Writeoff News is Back, and Capital Gains Aren’t Changing!

Big news: the capital gains inclusion rate is staying put! At least for now.

If you’re like most people, you probably heard whispers that the federal government was gearing up to increase it from 50% to 66.67% for individuals with over $250,000 in gains, and even more broadly for corporations and trusts. In other words, a lot of unsuspecting people would end up paying more, way more. There was a date. There was panic. And then… silence.

Turns out, they’re hitting pause on the change. The inclusion rate is still 50%, and for the moment, the tax world can exhale.

We’ll get into the details in a second, but first - yeah, I’ve been quiet!

The plan wasn’t to ghost you. Tax season got loud, and like any good (or some might even say, great) accountant, I disappeared into spreadsheets, buried under a small mountain of T-slips, client questions, and… Tariffs.

Writeoff took a short nap, but we’re back now, just in time for the final sprint to the filing deadline.

If you’ve already filed, congrats! You’ve officially made it through another year of decoding the Canadian tax system. If not, this is your sign to lock in. There’s still time, but we’re closer to the end than the beginning. Now’s the moment to make sure you’re claiming everything you’re eligible for — RRSPs, first-time home buyer credits, child care, moving expenses, student loan interest. All the good stuff that gets buried under the stress of just “getting it done.”

Now, back to the headline.

Earlier this year, the government floated a major change: bumping the capital gains inclusion rate to 66.67% for individuals with large gains and all gains inside corporations. The idea was to bring in more revenue and reduce the advantage of capital income over regular income. In theory, this could have had big implications for investors, business owners, and anyone thinking of selling assets after June 25, 2024. What many didn’t realize is the sheer impact of this on everyday folks.

Canadians selling their small businesses to retire could’ve found that their original retirement plans no longer lined up. Others inheriting cottages or assets from loved ones would’ve found that they’d need to sell the assets to cover the increased tax bill.

The Canadian tax world braced for impact.

But the execution? Not great. The CRA had to delay releasing some forms. Tax software developers didn’t have guidance. Clients were asking questions that nobody could answer. And accountants? We were left refreshing CRA bulletins and hoping for clarity that never came.

Then came the walk-back. Not a cancellation, just a delay, but enough to settle the noise for now. The inclusion rate remains at 50%, and there’s no immediate change coming into effect this filing season.

Here’s my take: this is 100% the right call.

Not because the original idea was wrong. There’s a valid policy conversation to be had about how capital gains are taxed, and whether the system is fair (up or down). But that conversation needs time, clarity, and consistency. Dropping a massive change in the middle of tax season with no infrastructure in place? That’s not good governance. That’s how you create confusion and undermine trust in the system.

People don’t plan well in chaos. And taxes are already complicated enough!

For now, we’ve got breathing room. Business owners can strategize without scrambling. Investors can make decisions with certainty. And the rest of us can focus on the returns in front of us without wondering if CRA is going to patch a new rule mid-April.

Looking ahead, I’m kicking off a new series that I’ve been meaning to do for a while. I’ve seen a lot of confusion this tax season, and so we're going to start breaking down some of the most misunderstood pieces of the Canadian tax puzzle. The kind of stuff that shows up on your pay stub or in your deductions and makes you go, “Wait, what even is this?”

Things like:

• How EI really works, and what it gets you in return

• What CPP contributions are actually building toward

• Why some people owe at tax time even though their employer “took enough off”

• What tax brackets really mean, and why earning more doesn’t mean you “lose money”

If you’ve ever felt like the tax system was built on inside jokes no one explained to you, this series is for you.

Glad to be back. Let’s finish the season strong.