A law firm is seeking to prevent the Canada Revenue Agency from implementing a proposed capital gains tax increase before it is approved by Parliament.
A law firm acting on behalf of a British Columbia company is seeking an injunction to prevent the Canada Revenue Agency from implementing a proposed capital gains tax increase that has yet to be approved by Parliament. Thorsteinssons LLP filed a challenge in Federal Court last week on behalf of Pelco Holdings Inc., aiming to stop the government agency from enforcing the change as if it were already in effect.
The proposal, outlined in the Liberal's spring budget, seeks to raise the portion of capital gains subject to taxation for companies from one-half to two-thirds. This policy would also apply to individuals with capital gains earnings exceeding $250,000. While the rule change has not yet been passed by Parliament, which is currently prorogued until March 24, the CRA has stated that it must proceed as if the change will take effect unless Parliament reconvenes and the government explicitly announces its intention to withdraw the proposal. Instead of complying with the proposed change, the law firm argues that its client, Pelco Holdings, wants the Federal Court to mandate the CRA to administer the tax law as it currently stands, which taxes capital gains at an inclusion rate of one-half. Pelco Holdings asserts that deviating from the existing inclusion rate could leave taxpayers in a precarious situation, as they would be forced to choose between adhering to the current law or complying with the revenue agency's interpretation.
CAPITAL GAINS TAX CANADA REVENUE AGENCY INJUNCTION PELCO HOLDINGS INC. THORSSTEINSONS LLP
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