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ARTICLE · 15 JANUARY 2025

Capital Gains Confusion: The Reporting Conundrum For Investment Funds

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In the 2024 Federal Budget, the Government announced its intention to increase the capital gains inclusion rate in respect of capital gains arising on or after June 25, 2024...

CanadaTax
Michael Friedman
Michael Friedman
Adam Slinn
Adam Slinn
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In the 2024 Federal Budget, the Government announced its intention to increase the capital gains inclusion rate in respect of capital gains arising on or after June 25, 2024 (the "Capital Gains Changes"). Proposed amendments to the Income Tax Act (Canada) (the "Tax Act") were included in a Notice of Ways and Means Motion that was brought before Parliament on September 23, 2024 (the "September NWMM"). However, Parliament was recently prorogued, which has cast the future of the Capital Gains Changes in doubt.

Although the Capital Gains Changes have not been enacted into law, the Canada Revenue Agency (the "CRA") has asserted that it will administer the Tax Act on the assumption that the Capital Gains Changes will ultimately be enacted with retroactive effect. The CRA justifies its position on the basis that the Capital Gains Changes were included in the September NWMM, and the Government has not signaled an intention to abandon the proposed amendments.

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The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

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