A controversial increase to the capital gains inclusion rate is now in effect despite strong pushback from small businesses, farmers and medical professionals.
Starting Tuesday, individuals with capital gains of more than $250,000 will be subject to an inclusion rate of 67 per cent, up from 50 per cent before. For corporations, all capital gains are now subject to the two-thirds inclusion rate.
The federal government says the move will improve tax fairness and increase federal revenues by $19.4 billion over five years, with a bulk of that money flowing into federal coffers this year. Budget 2024 shows the change to the inclusion rate will bring in an estimated $6.9 billion dollars this fiscal year.
The tax change applies to profits made from the sale of secondary properties or investments, including stocks or bonds and family cottages. The new inclusion rate does not change the tax rate itself, which will continue to be an individual or corporation’s marginal rate, but increases the taxable portion of that gain.
“Do you want to live in a country where we make the investments we need — in health care, in housing, in old age pensions — but we lack the political will to pay for them, and choose instead to pass a ballooning debt onto our children?” Finance Minister and Deputy Prime Minister Chrystia Freeland asked in Toronto earlier this month.
EY Canada tax policy leader Fred O’Riordan says the government appears to be using this tax change to keep the federal deficit below $40 billion.
“Instead of doing (it) immediately effective Budget Day, which is why most of them are done, they gave that window of time a couple of months until June 25,” O’Riordan said. “A lot of us believe that the main reason they did that was to encourage people to crystallize, to realize capital gains earlier than they might otherwise and then bring additional tax revenue into this fiscal year.”
Law firms and other corporations who regularly handle capital gains say that since the measures were announced in Budget 2024, clients have rushed to realize their gains before the changes took effect on June 25.
“I have heard from some Canadians who are concerned,” Freeland said in Toronto earlier this month. “No one likes paying more tax, even those who can afford it the most.”
But while the Liberals contend this increase will only impact 0.13 per cent of Canadians with capital gains income, an array of groups from small businesses to medical professional and farmers have called for immediate changes.
“Politically speaking, you would think there would be some room for manoeuvring, but they haven’t budged at all and you’ve got to think that it’s because they really want the revenue,” O’Riordan said.
Details about the change were included in what is called a “Notice of Ways and Means Motion” that was approved by the House before it rose in June. The legislative details of the tax change are expected to be released later this summer, with the bill itself voted on when Parliament returns in the fall.
Although the change is now in effect, O’Riordan believes the government still has time to make carve-outs.
“They really painted themselves in a corner but who knows,” he said. “There’s still wiggle room there if they want to change their mind.”
Farmers say increase ‘targets’ them
Last week, a survey released by the Canadian Federation of Independent Business (CFIB) found that half of all small-business owners in Canada will be affected by the change and another 45 per cent said the tax would affect the investments they hold privately.
One of the loudest groups of small businesses pushing the federal government to reverse course are farmers who say family-owned farms across Canada will be negatively affected.
Günter Jochum’s family owns and operates a wheat farm just outside Winnipeg and calls the change “appalling,” He says the increase will make it harder to transfer the family farm to his daughter, Fiona, when she’s ready to take over.
While farmers do have to pay capital gains on the profits from the sale of their farmland, a portion of the property considered by the Canada Revenue Agency to be a primary residence is excluded.
“My parents are still drawing from the farm. I myself draw from the farm,” he said. “These changes will just mean that there is more of a tax burden now and it will make it more difficult for my daughter to maintain the farm and be able to satisfy all three households.”
Jochum, who is also president of the Wheat Growers Association, said the tax change makes farming less attractive and could result in more farms being sold outright instead of passed on to the next generation.
“I get what they’re trying to do; they’re trying to hit the really big corporations who make multibillion dollars,” Jochum said. “That’s not farmers who are small businesses, and we somehow get lumped into that and that is very dangerous.”
The government recently increased the Lifetime Capital Gains Exemption (LCGE) that allows tax-free capital gains up to a new $1.25 million on the sale of a qualified property. Prior to June 25, the LCGE limit for small business shares, farms and fishing properties was $1.016 million.
While that cumulative lifetime exemption is helpful, Jochum argues it is simply not enough. Jochum says his accountant advised him that despite programs like the LCGE meant to help farmers, he should expect to pay about 30 per cent more on the eventual sale of his farm.
“You want to stick everything into your business to build it up and take it to where it is today,” Jochum said, adding he has chosen to invest in his farm rather than into an RRSP. “For the government to come along and tap into my retirement, and say, ‘Yeah, we want to tax your retirement 30 per cent more,’ is really offensive.”
Doctors ‘disappointed’ with tax hike
Medical professionals have also joined the chorus of voices calling for change. Most family doctors are considered corporations for tax purposes and will now be subject to the higher inclusion rate.
Canadian Medical Association president Dr. Joss Reimer says she is “disappointed” the government made no exceptions for family doctors. Unlike individuals, the higher inclusion rate affects all capital gains earned by corporations. Reimer fears that difference will impact the bottom line of many family practices and could make physicians less likely to enter or stay in family practice.
“We know that there are so many Canadians who already don’t have access to a health-care provider,” she said. “Anything that’s going to cause any of our physicians to consider not doing family medicine or to decrease their hours is really concerning.”
Reimer says she is hopeful the government will engage in conversations with members of the medical community over the summer. One solution, she says, is allowing family physicians to use their personal $250,000 annual exemption for their corporation.
“Then we would still be taxed just like everybody else, but it treats us more like the individuals that we are,” she said. “We’re not the same as the big companies who have their shareholders … We’re just trying to save for our retirements, from maternity leave or sick leave, all of those things that physicians aren’t usually eligible to get.”
New measures for entrepreneurs
The government’s ways and means motion also includes a new Canadian Entrepreneurs’ Incentive that was promised in the spring budget.
This measure will reduce the inclusion rate to 33 per cent on a lifetime maximum of $2 million on eligible capital gains. The limit will start with $200,000 in 2025 and increase by that amount every year until it reaches the $2-million threshold in 2034.
Entrepreneurs may also use the total lifetime capital gains exemption of $1.25 million, resulting in a combined exemption of at least $3.25 million.
What is not changing
The measures coming into effect today will not impact capital gains on tax-sheltered savings that are currently exempt.
This includes:
Capital gains from selling a principal residence
Income earned in tax-sheltered savings accounts, like tax-free savings accounts (TFSA), First Home Savings Account (FHSA), registered retirement savings plan (RRSP) or registered education savings plan (RESP)
Pension income or capital gains earned by registered pension plans
The first $250,000 earned in capital gains will continue to be subject to the 50 per cent inclusion rate for individuals.
SAINT PAUL, Minn. – Joel Eriksson Ek scored two goals and added three assists as the Minnesota Wild grounded the Winnipeg Jets 8-5 in NHL pre-season action on Friday.
Kirikk Kaprizov had two power-play goals for the Wild, who scored seven goals in the second period to break open a tight game.
Ben Jones, Mats Zuccarello, Liam Ohgren and Marat Khusnutdinov also scored for the Wild who got a 36-save performance from netminder Marc-Andre Fleury. Thirteen players had at least one point for the Wild in the lopsided win.
Cole Perfetti, Mason Appleton, Nikita Chibrikov, Brayden Yager and Morgan Barron scored for the Jets, who had two power-play goals.
The teams were tied 1-1 after the first period and the Wild took an 8-2 lead into the final frame.
Connor Hellebuyck allowed eight goals in two periods of play, stopping 21 of 29 shots. Thomas Milic stopped all six shots he faced in the final period.
UP NEXT
Jets: Host the Calgary Flames on Wednesday.
Wild: Host the Dallas Stars on Sunday.
This report by The Canadian Press was first published Sept. 27, 2024.
WINNIPEG – Zach Collaros threw a career-high six touchdown passes to ignite the Winnipeg Blue Bombers in a 55-27 victory over the Edmonton Elks that extended their win streak to seven games and clinched a playoff spot for the eighth consecutive season.
Winnipeg’s first four series of the game resulted in TD catches by Nic Demski, Keric Wheatfall and Brady Oliveira, plus a field goal by Sergio Castillo.
The explosion of points had the team’s third straight sellout crowd of 32,243 at Princess Auto Stadium cheering wildly as the CFL West Division-leading Blue Bombers improved to 9-6.
The Elks dropped to 5-10 and have a flicker of a chance to still make the CFL playoffs.
Collaros completed 21 of 26 pass attempts for a season-high 432 yards with the six touchdowns and no interceptions. His career best for passing in a game is 439 yards.
Edmonton quarterback McLeod Bethel-Thompson, who got the start ahead of Tre Ford, had a tough night against Winnipeg’s stifling defence. He was 19-of-34 passing for 223 yards with three TDs and no picks.
Winnipeg led 17-0 after the first quarter, 34-6 at halftime and 41-20 heading into the fourth.
Demski had a pair of TD receptions for 40 and 11 yards, while Kenny Lawler added two majors with catches of six and seven yards.
Lawler finished with a game high of 130 yards off eight catches and Demski had four receptions for 117 yards.
Wheatfall took a pass and turned it into a 61-yard major and Oliveira grabbed a short toss and deked and dashed 33 yards into the end zone.
Winnipeg defensive end TyJuan Garbutt scooped up a fumbled Edmonton pass attempt and ran 62 yards for a TD.
Castillo connected on field goals from 39 and 33 yards and made seven converts.
Edmonton kicker Boris Bede booted an 18-yard field goal at 10:10 of the second quarter to get the visitors on the board. He added a 24-yarder as time expired on the first half and made three converts.
Eugene Lewis, Tevin Jones and Dillon Mitchell each had TD catches for the Elks.
Edmonton’s fortunes turned early.
On Winnipeg’s first series of the game, Lawler fumbled a catch the Elks recovered but a review deemed Lawler had been down by contact.
Three plays later, Collaros fired the ball to Demski in the end zone at 3:04 and Castillo hit the convert to begin spinning the numbers on the scoreboard.
Edmonton’s first four possessions ended with three punts and a turnover on downs.
Collaros used the turnover for a TD pass to Wheatfall and 17-0 lead at 12:49 of the first quarter.
At that point in the game, Bethel-Thompson had completed one of three passes for nine yards. Collaros was 6-of-7 for 143 yards.
Oliveira made his run to the end zone at 1:09 of the second quarter, followed by Garbutt’s fumble-recovery TD at 6:45 to make it 31-0.
Three field goals ended the first half.
Lewis, Lawler and Jones provided three touchdowns for the third-quarter scoring that cut Winnipeg’s lead to 41-20.
Demski added his second TD of the game 23 seconds into the fourth, followed by Lawler’s stretching grab in the end zone at 7:06 to boost the lead 55-20.
Mitchell recorded his 37-yard TD catch as time expired.
UP NEXT
Elks: Host the Saskatchewan Roughriders on Saturday, Oct. 5.
Blue Bombers: Visit the Hamilton Tiger-Cats on Friday.
This report by The Canadian Press was first published Sept. 27, 2024.
TORONTO – Xavier Edwards made franchise history on Friday by becoming the first Miami Marlins player to record three triples in a single game. His achievement helped the Marlins crush the fading Toronto Blue Jays 15-5 at Rogers Centre.
Edwards emerged as Miami’s hero early in this contest, smacking his first triple in the second inning and finishing the contest 3-for-5 with four RBIs. In addition to setting a franchise record, the 25-year-old became the first Major League Baseball player with three triples in a single game since 2014.
“It’s definitely cool to get an opportunity to run at full speed and get to open it up,” Edwards said of his impressive evening.
The Marlins (60-100) broke through early, plating three runs in the first inning off Jays’ starter Jose Berríos. Miami built some heavy momentum and never slowed down, recording 17 hits.
Jonah Bride was also an integral part of the Marlins victory. The Marlins infielder hit two homers, his 10th and 11th of the season, and drove in three RBIs to secure Miami’s lead.
The Blue Jays (74-86) came up short in their 12-hit effort, which included Ernie Clement’s solo homer in the fourth inning, his 12th of the season. Vladimir Guerrero Jr. added two singles and an RBI, bringing him one hit shy of 200 on the season, while Alejandro Kirk extended his hitting streak to 18 games.
“We didn’t pitch well at all,” said Blue Jays manager John Schneider. “I think effort and compete — that was there. (We’ll) move on to tomorrow.”
Berríos (16-11) took the loss, allowing six earned runs on six hits in just three innings of work, marking his shortest start of the season. The right-hander also struck out four batters and yielded three walks.
“Frustrating that that’s his last outing for the year,” said Schneider, summarizing Berríos’ season. “But I think, looking at his overall body of work, he should be really proud of the things that he did on and off the field.”
The Marlins quickly extended their lead in the second inning as Otto Lopez singled, Kyle Stowers walked, and Nick Fortes advanced the runners with a sacrifice bunt. Edwards capped off the Marlins rally with a two-run triple off Berríos.
The Blue Jays responded against Marlins starter Adam Oller (2-4) in the bottom of the third, as Nathan Lukes doubled off the right-field wall, scoring Leo Jiménez from second. Spencer Horwitz singled up the middle, driving in George Springer and Lukes two batters later.
Oller earned the win for the Marlins, pitching five innings and allowing four earned runs on eight hits while striking out three.
The Marlins poured it on with five runs in the seventh inning. Griffin Conine homered, Edwards picked up his third triple of the night, and Jake Burger, after driving in a run earlier, doubled for his team-leading 76th RBI of the season.
The Rogers Centre roof opened an hour before first pitch, revealing cloudy skies. Announced attendance was 31,597, and the game lasted three hours, seven minutes.
SCHUMAKER LEAVES THE TEAM
Midway through Friday’s game, the Marlins announced manager Skip Schumaker would miss the remaining two games of the season due to a family medical issue. Bench coach Luis Urueta will manage in Schumaker’s place.
MARLINS MAKE A MOVE
Before the game, Miami placed reliever Declan Cronin (3-4) on the 15-day injured list with left knee patellar tendinitis and activated right-hander Mike Baumann (3-1) from the paternity list.
ROTATION SHUFFLE
Blue Jays starter Chris Bassitt (10-14) will not pitch in Sunday’s series finale against the Marlins, Schneider announced Friday. With the Jays eliminated from playoff contention, the Jays skipper said he prefers to rest Bassitt and let other pitchers see some action.
UP COMING
The Blue Jays send right-hander Yariel Rodríguez (1-7) to the hill for the second leg of this three-game series on Saturday. The Marlins have not yet announced a starting pitcher for Saturday.
This report by The Canadian Press was first published Sept. 27, 2024.
