Federal government has delayed its multibillion-dollar plan to raise the capital gains tax to January 1, 2026.
Initially announced in the April 2024 budget with a start date of June 25, 2024, the proposal remained in limbo after Parliament failed to pass the required legislation.
Prime Minister Justin Trudeau’s decision to prorogue Parliament earlier this year further stalled the legislation.
In a news release on Friday, Finance Minister Dominic LeBlanc said the Liberal government will introduce legislation “in due course” to implement the new timeline.
“Given the current context, our government felt that it was the responsible thing to do,” said LeBlanc in a statement.
“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.”
According to the federal budget, the increase to the capital gains inclusion rate would have raised $19.4 billion for Ottawa and an additional $11.6 billion for the provinces and territories over five years.
An election is scheduled for no later than October, though a spring election is most likely.
Trudeau prorogued Parliament until March 9 to allow the Liberal Party to select a new leader.
The House of Commons is set to resume on March 24.
Conservative Leader Pierre Poilievre, whose party leads in the polls, has pledged to scrap the tax hike if he forms a government.
Former finance minister Chrystia Freeland, who first introduced the increase and is now a Liberal leadership race candidate, recently promised to abandon the policy should she become prime minister.
Renaud Brossard, Vice-President of Communications at the Montreal Economic Institute, welcomed the federal government’s decision.
"Taxes shouldn't be levied without getting legislative approval, and the Minister of Finance is right to hit pause on the capital gains tax hike," said Brossard.
"Now, we're turning our attention to Quebec, where the provincial portion of this investment-killing tax hike has yet to be reversed by the Legault government."
“Taxpayers across Canada forced the Trudeau government to back down from enforcing this illegal and undemocratic capital gains tax hike this year, but the fight will continue until the policy is scrapped completely,” said Franco Terrazzano, Federal Director of Canadian Taxpayers Federation.
“This is a huge win for taxpayers who stood up and fought back against a tax grab that would illegally take billions of dollars from Canadians. Now the fight will continue until the capital gains tax hike is permanently scrapped.”
A capital gain is the profit earned when an individual or business sells an asset, such as stocks or property.
The proposed change would raise the percentage of capital gains subject to income tax, resulting in higher tax bills for some Canadians.