Capital Gains Corporate Tax Rate Increasing in Canada

Effective January 1, 2022

Government Announces Changes to Boost Revenue and Reduce Deficit

The Canadian government has announced an increase in the capital gains tax rate for corporations and trusts, effective January 1, 2022. The rate will increase from 50% to 67% on the realized capital gain, which is the difference between the sale price and the cost of the asset. The change is expected to raise an additional $5 billion in revenue over the next five years.

The government stated that the increase is necessary to boost revenue and reduce the deficit. However, some businesses are concerned that the move will discourage investment and growth. The Canadian Chamber of Commerce has expressed its concern, calling the increase a "tax on investment."

The new rate will apply to all corporations and trusts, regardless of their size or industry. It is important for businesses to be aware of this change and to adjust their financial planning accordingly.