Calling for clarity on capital gains
The Joint Committee on Taxation of the Canadian Bar Association and Chartered Professional Accountants of Canada is urging the federal government to clarify when—or even whether—the proposed capital gains changes will take effect.
In a nutshell
Canadian taxpayers—individuals and corporations—face significant uncertainty as they approach tax filing and payment deadlines. To ensure fairness, the federal government must confirm that any new capital gains provisions will apply only after the relevant legislation is enacted, rather than retroactively.
The January 6, 2025, prorogation of Parliament has heightened concerns within the tax community. Although the capital gains proposals outlined in the 2024 federal budget have not yet been tabled as a bill, both the Canada Revenue Agency (CRA) and the Department of Finance have indicated they intend to proceed as though the proposals have already been enacted.
According to the Joint Committee on Taxation, this is standard practice with respect to proposed legislation with retroactive effect. However, in this case, there is no guarantee that the proposals will become law. “This uncertainty is unlikely to be resolved prior to the time at which many taxpayers will be required to pay tax and/or file tax returns for their 2024 taxation years,” the submission reads.
This leaves taxpayers with having to choose between exposing themselves to interest later if they file according to current rules or paying more now and potentially over pay if the capital gains proposals are not enacted. Neither is optimal and may result in the public losing confidence in the tax system.
The Joint Committee on Taxation urges the government to clarify that, should the capital gains proposals be enacted, they will only apply to gains realized after the relevant bill is introduced in Parliament.
Read the submission.
