Taxpayers caught off guard by changes to capital gains rules that were never formally enacted by Parliament will have no choice but to seek resolution through the courts, according to parliamentary records.Blacklock's Reporter says despite the lack of formal legislation, the Canada Revenue Agency (CRA) announced it will enforce a higher inclusion rate for capital gains effective March 3, and will begin collecting interest on unpaid taxes based on the new rate.“It is up to the courts to determine whether state authorities or the public have complied with the legislation as it exists,” testified Philippe Dufresne, then-Law Clerk to the House of Commons, during a 2021 parliamentary hearing. “If a concern to that effect were to be raised before the courts, the courts would have to address that issue.”The CRA’s move stems from a Ways and Means Motion passed in the House of Commons on June 11, 2021. The motion proposed increasing the inclusion rate on capital gains from 50% to 66%, generating $17.4 billion in additional revenue. However, no tax bill to implement the change was ever introduced or passed into law.“For all taxpayers, the new inclusion rate will apply,” the CRA stated in a routine notice issued yesterday, even as critics questioned the legality of enforcing an unlegislated measure.Conservative MP Larry Maguire (Brandon-Souris, Man.) raised concerns over the implications of such actions. “What happens if the government provisionally collects a tax that ultimately never becomes law due to Parliament amending the bill or the bill never passing?” he asked.Dufresne acknowledged the uncertainty. “These are questions that ultimately can end up before the courts,” he said, emphasizing that taxpayers could only seek redress through legal action if the measures were not eventually enacted.The practice of enforcing tax measures before formal enactment is not unprecedented. Dufresne noted that governments often implement proposed changes “administratively” through the CRA while awaiting legislative approval, a process contingent on Parliament ultimately passing the measures.“House of Commons Procedure And Practice summarizes this practice as follows: ‘It is the longstanding practice of Canadian governments to put tax measures into effect as soon as the Notice of the Ways and Means Motion on which they are based is tabled in the House of Commons,’” Dufresne testified.The controversy over enforcing unpassed measures has sparked criticism from MPs. “The current government could announce what it wants, such as making tax changes, and afterwards aggrieved people would have to go to court,” said Conservative MP Luc Berthold (Mégantic-L’Érable, Que.).Bloc Québécois leader Yves-François Blanchet condemned such practices during a 2021 dispute over another tax measure. “A minority government cannot use a twisted ploy to circumvent the will of Parliament,” Blanchet said, calling the situation “unheard of.”
Taxpayers caught off guard by changes to capital gains rules that were never formally enacted by Parliament will have no choice but to seek resolution through the courts, according to parliamentary records.Blacklock's Reporter says despite the lack of formal legislation, the Canada Revenue Agency (CRA) announced it will enforce a higher inclusion rate for capital gains effective March 3, and will begin collecting interest on unpaid taxes based on the new rate.“It is up to the courts to determine whether state authorities or the public have complied with the legislation as it exists,” testified Philippe Dufresne, then-Law Clerk to the House of Commons, during a 2021 parliamentary hearing. “If a concern to that effect were to be raised before the courts, the courts would have to address that issue.”The CRA’s move stems from a Ways and Means Motion passed in the House of Commons on June 11, 2021. The motion proposed increasing the inclusion rate on capital gains from 50% to 66%, generating $17.4 billion in additional revenue. However, no tax bill to implement the change was ever introduced or passed into law.“For all taxpayers, the new inclusion rate will apply,” the CRA stated in a routine notice issued yesterday, even as critics questioned the legality of enforcing an unlegislated measure.Conservative MP Larry Maguire (Brandon-Souris, Man.) raised concerns over the implications of such actions. “What happens if the government provisionally collects a tax that ultimately never becomes law due to Parliament amending the bill or the bill never passing?” he asked.Dufresne acknowledged the uncertainty. “These are questions that ultimately can end up before the courts,” he said, emphasizing that taxpayers could only seek redress through legal action if the measures were not eventually enacted.The practice of enforcing tax measures before formal enactment is not unprecedented. Dufresne noted that governments often implement proposed changes “administratively” through the CRA while awaiting legislative approval, a process contingent on Parliament ultimately passing the measures.“House of Commons Procedure And Practice summarizes this practice as follows: ‘It is the longstanding practice of Canadian governments to put tax measures into effect as soon as the Notice of the Ways and Means Motion on which they are based is tabled in the House of Commons,’” Dufresne testified.The controversy over enforcing unpassed measures has sparked criticism from MPs. “The current government could announce what it wants, such as making tax changes, and afterwards aggrieved people would have to go to court,” said Conservative MP Luc Berthold (Mégantic-L’Érable, Que.).Bloc Québécois leader Yves-François Blanchet condemned such practices during a 2021 dispute over another tax measure. “A minority government cannot use a twisted ploy to circumvent the will of Parliament,” Blanchet said, calling the situation “unheard of.”
