C.D. Howe report projects the higher inclusion rate will collect around $3.3-billion in additional personal income tax revenue over the next five years, considerably smaller than estimate
Deputy Prime Minister and Minister of Finance Chrystia Freeland speaks about changes to the capital-gains tax inclusion rate, during a news conference on Parliament Hill in Ottawa on June 10.Changes in capital-gains taxation will bring in billions of dollars less in revenue than the federal government is forecasting, a new C.D. Howe Institute report predicts.that are taxed from one-half to two-thirds for companies, and for individuals on annual gains over $250,000.
Projecting tax revenue from capital gains is difficult. Gains are realized, and taxed, when individuals or companies sell assets – decisions that can be influenced by market conditions, asset price changes and economic cycles. He said his projection, which is based on a Statistics Canada model, may be relying on more conservative baseline assumptions about the quantity of capital gains realized in a normal year, and how individuals respond to tax changes.
Revenue generation isn’t the only point of debate surrounding the capital gains tax change. There are also questions about who will be hit.The budget said only around 0.13 per cent of Canadians have capital gains above $250,000 in any given year – the implication being that the change will only touch a tiny minority of the wealthiest individuals.
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