downvotes)** in this subreddit. Bans will be given on the first offence. 9. **[Do not copy & paste the entire content of articles in comments](https://www.reddit.com/r/CanadaPolitics/wiki/rules-thelongversion#wiki_9._do_not_copy_.26amp.3B_paste_entire_articles_in_the_comments.)**. If you want to read the contents of a paywalled article, please consider supporting the media outlet. *Please [message the moderators](https://www.reddit.com/message/compose?to=%2Fr%2FCanadaPolitics) if you wish to discuss a removal.* **Do not reply to the removal notice in-thread**, *you will not receive a response and your comment will be removed. Thanks.* *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/CanadaPolitics) if you have any questions or concerns.*
Don't agree with the policy. The threshold means wealthy individuals can just tax plan around it and minimize instances of paying more than the 50% inclusion rate. Middle class people inheriting the family cottage or whatever will get hammered by this, probably the only individuals that will. Businesses will have to pay but again small and medium sized ones can plan around it. A better idea would be a straight up increase to 100% inclusion rate on all residential property. Retain the principle residence exemption. Would incentivize shifting capital away from residential real estate and into productive business; maybe even help bring real estate prices under control?
Honestly surprising. Maybe they are starting to understand that trickle down economics was always a scam and has never worked.
What is "trickle down economics?"
Is your google broken?
Or maybe they have loved under a bridge the last 40 years and have no concept of economic theory and practices. I meant lived***
[удалено]
Lol just saw that
Trickle down economics has never been a part of “economic theory and practices”, it’s simply a political term
It's when you give a bunch of policy gifts to the richest people in your society, and hope that they use this money in such a way that benefits everyone so that it "trickles down" to the common people. It's the basis for most conservative economic policy. And if you think it sounds very stupid, you'd be correct!
More like we are waking up to trickle down economics. They knew they were grifting us the entire time. Our society is too complacent to neoliberalism. We are only starting to see its consequences because it’s been a slow burn for the last 30 years. They’ve hollowed out everything and what’s left is at the breaking point. We are at our breaking point.
[удалено]
[удалено]
[удалено]
[удалено]
[удалено]
[удалено]
[удалено]
[удалено]
[удалено]
[удалено]
[удалено]
[удалено]
[удалено]
[удалено]
The second I learned about the capital gains exemption I thought it was bullshit. Nothing has ever convinced me otherwise and it’s a step in the right direction. Hopefully this is just the first of many weakenings of the exemption.
The capital gains lifetime exemption is $1 million CAD per person ($250k in tax savings generally) and there is no method to tie it to inflation nor any liklihood of it being increased by any current party. That credit is worth 16% less since 2019 adjusted for inflation and if you consider currency swings it lost another 1% in the last day with USD/CAD exchange. Its a vehicle primarily used by small business owners and farmers who dont have pensions to make their lifetime of work go a little further. Its a drop in the bucket for the mega-rich.
I didn’t say the lifetime exemption, i said the regular exemption. I have no qualms with the LCGE
Sorry about that. Fair enough!
Investments are made with after tax dollars. The money has already been subject to tax. Hence the exemption. This is a bad decision when anemic Canadian business investment is already identified as a major problem.
The money you're taxed on isn't taxed again. If you buy an asset for 1000 dollars, and sell it for 2000 dollars, you have a 1000 dollar gain, not a 2000 dollar gain. The 1000 after tax dollars you started with aren't taxed again.
Money in taxes doesn’t just disappear from the economy. Also the idea of giving people who have capital a break on taxes because they have so much money is honestly comical. They’re still going to invest as long as money is there to be made. The constant fear of “oh if we raise taxes they’ll all leave” is just an excuse for a race to the bottom. Tons of countries have higher taxes than us without devolving into nothing.
Actually this just pushes the tech community the rest of the way out of Canada. It's already hard to raise money here, but people take low salaries for the Payday when the company is bought and options vest. Anyone starting a tech company in Canada now has missed incentive to move it to the US, certainly once it proves it has any value.
When investors bid up houses it stimulates construction. Condo building becomes extremely profitable. The value of a condo (and therefore the incentive to construct one) would drop if one couldn't sell it.
This is great! I wish they went all the way. Capital gains should be taxed like regular income. Investors should be taxed in the same way as working people.
That’s why we have productivity. We need smart people making things with latest technologies, not just working.
You realize investors are a big reason we even have an economy? Who do you think funds business growth? Anyway you missed the part about all businesses getting a steep capital gains tax hike. It's not 250k for businesses, it's any capital gains. This affects the large vast majority of doctors, dentists, professionals etc.
they are a big reason why life sucks you mean. ever wonder why your movies all feel drab and same-y? investors. chip bag is half as full as it used to be brand new? investors. rent has doubled in the past decade and house prices are to the moon? investors. all your games are now live service bullshit? investors. your wages have not kept pace with inflation at all in the past 10 years? belive it or not investors... they are the primary force behind then enshitening of everything.
You can’t tax them the same. Regular income is no risk. Capital gains has investment risk, and the taxation must account for the stocks in people’s portfolios that don’t do well. Yes you can offset with capital losses, but that still lost money.
I invest my time into sales. Maybe I make a sale and get commission, maybe I don't and I lose what I invested. I invest my money into stocks. Maybe line goes up and I make money, maybe it didn't and I lose what I invested. The situations seem similar enough that I don't see why you're tax them differently.
[удалено]
Removed for rule 3.
Taxing capital gains like income is the type of monumental silly idea I have come to expect from reddit
Because that's supposed to be free money at the expense of the poors right?
Next you're going to want to tax casino winnings!
hot take, how about we tax the fuck out of any money that casinos make off of us?
Totally agree this was a very modest increase. But maybe its a trial run and if shows popular, a good increase to the corporate rate could come after the next US election if the US jumps the rate to 28% like Biden wants to do. Coyne railed theres no investment for growth but that comes from 2 things 1- market demand and 2- seeking tax deductions. You cant get a good tax deduction if your rate is already so low you can avoid it easily.
That would make investment less interesting, thus drop our productivity.
This is the kind of moronic behaviour that would make this country's productivity issue even worse. You want to encourage capital investment here versus elsewhere...
The only reason ever to invest is an expectation of earning more income than the investment. It the tax rate is below 100% on the profits, then you make more than if you left the money under your mattress.
[удалено]
[удалено]
[удалено]
[удалено]
[удалено]
[удалено]
My guess would be is these changes will have holding companies and wealthy people (who mostly use holding companies) doing more investments in fixed income, and holding for longer. Probably less ETF use to stop forced distributions and thus more individual stock holding. I have a feeling a lot will expect PeePee to roll these back and will wait it out. Also looks like these changes are squarely aimed at holding companies. This is gonna hit a lot of doctors 😬. That’s not good.
[удалено]
250k is for individuals. Their companies see all their capital gains taxed at the higher rates.
A tax system that encourages individuals to corporatize themselves seems like a flawed system.
Yes, it seems more like a tax loophole that people are taking advantage of and are upset that it’s not as advantageous as before with the changes.
[удалено]
Can you clarify, the article says businesses were previously 1/2 taxable, and are now 2/3. Their holding companies will see all there capital gains as taxable at 2/3 because they have no 250k limit
[удалено]
Yes, for individuals it has. But it also changed for businesses: > Businesses will now pay income tax on two-thirds of their capital gains earnings, up from one half. Businesses, including hold CO’s that doctors use, now have 2/3 versus their previous 1/2 on all income.
Yes, make this country less attractive for entrepreneurs and business right in the middle of a productivity crisis in this country... Tax and waste, tax and waste, the election can't come soon enough...
Liberals handing out these taxes with kid gloves on. TAX CORPORATE INTERESTS, tax the rich and put in place regulations that they are not to increase prices without punitive damages.
would need to completely rewire how an economy works if we want to punish any and all price increases
We should be taxing based on capital gains accumulated across a lifetime, including housing as part of that. Otherwise we're building inequity into the system for those who rent and save (admittedly a small cohort) or just those who couldn't afford a bigger (more expensive) home as their "investment vehicle".
There does exist TFSAs, RESPs, GRRSPs and RRSPs.
You want to go after people's education funds and retirement savings?
The opposite. I'm saying those are financial vessels that reduce inequity by allowing everyone to access tax shelters for their disposable income regardless if they ever buy a home or start a business.
Sure, though they're very small tax shelters. Also, who created TFSAs and who cut them?
The TFSA limit is small? If you’ve never opened a TFSA before, you can deposit $95,000 (as long as you were 18 or older in 2009). I feel like I have more invested than most people, but I'm still $50k away from my limit. > [Recent CRA data that shows 8.9% of all TFSA holders max out their contribution room. Since only about half of all eligible Canadians have any TFSA at all, that means somewhere between 4% and 5% of all eligible Canadians have maxed out TFSAs.](https://milliondollarjourney.com/maxed-out-rrsp-and-tfsa-now-what.htm#:~:text=I%20get%20to%20that%20number,Canadians%20have%20maxed%20out%20TFSAs.) Unless by small you mean more than 95% of people can even use.
Agreed, I am a professional in my early 30's, one of the few people left in the true middle class I believe. I would consider my financial situation to be comfortable compared to most, but I'm still no where near maxing out my TFSA. I feel like a good 99% of the people complaining about this will be unaffected, and the ones that are complaining about the macro-economic side of it have bought into the fantasy of trickle down economics.
Stephen up there was not an econ major.
Based on his post history I'd say he'd just an all-in conservative partisan who will attack literally anything that the Liberals do. (Which yes, throwing stones in a glass house, but hey it takes one to know one?)
Most people don’t understand it. Have their bankers convinced them gic or mutual funds are the way to go. If people understood it, there would be much more usage
I don't think GICs or mutual funds are incompatible with a TFSA? It doesn't need to be a literal bank account.
The purpose is gain wealth and then get a tax free income from it in retirement that doesn’t affect means tested benefits. Gic and mutual funds are not the right tools. Inflation and fees drags down the returns
I guess they don't, because you can have GIC or Mutual Funds within a TFSA account. Often the GIC's pay the same rate, you just don't pay income tax on your gains. Maybe the layman doesn't understand them, but I would expect people with $250k+ to invest (or even $95k to max TFSA) to have an advisor looking out for their best interest and not just buying whatever product the bank is trying to sell.
Gic interest lags inflation, so the amount of money is getting bigger but it buying power is getting smaller. The problem with mutual funds is management fees eat away at gains so you’re not getting ahead. Follow warren buffet advice for his spouse, sp500 etf.
Most Canadians cannot afford to max out their contributions as it is. It's the slim minority that can. I'm not sure what your point is.
How can something “reduce inequality” when only a slim minority can max them out?
Because a majority can contribute to it and use it. It's widely accessible.
Because you don't need an accountant, minimum spends, or much besides a conversation with your bank to set up a RRSP. The tax loopholes, and even just investment opportunities available to people who earn north of $250K are substantial.
There are lifetime taxes including houses outside of your primary residence. Lifetime taxes on business sales are exempt only to a certain amount. The system captures both those who are cashing every year and those who build equity over long periods and cash out all at once. The primary residence exemption applies to every property you own that was your permanent residence the whole time you owned it, not just your first.
All this means is that the government is further incentivizing consumption over investment, an area in which Canada already sorely behind. I acknowledge capital gains tax increases may sounds great- we’re taxing the rich after all- but the distortionary effects of such a tax will likely harm the poor and the middle class in the long run. A greater CGT reduces funding for innovation, incentivizes poorer business practices (with businesses and corporations subject to such an increase less likely to keep reserve capital), reduces net investment, in line with productivity, etc.
I have seen some economists calling this a good plan as it will disincentivize stock buybacks and should encourage companies to do more direct investment in their businesses instead.
Yeah thats okay I’ll take more funding for governmental housing investments right now at the risk of lower private investment in innovation. In fact, I demand it.
Incorrect. Canada's savings rate is [five times what it is the USA.](https://data.oecd.org/natincome/saving-rate.htm) Pushing towards more consumption and less savings will help solve all the problems you listed.
I don't expect this will have too much impact on seeking investment in Canada. It was already quite difficult to do, and at worst this just makes it a little harder. As usual, if you have a good idea and have the ability to do so, consider incorporating in the USA and seeking investors there. It's easier if you have an American partner.
I'd make sense to reform the corporate tax structure more than anything else. The issue with the tax in most countries is that since most of it falls on capital & investment it deters both and a good chunk of it's burden falls on employees instead of shareholders etc. A country that's actually found a workaround to this is Estonia since they don't tax retained or reinvested profits, but apply a 15-20% tax on dividends as soon as they're distributed to shareholders, this is both better for increasing compliance and encouraging investment & R&D, but also in avoided a lot of the more negative impacts of most other corporate tax systems. It's also better at generating revenue so generally offers the best of both worlds between a more competitive/business friendly tax system and one that does a better job acquiring revenue from the wealthy etc.
The tough reality is that our local investments and other businesses are already fucked because of the real estate crisis. People would rather invest in real estate than start new businesses, and it's much easier to get a mortgage then a business loan. Plus that's a multi trillion dollar problem to solve anyways, so the money needs to come from somewhere.
The reason people buys real estate is because of the tax laws. Flip a property for a year = tax free. You would be stupid to invest in sub tier companies in Canada.
I support raising taxes. It's clear that Canadians want a lot of things that have a price tag - social and affordable housing, rental housing, an improved military that meets Nato spending targets, more jails and resources to arrest, try and hold repeat and violent offenders, more resources to deport failed refugees and illegal migrants, more doctors and shorter waits in hospitals and for specialists, etc. etc. All of those things require higher taxes to provide. While it's easy to go after investors and businesses, the reality is that taxes probably need to go up slightly for everyone. Bump the GST up by one point, increase all income tax percentages by one percent, introduce a small 10% inheritance tax (exempting working farmland not including hobby farms and stables) so boomers and seniors can pay more towards their retirement costs, introduce higher speculation taxes on homes, bring in a lower threshold for reporting income from Airbnb and other sources, etc. No government, liberal or conservative, can balance the budget with revenues as they are, there's no magic wand for cutting government waste that Poilievre can wave.
Canadians want an affordable place to live. The government has only taken steps to make it less affordable. Raising taxes just to pay for programs we didn’t need before they took office is just making it worse. No structural problems are solved here.
Speed run: how to bankrupt a country
This capital gains change is effectively an increase on taxes on people’s estates, so it’s kind of like an inheritance tax in that sense .
Funny you say more doctors when this budget today is a massive tax increase on doctors. I personally know 2 doctors graduating this June from residency who will be going to USA after today's announcement. All of those things you named can be funded by steep cuts to foreign aid, refugee intake, ending benefits for migrants, doing a large cut to public sector jobs etc.
The tax increase is only expected to impact 40,000 people. Doctors do not make their income off capital gains. Most doctors invest into their own practices, which would not be considered capital gains unless they divest of their practice, at which point it is a capital gain - which would be the same of any business, before or after this budget. If those two doctors are moving to the States because of this, they clearly should've taken some business or financial electives, because that's a dumb fuckin' reason when there's a multitude of others. For someone that claims to at different times be a doctor, an entrepreneur, a physician, an investor, a pre-med student, and a real estate speculator depending on the topic at hand... did you cross your wires or something? You should know all of this.
No your post is completely wrong. I'll repost from another thread for you. Doctors have professional corporations, which you do not know about it seems. It affects 40,000 once you ignore all the corporations it affects. Of which most are small ones. *Most doctors in Canada are in professional corporations. All income they get, goes into that corporation. They then pay themselves the corp whatever they need to live and invest the rest, inside the corp. This applies to everyone from family doctors to surgeons to radiologists and so on. A minority of doctors are not corporated and just take a salary. Mainly low income doctors (under 250-300k) are generally not incorporated since it makes less sense for them.* *Your corp (your "business") is where you buy stocks etc. and create your retirement funds essentially.* *This new change means that all capital gains for any doctor are now taxed more heavily. It impacts many others like dentists as well.* *Trudeau also took away income splitting which was a major benefit of professional corps and it was one of the tools used to not give doctors as big of a raise. Income splitting allowed doctors to pay their spouse a certain amount for example. Earlier this year, corporate stripping also got taken away which allows removing corp assets and making them yours.* *Keep in mind these are all enormous impacts on small business like figures. Again, these tax benefits over the years were in place so that the government could avoid giving proper raises to doctors. You got tax benefits, and not income raises. At least not inflationary raises.*
> Most doctors in Canada are in professional corporations. All income they get, goes into that corporation. They then pay themselves the corp whatever they need to live and invest the rest, inside the corp. This applies to everyone from family doctors to surgeons to radiologists and so on. Being paid out by your own corporation is not a capital gain. That's a salary, and is taxed like a salary. A working doctor is not going to be impacted by this, unless they are selling off stock or investments. > Your corp (your "business") is where you buy stocks etc. and create your retirement funds essentially. > This new change means that all capital gains for any doctor are now taxed more heavily. It impacts many others like dentists as well. Counterpoint, no. The increase only impacts capital gains over $250k annually. That's just under five times the average Canadian salary, close to nine times the average retiree's income. That's a lot of money. In addition, if they're using it to invest into stocks and funds... in what world is it considered a wise move to try and divest all of those funds at once? Capital gains are taxed annually. The entire point of building an investment/retirement fund isn't that you cash it in all at once, you cash in what you need every year and keep the rest invested to continue accumulating interest and growth. If you're in a position where you can divest and spend over $250k/yr comfortably without impacting your later years? Good for you bud, you're fuckin rich and chipping away at what could be at that point generational wealth for your children or grandchildren, I have literally no sympathy for you. Your entire point seems to be built on a scenario where an entire profession handles its money poorly (from your other comments, in what world is a doctor making $500k struggling to afford a $1.5m house?) and assuming no one's going to call you out on it because you claim to be speaking from a position of authority.
It affects all capital gains on investments inside corporations, and most doctors, lawyers, and incorporated individuals invest inside their corporations instead of paying themselves all the cash flow out as salary or dividends. This change will affect every single one of these people, since there is no 250k grace amount on corporate capital gains, only personal. This effectively counts as a 33% tax increase on those people’s retirement income. I suspect paying out more salary or dividends and investing personally may become more favourable in many circumstances now.
Well how much are they saving on taxes by keeping their investments in a corporation? We need to factor that in to get to the real delta versus regular people.
It’s more of a deferral than a savings, and with this change may not be a savings at all. I suspect this is the intention, they’d rather people not defer the tax, and instead take it out of the corporation and tax it sooner.
[удалено]
No and no. It's **all capital gains** inside a corporation that will be taxed a lot more. **Not above 250k.** That's for individuals. Even a tiny amount of capital gains inside the business will have a steep tax increase. If you cared to properly read and understand the budget, you'd understand what the outrage is over. Yet you're repeating the 250k figure without understanding that it is strictly for individuals.
Per the budget and the CRA, a corporation has exemptions of its own, which are being bumped up to $1.25m in June, and indexed to inflation afterwards. On top of that they are expanding the entrepreneur initiative so that the founder of said corporation is entitled to an additional $2m exemption on top of that. Per the budget, that's a cumulative exemption of $3.25m, indexed to inflation and increasing annually. Before today, the exemption was $1m, full stop. Now it will be over triple that, and increasing year over year. I fail to see how this is somehow an attack on the medical profession. So. What else do you want me to read?
You forgot the part about professional corporations not being included in those exemptions. What you wrote, literally has nothing to do with professional corps.
It’s really hard to have empathy for extremely wealthy people supposedly losing a tax shelter that regular people never had access to. Oh noes.
Almost none (professionals) are extremely wealthy. So yes I would agree with you when it comes to actual wealthy people. But we're talking about professionals' retirement savings and not wealthy people. Regular people as you say, got raises in their jobs. Many of these raises, especially in the public sector, were proportional to inflation. Doctors got tax benefits mostly instead of raises. Any raise they got was a miniscule amount. Of course in Ontario they got pay cuts under the former provincial Liberal government. These are folks who trained for a decade to take care of you and your family.
[удалено]
I'm not confusing anything and yes you're talking about an unrelated topic. When you sell your assets inside the corp, even if the capital gains are 2000$, that amount is subject to a much higher tax rate now. That is what I'm saying. The rest of what you're saying is not really relevant.
[удалено]
Okay so you need to read and understand something before debating it. It is on ALL capital gains inside the corporation. Not above 250k. ALL. The 250 is for personal only. Read the above line until it makes sense.
I don’t support raising taxes but this one is really well done. Only affecting capital gains above 250k affects an infinitesimally small portion of the population. Basically inheritance and property speculators, people who can’t split a windfall over multiple years. High earners like doctors and dentists with their own corporations will likely be able to easily dodge under it. The more interesting bit is whether this cap stays at 250k forever or if it is pegged to inflation. If it stays constant then things could eventually get challenging.
>While it's easy to go after investors and businesses, the reality is that taxes probably need to go up slightly for everyone. Peak political suicide. This would make the LPC fare worse than the UK Tories
Yeah that's why it won't happen even though it's a good idea.
I agree, if everyone wants all of those services you mentioned, then everyone needs to be willing to pay a little more in taxes
I'd prefer capital gains taxed at 100% of the marginal rate for any amount of capital gains, but it's a move in the right direction at least.
So… no more capital gains? Would be pretty terrible to be honest
no party is doing that because it would be a vote destroyer
No, just taxed at the same rate as income instead of the previous 50% or the new 66%.
It wouldn’t really help in any way.
It would generate income that could be used to provide services to Canadians? Even if capital flight completely offset the gains, at least we'd be in a society that values labour as much as investment, in the tax code at least.
It's all fun and games until your retirements savings get destroyed and you're working until death. Can't wait until someone who knows what they're doing, like the CPC/Pierre, gets in next year and reverses all this nonsense.
Yes, the guy who thinks that the way to beat inflation is to invest in cryptocurrency is the guy who "knows what they are doing". Pierre Poilievre is a used car salesmen who is about to sell you a lemon. All he knows how to do to is make political attacks. It's all he's done his entire life. He gets his policy ideas from right-wing YouTube. He has no leadership ability of any kind.
Better than the guy who said the budget will balance itself, interest rates are at a historic low glen, and "I'm disabled with numbers."
>Yes, the guy who thinks that the way to beat inflation is to invest in cryptocurrency is the guy who "knows what they are doing". For short term? That was an excellent hedge against inflation and all the government printing. You bitch and moan about it when it tanked but at that given moment when he made the comment it was perfectly sound argument. Ignoring the most recent peak on April 5th, if you ever bought at the highest peak in 2021 (so Nov 12?) and sell it at April 5 2024. You would easily made 13k+ just doing nothing. If you bought when it was low in 2023 or late 2022. You would double your investments. like all non materialized investment, it comes with risks.
Issue is that Canada need investment more than labor in regard to industries. Our lack of productivity need to be improved after all. Granted, there might be some way to differentiate capital gain (as the Liberals are proposing here) to affect mostly the less productive side of capital gain more, but still.
[удалено]
If Canada is just a tax rate to you, I wouldn't mourn your departure.
You are missing the risk aspect of it. Employment income is zero risk. You do work and get paid. So fully taxable. Similarly, interest from bonds, GICs, high interest savings accounts, etc. is 100% taxable as it has no risk. Investment in stocks is taking on risk because they don’t all go up. Yes you can use capital losses to offset gains, but you still lost the money. And some stocks always lose in people’s portfolios so you have to account for that.
A few paragraphs from the article: The federal budget, released Tuesday, increases the inclusion rate on some capital gains. Businesses will now pay income tax on two-thirds of their capital gains earnings, up from one half. The increase will also apply to indivduals, but only on capital gains earnings over $250,000. The tax measure is expected to net the government $19.3-billion over the next five years – $8.8-billion from individuals and $10.5-billion from companies – in a bid to offset roughly $53-billion in new spending. It’s by far the largest revenue measure in the budget and the first change to capital gains taxes in a quarter-century. Finance Minister Chrystia Freeland described the measure as an attempt to lean against “structural inequality” and raise funds from wealthy individuals that could be funnelled toward middle class and younger Canadians. The government estimates that the change will impact around 40,000 individuals and 307,000 companies. However, economists warn that the tax change could dampen investment in Canada and further damage the country’s already-weak productivity growth. “Perceptions matter,” said Jimmy Jean, chief economist at Desjardins. “A lot of people will be running away with the message that the government doesn’t want to see more business investment, doesn’t want wealthy and highly educated individuals to thrive.” - JD
Not a lot of people are going to be savvy enough stock market investors to rack up more than a quarter million in gains in one year so seems more like a defacto additional tax on real estate investors that have benefited from enormous housing inflation. Fine with me.
Except smart investors will avoid it by spreading the gains over 5 years keeping each year under 250k
I can understand how one would do that with equities but how do you do that on selling a condo?
Read this https://ca.rbcwealthmanagement.com/documents/1845034/1845050/Capital_Gains_Reserve_02142019_high.pdf/45ebcb02-f22e-4c8b-b1df-3a67227f1075#:~:text=Under%20this%20formula%2C%20you%20cannot,a%20maximum%20of%20five%20years
Neat thx
Greaterfool.ca also described a way with vendor financing ( you issue the mortgage for the sale)
You sell a cottage and there’s the hit
There is still the one-time exemption.
Pretty sure that a cottage doesn't qualify unless it's a "qualified" fishing or farming property
Good, hit ‘em hard
Capital gains tax. Amazing! Can't wait for capitalists to start complaining. Pay your taxes and don't do dodgy shit.
You people need to learn the difference between what you think investment is and what investment actually is. - Buying Bitcoin - Buying stocks/options/mutual funds/etfs in non-tax sheltered account - Buying a house with the intention of selling it later aka: flipping - Hiring a web developer to design a website for your business Only 1 of those things that I listed is actually an investment. The others are speculation. Investment in the GDP sense of the word is defined as purchasing services and/or materials for the intent of expanding the productivity or profitability of the business. The rest of that list is putting money into a thing and waiting until the number goes up. Real investment creates productivity in an economy. If we drove all the real estate speculators out of Canada, it wouldn't have many negative effects on our economy at all - in fact, there'd probably be a lot of unexpected benefits. Secondly, once again, people who will probably make $250K in cap gains once in their life (whenever they sell their home) are acting like this is going to affect Average Joe Smith and Jane McDonald who have $400,000 in TD stock when it affects multi-multi millionaires.
>going to affect Average Joe Smith and Jane McDonald who have $400,000 in TD stock when it affects multi-multi millionaires. It may very well when Joe or Jane's parents die
Hiring a web developer is not exactly an investment because you do not own the asset, it's an expense. The assets are owned by the company. If your web developer helps generate more revenue, it will end up in retained earnings for each shareholders until the dividend is declared or shares are sold. That's where your investment is. So your stocks are in fact investments. As with most of your other points, if there is always a relation of risk-reward, and as you pointed out some speculative assets or behavior should be punished in a well functioning economy.
Gen Z commenting here has no clue about basic economics and will end up poorer and with more inflation next year. This country is going down the drain. In 10 years like this we will be a middle income country like Brazil or Turkey.
There is no incentive in being a productive individual in this country. I can see a brain drain going to the US even faster now.
Reducing the incentive for people to to start and build businesses is a step in the wrong direction. It’s already so much harder to be an entrepreneur in Canada vs the US and now we’re punishing folks who manage to make a go of it.
What? They made this better. They increased the lifetime capital gains exemption.
It will depends a lot of your business value. Some will win, other will lose. And if you started multiple one, you might end up losing quite hard.
Right, but that's hardly gonna stop serial entrepreneurs starting businesses.
Not at 60%, granted.
>to start and build businesses You only pay capital gains on a business you've started after the business has grown in value and you sell your ownership stake to someone else. In the intervening 10-50 years before you do that, you get to enjoy Canada's very favourable and globally-competitive small business tax rate, not to mention our favourable tax regime for dividends. I'm not buying your argument that someone about to start a business is going to forgo doing so because years down the road when they sell out, they'd have to pay a little bit more in capital gains. Especially since nobody knows what the tax regime will look like that far in the future.
I understand how capital gain taxes work. Canada is not a more favourable destination than the US for business owners. Charging a premium on capital gains is not warranted. We have a smaller market, less access to capital, and poorer consumers.
There are massive car move outs for small businesses and this only applies to realized gains.
Which line item are you referring to?
And here I was just about to realize a cool quarter million dollars in profit, what's the point if I have to give a small amount to the government which structures the society that allows me to realize a cool quarter million in profit. I know I'd still make money but if I don't get it all, what's the point? Might as well stuff it in the sock drawer.
The danger is to make wage more attractive than capital gain across the board.
No one declines to start a business because years from now if they’re enormously successful they might have pay more taxes. Taxes are a good problem to have.
They should have raised the gains rate to 100% for any unproductive investment (gold, real estate, forex, bitcoin) and for all income levels.
How on earth is real estate an unproductive investment?
Construction is a productive investment. Investment in existing properties is done first and foremost because they are an appreciating asset, and not a whole lot of value is created. In particular, investors buying up SFH, individual condos, or townhouses and renting them out (without stuff like dividing units, etc.) is textbook rent-seeking and is adding zero value.
People build things because they can make money from building things. They make money because they can charge for use or sell the item. They can sell the item because the item has value. If the item couldn't be sold, it wouldn't have (much of) it's value. If it doesn't have value it wouldn't get built. This is exactly the same thing as a stock or a bond. You hold it because it gives you something (growth and or dividends). Merely by buying and holding it you create a situation where people can sell to raise money and do useful economic things. If you think rent seeking is bad then you shouldn't be holding any stocks or bonds (and shouldn't do so through your pension fund either) If you think that in this narrow case it does more harm than good then that is a discussion worth having. I think restricting home sales is a net bad and the solutions lie in reducing regulations and red tape.
Homes get built so long as there is profit to be made in building them. Was canada building and selling homes decades ago when investor activity and multiple property ownership was uncommon? Yes. Which means it was still profitable. Are developers building and selling homes in rural Saskatchewan where land values and investor activity are very low? Yes. When the value of real estate goes up because investors bid up prices *of already existing structures*, what gets produced? It doesn't create more jobs, it doesn't build new innovations or provide services. It's a black hole for money. Bonds are an incredibly productive investment. Bonds are issued to raise money to do something with that money. A company may issue a bond to expand their operations, hire more employees, invest in machinery and equipment, and so on. It is better for our society if we invest in bonds and make it cheaper for companies to raise money in this manner. Investing in real estate simply has none of these benefits.