More Taxes on Capital Gains in Canada in 2024 | Hacker News Reader

More Taxes on Capital Gains in Canada in 2024

theglobeandmail.com

16 pointsEhsanEtezad6 comments

Can anyone from Canada comment if the "would come into effect on June 25, 2024" would apply on the date of sale of the stock, or on the date of purchase.

If it is the former, then wouldn't that trigger some sell-offs in big gainers?

If it is the latter, the the effect would seem much more muted, and not as immediate.

I haven't read the actual bill, but from the news reports it's the former. Right now the inclusion rate is 50%; which more or less means capital gains are effectively taxed at about 27%. On June 25th, 2024 the inclusion rate will be 66% for an effective capital gain taxation rate of around 35%.

Either way, this is a big 'ouch' for the fat cats who hold stocks (probably all of them). Moreover, these 1-percenters tend to disproportionately hold higher amounts -- so 10% (very rough guess) of the shares in a typical company could be under this new regime (if it is passed). Result:

1. Bail after law passes, but before the effective date;

2. Hold, and sell, in multi-year allotments so as to stay under the 250,000 triggering criteria (drips and drabs strategy).

If it was me (I'm not a Canadian citizen), I would sell half my holdings (as a fat cat) ahead of the effective date, and pay the lowered taxes early. I'm sure there are tax pros who have a few other tricks up their sleeves to minimize the 'hits' in future years.

Full disclosure: I'm an American holding a CA stock.

You have until June 25 to decide if you’d like to take the massive sell off route.

Further, capital gains deductions before June 25 remain at 50% but selling after June 25 is taxed at 66%

There is more to it though, the rate from 100,000 to 250,000 remains at 50% even after June 25 and only amounts over 250,000 will have an effective rate of 66% after June 25

So, a big short term gift to tax preparation and tax planning industries.

Most people won’t worry about this, as selling your principal home in Canada is capital gains exempt… as long as you don’t try and game that system by doing multiple transactions in less than 1 year, or the CRA deems you to be “in the business of”.

The bigger problem with this budget is the 40 billion dollar deficit (which is surely larger but employs many tricks to get it to the “modest” 40 billion). Some quick stats

Canada will pay more in interest payments alone than it spends on health care

Canada will pay more in interest payments alone than it collects from the GST (Canadian VAT tax / sales tax on everything).

I'm extremely miffed. Mulling leaving the country at some point in the near future, and that triggers a much higher tax bill (considered a deemed disposition). There is just no way to get ahead in this place.

I just realized that link has a paywall if it's your second time on the website - here is another coverage of the same news: https://globalnews.ca/news/10427688/capital-gains-tax-change...

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