By Canadian Press

Business groups walk back claim on share of Canadians hit by capital gains changes

May 9, 2024 | 12:08 PM

OTTAWA — Prominent business groups are backtracking their claim that one in five Canadians would be affected by the federal government’s proposed changes to capital gains taxation.

In a letter sent to Finance Minister Chrystia Freeland today, the Canadian Chamber of Commerce and other groups said the government’s assertion that only the wealthiest Canadians will be affected was misleading.

The group claimed one in five Canadians would end up paying higher taxes over the next decade — but the study from which that figure was taken suggests otherwise.

The 2023 study by Simon Fraser University’s Jonathan Kesselman estimates one in five Canadians would be affected over a 10-year period if the inclusion rate was increased on all capital gains.

But the federal budget only increases the inclusion rate on capital gains above $250,000, which means a much smaller fraction of Canadians would end up paying higher taxes.

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After The Canadian Press reached out with questions about the figure, the chamber of commerce changed the letter on its website to read that one in five companies would be directly affected.

The joint letter from the Canadian Chamber of Commerce and other industry associations calls on the Liberal government to scrap the tax increase.

The federal budget presented last month proposes making two-thirds rather than one-half of capital gains — or profit made on the sale of assets — taxable.

The increase in the so-called inclusion rate would apply to capital gains above $250,000 for individuals, and all capital gains realized by corporations.

The federal government estimates that in any given year, 0.13 per cent of Canadians would pay higher taxes on their capital gains.

This report by The Canadian Press was first published May 9, 2024.

Nojoud Al Mallees, The Canadian Press