The proposed hike of the capital gains inclusion rate, controversial among Canadian farmers, has been cancelled.
Prime Minister Mark Carney announced Friday he would terminate the measure, which many producers cited as one of their top concerns for the 2025 election.
The government will also maintain the increase in the Lifetime Capital Gains Exemption limit to $1,250,000 on the sale of small business shares and farming and fishing property, according to a news release.
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The government is also pledging it will “introduce legislation affecting the increase in the Lifetime Capital Gains Exemption limit in due course.”
“Canada is a country of builders,” said Carney in the release. “Cancelling the hike in capital gains tax will catalyze investment across our communities and incentivize builders, innovators, and entrepreneurs to grow their businesses in Canada, creating more higher paying jobs.”
Many commodity groups in Canada have formally criticized the capital gains tax, specifically the changes to the inclusion rate.
In June, Grain Growers of Canada (GGC) Executive Director Kyle Larkin called on the government “to exempt intergenerational transfers and allow them to be taxed at the original capital gains inclusion rate” after GGC research “revealed that the capital gains inclusion rate changes will increase taxes by 30 per cent on family-run grain farms.”
The Canadian Federation of Agriculture (CFA) said the change would have a negative impact on farm succession planning.
Acoalition led by the Canadian Canola Growers Association (CCGA) Canadian Cattle Association (CCA) and GGC called on the government to “reverse its decision to administer the proposed capital gains inclusion rate legislation.”
