Canadian Tax Agency Will Collect New Taxes That Haven’t Become Law Yet
Liberal government needs the additional money to cover the deficit
(via The Daily Bell)
In the Canadian federal budget this past April, the Trudeau Liberals introduced a new capital gains inclusion rate, hiking it from 50% to 66% (to be clear, this doesn’t make the amount of taxes paid on capital gains 66%, it raises the taxable amount of a capital gain to the new level).
For example: let’s say that a sale on a small business produces a capital gain of one million dollars – instead of having your tax rate applied against half of it, it would henceforth be applied against two-thirds of it.
So in our hypothetical case, a small business owner sells a company they spent their life building and gets a million bucks (after allowable exemptions) off the table:
Under the old rate = $1,000,000 X 50% inclusion rate X 53% (top tax rate in Canada) = $265,000 in taxes.
Under the new rate it comes out to $349,000 in taxes.
It’s enough of a difference to change the retirement calculations for a lot of people and I do remember a flurry of M&A activity as some Canadian business owners and property investors decided this was their cue to realize their sweat equity before the new rate kicked in (which was supposedly in June).
For many it was the final straw from the most small business, family business and farm hostile government in Canadian history.
Posts
No comments:
Post a Comment