As announced in our prior publication, Government Announces Deferral of Changes to Capital Gains Inclusion Rate, the Honourable Dominic LeBlanc, Minister of Finance and Intergovernmental Affairs, announced that the federal government is deferring the date on which the capital gains inclusion rate would increase from one-half to two-thirds on capital gains realized. It was previously set to change on June 24, 2024 but the legislation to implement the change did not become law. The government announced the new proposed effective date is January 1, 2026. There is still uncertainty as to whether these changes will ever be enacted.
The CRA announced on January 31, 2025, it will revert to administering the currently enacted one-half inclusion rate because of the announcement by Mr. LeBlanc. Furthermore, the CRA also announced interest and penalty relief to provide additional time for taxpayers reporting capital dispositions to meet their tax filing obligations. The CRA will grant relief in respect of late-filing penalties and arrears interest until June 2, 2025, for impacted T1 Individual filers and until May 1, 2025, for impacted T3 Trust filers. The relief appears to only apply to taxpayers that report capital dispositions and is not applicable to individual and trust filers who do not.
For corporate taxpayers who filed with the two-thirds inclusion rate, the CRA will coordinate corrective reassessments to reverse the application of the higher inclusion rate.
