Capital gains tax enforcement sparks controversy amid Parliament prorogation

The Canada Revenue Agency's plan to proceed with controversial capital gains tax changes despite Parliament's prorogation has started a heated debate about taxation authority and the democratic process.

The Finance Department (FD) confirmed that the Canada Revenue Agency (CRA) would start collecting the proposed changes that would increase the taxable portion of capital gains for companies from one-half to two-thirds. 

The policy would also affect individuals with capital gains earnings exceeding $250,000.

According to the FD, it can collect taxation proposals as soon as the government tables a notice of ways and means motion, which occurred in September. 

The CRA intends to issue taxpayer forms reflecting these new rules by January 31, even though Parliament remains prorogued until March 24 following Prime Minister Justin Trudeau's resignation announcement.

However, the Canadian Taxpayers Federation (CTF) strongly opposes this approach. 

CTF General Counsel and Atlantic Director Devin Drover argues that the enforcement of tax increases should require proper legislative approval through Parliament, not merely administrative decisions by government agencies.

“The CRA is trying to enforce a tax increase without it ever becoming law,” said Drover. 

“Taxation should only be based on laws duly passed by elected representatives and not assumptions by unelected, unaccountable bureaucrats.”

The FD said that the CRA would cease administering the policy if Parliament resumes and the government signals it will abandon the proposed changes. 

This situation has become more complex given that both Conservative and NDP parties have said they will take down the Liberal government at the first opportunity, potentially affecting the legislation's future.

The controversy highlights a broader tension between administrative efficiency and democratic oversight in Canadian tax policy. 

While the government maintains its approach follows established convention, critics argue it circumvents proper parliamentary process during a period of political uncertainty.