The recent announcement that Prime Minister Justin Trudeau is stepping down as Liberal Party leader and proroguing (delaying return of) Parliament until March 24, 2025, has left many legislative measures in limbo—including the capital gains tax changes as proposed in the 2024 Federal Budget.
The prorogation may effectively defeat all unfinished legislative measures, raising questions about whether these tax changes will ultimately be enacted. Notwithstanding such legislative uncertainty, the Canada Revenue Agency (CRA) has confirmed it will proceed with implementing the proposed capital gains tax changes unless the Federal government explicitly abandons them when Parliament resumes.
What Happens to the Proposed Capital Gains Tax Changes?
Since these proposals were tabled through a Notice of Ways and Means Motion prior to the proroguing of parliament, the CRA has the authority to enforce taxation proposals as soon as they are introduced through such Motion.
What This Means:
- CRA will proceed as if the capital gains tax changes are in force, issuing taxpayer forms that reflect the new rules by January 31, 2025.
- If the new government signals a reversal, CRA will halt implementation and adjust accordingly.
Final Thoughts: Uncertainty, but Caution is Advised
With Parliament prorogued, tax measures from 2024, including the Fall Economic Statement, remain uncertain, making 2025 tax planning more complex for business owners and investors. Until there is more legislative certainty concerning the taxation of capital gains, multiple approaches can be considered and consulting a tax advisor in instances of significant 2024 capital gains is highly advisable.
At Bateman MacKay LLP, we share the frustration of taxpayers following years of last-minute changes and uncertainty in the Canadian tax landscape, highlighted by the UHT and Trust Return regimes. We will continue to closely monitor these developments and can help you navigate the evolving tax landscape. If you have questions about these updates or any other tax issues, contact a Bateman MacKay Business Advisor. Subscribe to our blog and follow us on LinkedIn for additional updates on tax, accounting and business advisory matters.
