# New Article

## The Impact of Potential Changes to Capital Gains Tax

Last week’s prorogation of Parliament has put a halt to the potential increase in the capital gains tax, which was set to be effective from June 25, 2024. However, the uncertainty remains as the possibility of the tax increase being resurrected still looms. The Canada Revenue Agency (CRA) has announced that they will be administering the changes to the capital gains tax effective June 25, 2024, leading to varied reactions from different taxpayers.

### Who May be Affected?

– **The Investor**: Individuals like Joel, living in Alberta, may or may not be affected depending on the amount of their gains post-June 24, 2024.

– **The Doctor**: Professionals like Jeff, a physician in Ontario, may see a significant impact as their professional corporation faces capital gains tax at the new two-thirds inclusion rate.

– **The Chalet Owner**: Individuals like Laurie from British Columbia, who recently sold a property, may face additional tax on their gains based on the new inclusion rate.

### Monetary Trade-Off: To Pay or Not to Pay?

The recent guidance from the CRA suggests taxpayers pay their capital gains tax based on the new inclusion rate to avoid any potential non-deductible arrears interest. However, waiting to see if the legislation ultimately gets passed may result in interest being charged. It becomes a risk-reward scenario where taxpayers need to weigh their options carefully.

### FAQ

**Q: Should taxpayers pay their capital gains tax based on the new inclusion rate now or wait?**
A: The CRA advises paying the tax now to avoid non-deductible arrears interest in case the legislation gets passed retroactively.

**Q: How will professionals running businesses through corporations be affected by the new inclusion rate?**
A: Professionals like doctors running businesses through corporations may face higher tax rates on capital gains, affecting their overall tax liability.

**Q: What happens if taxpayers choose to wait and see if the legislation gets passed before paying their tax?**
A: Waiting could result in interest being charged, posing a risk as taxpayers may have to pay additional fees.

### Conclusion

The uncertainty surrounding the potential changes to the capital gains tax has put taxpayers in a dilemma. While the CRA advises paying the tax based on the new inclusion rate, taxpayers need to evaluate the financial trade-off and make an informed decision. The impact of these changes can vary based on individual circumstances, and seeking advice from a financial advisor may be beneficial to navigate through the complexities of the tax system.

This article sheds light on who may be affected by the changes and the monetary implications of choosing whether or not to follow the CRA’s guidance amidst the tax uncertainty.

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For more financial insights and updates, you can contact Jamie Golombek, the managing director of Tax & Estate Planning at CIBC Private Wealth in Toronto, at [[email protected]](mailto:[email protected]).

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#### FAQ Section

**Q: Can the potential increase in capital gains tax be resurrected in the future?**
A: Yes, there is a possibility that the tax increase could be resurrected retroactively, depending on the political landscape.

**Q: How can taxpayers minimize the impact of the tax uncertainty on their financial situation?**
A: Seeking advice from financial advisors and staying informed about changes in tax laws can help taxpayers make informed decisions.

**Q: What is the CRA’s guidance regarding the payment of capital gains tax amidst the uncertainty?**
A: The CRA recommends paying the tax based on the new inclusion rate to avoid potential non-deductible arrears interest.

#### Conclusion

The potential changes to the capital gains tax highlight the importance of staying informed and making strategic financial decisions to navigate through uncertain times. It is crucial for taxpayers to assess their individual circumstances and seek professional advice to make sound financial choices.