Shocking Reversal: Canada’s 66.7% Capital Gains Tax Scrapped!

What This Means for Investors and Taxpayers in 2025

Canada’s proposed 66.7% capital gains tax rate has been a rollercoaster of anticipation, debate, and eventual cancellation, leaving investors and taxpayers scrambling to understand its implications. Initially set to reshape how capital gains are taxed across the nation, this policy shift promised to increase the taxable portion of profits from asset sales, only to be abruptly abandoned in a stunning turn of events. For those searching for clarity on “when did Canada’s 66.7% capital gains tax start” or “latest updates on Canada capital gains tax 2025,” this article dives deep into the timeline, political twists, and financial impacts of this now-defunct proposal, ensuring you have all the details to navigate your tax planning with confidence.

Understanding Capital Gains Tax in Canada

Capital gains tax applies to profits earned from selling assets like stocks, real estate, or other investments. In Canada, only a portion of these gains, known as the inclusion rate, is added to an individual’s taxable income. Historically, this rate sat at 50%, meaning half of any capital gain was subject to personal income tax rates. This system has long been a cornerstone of Canada’s tax framework, balancing revenue generation with incentives for investment. However, the 2024 federal budget shook things up by proposing a hike to 66.7% for certain earners, sparking widespread discussion about fairness, economic growth, and wealth distribution. For anyone researching “how does capital gains tax work in Canada,” this policy shift was poised to redefine the landscape until its unexpected cancellation.

The idea behind the increase was to target high earners and corporations, ensuring they paid a larger share on profits exceeding $250,000 annually for individuals. Businesses and trusts faced an even broader application, with the 66.7% rate slated to hit all their capital gains. Announced on April 16, 2024, by the Department of Finance, this move aimed to address disparities where a nurse earning $700,000 might face a 29.7% marginal tax rate, while a wealthy investor realizing $1 million in capital gains paid just 26.8%. The proposal, dubbed “Tax Fairness for Every Generation,” sought to level the playing field, but it quickly became a lightning rod for controversy.

The Rise and Fall of the 66.7% Capital Gains Tax Rate

The journey of the 66.7% capital gains tax rate began with its unveiling in the 2024 budget, setting an initial start date of June 25, 2024. This timeline gave taxpayers mere months to adjust, prompting a flurry of asset sales as investors rushed to lock in gains under the existing 50% inclusion rate. On June 10, 2024, the government doubled down, releasing draft legislation under the banner “Fair and Predictable Capital Gains Taxation,” reaffirming its commitment despite growing pushback from industry leaders and small business owners. For those tracking “Canada capital gains tax changes 2024,” this moment marked the peak of anticipation.

Yet, cracks soon appeared. Political pressure mounted as critics argued the hike would stifle investment, hurt economic growth, and disproportionately burden entrepreneurs. By January 7, 2025, the Canada Revenue Agency signaled intent to push forward despite parliamentary gridlock, hinting at a possible delay to January 1, 2026. Confusion reigned as reports swirled about shifting timelines, with some suggesting the policy’s fate hung in the balance. Then, on March 21, 2025, a bombshell dropped: Prime Minister Mark Carney’s office announced the complete cancellation of the 66.7% rate hike. The decision, covered by Reuters under “Canada cancels controversial capital gains tax increase,” reverted the inclusion rate to 50%, effective immediately and applicable to 2024 tax filings due by April 30, 2025. For those Googling “is the 66.7% capital gains tax still happening in Canada,” the answer is a resounding no.

This reversal stemmed from a mix of public outcry, declining Liberal Party support, and economic concerns. Business groups like the Canadian Federation of Independent Business had warned of job losses and reduced competitiveness, while investors feared a chilling effect on markets. The about-face left the 50% inclusion rate intact, offering relief to those bracing for a heftier tax bill and underscoring the volatility of tax policy in a politically charged climate.

Timeline of Events: Key Dates in the Capital Gains Tax Saga

To fully grasp “when was the 66.7% capital gains tax supposed to start,” a clear timeline is essential. Below is a detailed table capturing the pivotal moments in this policy’s rise and fall, optimized for those seeking “Canada capital gains tax timeline 2024-2025.”

Date	Event	Outcome/Impact
April 16, 2024	2024 Federal Budget Announced	66.7% rate proposed, June 25 start date
June 10, 2024	Draft Legislation Released	Policy reaffirmed, debate intensifies
January 7, 2025	CRA Signals Intent to Proceed	Uncertainty grows over delays
March 21 2025	Policy Cancellation Announced	50% rate retained, relief for taxpayers

This table highlights the rapid shifts that kept taxpayers on edge, from the initial proposal to its ultimate demise. Each twist fueled online searches like “latest Canada capital gains tax news,” reflecting widespread anxiety and the need for real-time updates.

Separate Tax Relief: Lifetime Exemption Boost

Amid the capital gains tax upheaval, a lesser-known but significant change took root. Effective June 25, 2024, the Lifetime Capital Gains Exemption for small business shares, farming, and fishing properties rose from $1,016,836 to $1,250,000. This adjustment, detailed by Crowe MacKay in “Understanding the 2024 Capital Gains Inclusion Rate Adjustments,” offers a lifeline to middle-class entrepreneurs unaffected by the 66.7% saga. For those exploring “Canada lifetime capital gains exemption 2025,” this increase provides a tax-free buffer on qualifying asset sales, softening the blow of broader policy uncertainty. It’s a rare win in a tumultuous year, ensuring some stability for small business owners navigating “capital gains tax rules for Canadian entrepreneurs.”

What This Means for Your 2025 Tax Planning

With the 66.7% rate off the table, the current 50% inclusion rate governs 2024 capital gains, reported in your 2025 tax filing. This stability simplifies planning for investors and businesses alike, avoiding the chaos of last-minute adjustments. However, the saga’s legacy lingers: the pre-June 2024 rush to sell assets spiked market activity, a trend noted by TurboTax Canada in “Capital Gains Tax Updates in 2025.” For those asking “how will capital gains tax affect me in Canada 2025,” the answer hinges on your income bracket and asset portfolio, but the scrapped hike removes a major variable.

The cancellation also reflects broader lessons about tax policy unpredictability. Political winds, public sentiment, and economic forecasts can upend even the most detailed proposals, as seen in this case. Investors searching “best strategies to minimize capital gains tax Canada” can now focus on existing tools like tax-loss harvesting or leveraging the enhanced lifetime exemption, rather than bracing for a seismic shift. Still, staying informed remains critical, as future budgets could revisit this contentious issue.

The Bigger Picture: Fairness vs. Economic Impact

The 66.7% proposal wasn’t just about numbers; it was a battle over principles. Proponents argued it would fund social programs and reduce inequality, as outlined in the Department of Finance’s “Tax Fairness for Every Generation.” Critics, however, saw it as a growth-killer, with the Canadian Federation of Independent Business warning of “capital gains tax impact on small businesses in Canada.” The cancellation suggests economic pragmatism won out, but the debate lingers. For those digging into “why was the Canada capital gains tax increase canceled,” it’s a mix of political survival and market realities, a story that will shape tax discussions for years.

This deep dive into Canada’s capital gains tax rollercoaster offers everything you need to understand its past, present, and future implications. Whether you’re an investor, business owner, or curious taxpayer, the scrapped 66.7% rate marks a pivotal moment in Canada’s fiscal history, one that underscores the power of public voice and the fragility of policy ambition. Stay tuned to trusted sources like Canada.ca and TurboTax Canada for the latest twists in this ever-evolving narrative.

Key Citations

• Tax Fairness for Every Generation - Canada.ca
• Fair and Predictable Capital Gains Taxation - Canada.ca
• Capital Gains Changes | CFIB
• What does the capital gains inclusion rate change mean for you? | Doane Grant Thornton
• Canada cancels controversial capital gains tax increase | Reuters
• Capital Gains Tax Updates in 2025 | TurboTax® Canada Tips
• Understanding the 2024 Capital Gains Inclusion Rate Adjustments | Crowe MacKay