As of February 1, 2025, the Canadian government’s planned changes to the capital gains tax are on hold. Originally introduced in Budget 2024, the proposal aimed to raise the inclusion rate from 50% to 67%—but only for individuals with over $250,000 in annual capital gains, as well as all corporate and trust gains. The changes were initially set to take effect on June 25, 2024, but have now been pushed back to January 1, 2026.
What is the Capital Gains Tax?
Capital gains tax is what you pay when you sell an asset—like stocks, rental properties, or a business—for more than you bought it for. In Canada, only part of that profit is taxed. Right now (2025), 50% of the gain is added to your taxable income, but the government has proposed raising that to 67% for big gains over $250K and for businesses. The actual tax you owe depends on your income, since it’s taxed at your regular rate.
Why the Delay?
The Canadian government has pushed back the capital gains tax changes to January 1, 2026, mainly due to political roadblocks. The plan was to raise the taxable portion of capital gains from 50% to 67% for businesses and individuals with over $250,000 in gains, but it faced pushback from various sectors worried it might scare off investors. On top of that, with Prime Minister Trudeau stepping down and Parliament being put off, the process to pass these changes has stalled. As a result, the CRA hasn’t given any new guidance, and tax experts are advising people to stay prepared for possible increases while keeping an eye on further updates.
“Given the current context, our government felt that it was the responsible thing to do,” LeBlanc said in a press release. “I look forward to further conversations with Canadians on how we can ensure Canada’s fiscal policy encourages robust and sustained economic activity in every region of our country.”
Liberal Party leadership candidate Chrystia Freeland, who introduced the policy as federal finance minister, recently said she would nix the capital gains tax hike if elected.
Conclusion:
The delay in the capital gains tax changes is a win for people in real estate. It gives them extra time to sell properties before the tax hike kicks in. If they were planning to sell and make a big profit, the current tax rules (where only 50% of the gain is taxed) still apply until the end of 2025. This means they’ve got a few more years to avoid the proposed increase to 67%, which could lead to a higher tax bill. Basically, it’s more time to sell at a lower tax rate before the changes happen.
