The Canada Revenue Agency is under scrutiny for enforcing a $17.4 billion increase in capital gains taxes despite the measure never passing through Parliament.
Blacklock's Reporter says the controversy stems from an agency manager’s assertion that auditors will “continue to administer the proposed legislation” as though it is already law.
“We are looking into this,” said CRA spokesperson Benoit Sabourin when asked for clarification. “We will keep you up to date.”
The proposed tax hike, outlined in the April 16 federal budget, would increase the taxable portion of capital gains from 50% to 66%. While the House of Commons passed a required Ways and Means Motion on June 11, no subsequent legislation was introduced or approved to make the increase law.
The change was intended to take effect on June 25, but Parliament dissolved before any bill was tabled.
Despite the absence of legislation, the Canadian Federation of Independent Business reported that CRA auditors are acting as if the higher rate applies.
Nina Ioussoupova, a senior project officer with the agency, was quoted as saying the 66% inclusion rate would still be administered even if an election intervenes.
“This makes no sense at all,” said Dan Kelly, CEO of the Federation.
“Legislation has not even been introduced but the Canada Revenue Agency put the new rules into effect as of June 25. The agency is saying even an election will not cause it to go back to the 50% inclusion rate.”
Kelly called for clarity, arguing that “there needs to be a time limit for a government to put legislation in place to raise taxes.” He urged the government to withdraw the proposal and allow political parties to debate the issue during the upcoming election campaign.
The situation has raised concerns about the CRA’s authority to enforce tax measures without parliamentary approval.
“Parliament is supreme,” said former Liberal MP Wayne Easter in a 2021 debate on tax enforcement. “Parliament is above cabinet, it is above the Department of Finance. We can’t allow that to be undermined.”
The proposed tax increase was part of a broader plan to help address Canada’s growing deficit. According to the December 16 Fall Economic Statement, the federal deficit is already 21% over target, rising from $39.8 billion to $48.3 billion.