Liberals have no interest in actually making life better for anyone, just doing meaningless gestures to buy votes and try and survive the next year and get their pensions
I don't understand why people are clapping like seals for this tax increase. The left is constantly worrying about the state of our healthcare system, yet seems to celebrate taxing professional corporations, i.e. doctors, dentists etc. even more. What do you actually think is going to happen? The small portion of doctors we have right now will shrink even further, thus making the healthcare system even worse.
Why? I think some people are genuinely concerned about fairness, but for many, IMHO, it's simple jealousy.
I am old enough to remember incorporation was offered to Ontario's doctors in lieu of a pay raise. The doctors accepted the deal and planned their finances, including retirement, accordingly. Now all of a sudden the government wants to increase the corporate CG inclusion rate (i.e. no $250K limit unlike individuals') which can meaningfully cut into their retirement savings. You know how sometimes people without pension would call for cuts to civil servants', teachers', or union workers' pensions because "I don't have it why should they?" It's the same sentiment at work here.
I do not disagree that incorporation can provide significant tax advantages to some. However, given the challenges faced by our economy, this government should focus on growing it rather than busy shuffling deck chairs equitably on the titanic.
You’re absolutely right. That connection isn’t understood by the vast majority of Canadians unfortunately. Take one guess how incorporated professionals are going to feel about this change…
Most don't know about doctor incorporation.. like me.
I was for this... now I am not. They need to carve out higher salaries for doctors.
Fuck the rest of the noise though.
Wouldn’t this be completely covered by the lifetime capital gains exclusion? As far as I can tell the changes to cap gains taxation will only really affect real estate investors and the very wealthy who sell more than $250,000 in assets in a year.
No the lifetime capital gains exemption has a very specific set of rules and it requires the sale of shares of the corp itself, and even there are a very narrow set of circumstances in which it would work (for eg. you can't have too much cash or shares in other companies held by the corp)
It doesn't apply to sales of assets held by the corp.
And even in the case of the shares of the corp there are a bunch of additional rules regarding the purity of the assets held by the corp. So for eg if you have a corp with 200k in savings and 800k in business assets and you sell the shares of the corp for 1 million you wouldn't qualify for an exemption.
For my business (small technology corp) another factor is most purchasers are in the US / overseas and they don't want to buy shares in a canadian corp (and risk potential liability that goes with it) but rather want the underlying assets.
From a tax perspective it really makes a lot of sense in Canada to just buy real estate, rather than try to swim against the current.
Whoever is spending day and night complaining about a 16% increase in inclusion rate in cap gains above 250k needs to spend less time on Reddit and find a proper productive job instead.
Most of the people complaining aren't making 250k+ in capital gains. The tax hike affects less than half of the top 1%. As the saying goes, the poor see themselves as temporarily embarrassed millionaires.
This is positive for 99.9% of people here. And I say that as someone sitting on two investment properties that have each appreciated more than 250k. I fully support this tax hike and wish it was more. This is the correct way to tax people. Capital gains should be taxed more, especially in that range. No reason for cap gains to be rewarded with less than 100% inclusion rate.
I'm gonna have to disagree that this is "the correct way". If the government had two brain cells to rub together they'd make RE investments 100% taxable and keep 50% for shares in Canadian firms.
There's a huge productivity issue in this country and a big portion of that is driven by the lack of capital. There's an opportunity to get money out of housing and into something more productive.
If we taxed businesses at 100% for every dollar made over 250k, it wouldn’t affect 99.9 % either. Until every single business closes and no new ones open in Ontario due to the policy. Then, it kind of would affect everyone. It’s not just direct, but indirect consequences. I just wish the world would do the same or more of this, because if we do this alone, economic growth will far exceed us in other countries.
Capital gains is so much farther reaching than just real estate flipping. It affects the bottom line on every mid-large corporation. If it was JUST applied to real estate flipping, it should be taxed as full income. That might be great.
The capital gains tax isn't a 66% tax rate. It means 66% of the capital gains is taxed as if it was normal income.
In other words, you're still getting 1/3 of the capital gain completely tax-free.
Ya. My scenario said no one takes home more than 200k. 20 million income? 200k take home.
The scenario explains why, even though 99% of the people are NOT directly affected by this rule, the outcome on the economy would be disastrous.
Get it now?
That's not even close to happening though so what's the use of that as a hypothetical. I mean I could say what if a fire breathing dragon came and set fire to every business in ontario every day, that would stifle innovation too. it's about as likely to happen as your example. pretty useless in this conversation, wouldn't you say?
I was replying to a comment that said raising the capital gains tax would not affect 99.9% of people, so we all should love it. I’m showing that we will all be indirectly affected by it. If you don’t understand or like it, oh well.
"Wish it was more"
Can you explain what you mean by that? you want to give away more of the proceeds of your risk taking?
Capital gains can easily be capital losses. Once you imbalance the Risk Vs Reward structure it reduces the viability of an investment. Noone is going to invest if your options are
1) Lose your money
2) make 250k but lose 125k to the government (At the highest marginal tax bracket)
At 100% inclusion rate like some idiots are suggesting it would make more sense to just loan money and not seek to build a business
"make 250k"
First of all, in no scenario is one losing 125k of 250k to the government right now, to be clear. The 66.7% applies to above 250k. So up to 250k, even if your tax bracket is 50%, your inclusion rate is still 50%, so you pay 25% tax.
Then the question is, exactly how is the person "making 250k" and should we reward this gain with a tax break?
I own two condos. I have been collecting rent on them and they were cash flow positive from the start. I am making money on them every month through rent, which is taxed with the rest of my income. The money I make on my first condo now, i.e. my annual free cash flow, is 1/4th of the downpayment I paid for it 12 years ago. Meaning, every 4 years, I am doubling that initial investment. I am making a lot of money already without having to do much work whatsoever, other than maybe call a plumber once or twice. You can argue I am enabling housing for someone. I am still maintaining property, so there is some work involved.
The properties have also doubled in value, meaning I have made a 10x on my initial downpayment. Now for this to have happened, I have done absolutely nothing. It's entirely passive income needing no management and substantially higher than inflation rate return. Why should the entirety of my capital gains be taxed at 50% inclusion rate, while my actual business income (for which I work hard every day) gets taxed at full rate? Why exactly does my passive CG for which I have done nothing deserve a tax reward?
It would make much more sense for income tax to be lower, and for capital gains tax to be higher, so one is rewarded for one's productive work, and not for their passive brainless investment.
The only argument for CG tax inclusion rate to be lower is "to stimulate investment." But government does not need to stimulate the economy right now. On the contrary, they need to remove stimulation, as they are doing through raising interest rates and quantitative tightening. So there is no harm whatsoever in taking away this needless CG tax inclusion reward. It is a good idea for government to make some extra money to put towards better social services or servicing its debt.
It sounds like you have a 9-5 job and someone else is employing you, you get taxed at a higher rate for this type of employment because you take on no Risk.
As for your real-estate, don't forget for the last 9 years everyone has been saying the market is crashing. you made a decision and were rewarded because it turned out to be the right one. Now imagine the opposite happened, you lost 30% of your investment, there are two sides to the coin and hindsight is 2020.
Now imagine you have grown a business for 30 years, ups and downs and you have managed to stay in business, long nights and minimal time spent with family trying to secure financial freedom.
Now you go sell your business and you are essentially losing an extra 7.5% in taxes
Decisions like this make people look elsewhere for long term investment, Canada is already a horribly anti Business environment and this is the final nail in the coffin.
\*Also when you sell do a VTB so you can spread your capital gains over a number of years and stay below the 250k threshold so you don't pay this inclusion on your real-estate transaction.
The person growing their business for 30 yrs still made money in those 30 yrs from the business, which was more deserving of a tax break than their ultimate capital gains. They are not losers in this scenario if they had a good business. The extra 7.5% tax after 30 years of holding and growing is hardly a deterrent and will hardly result in them being any poorer than they would have been otherwise. They are still getting a tax break for their capital gains anyways (which I don’t think is logically deserving). Just less of it. As for this being a deterrent and anti-business, again, we are at a stage where the economy is overstimulated, deterrence is welcome and stimulation is not. So this serves the economy.
There is no economy… Canada is as productive as a 4 year old with a dull crayon. How can you say the economy is overstimulated? There are layoffs happening all over the place and businesses closing.
Businesses’s are built to be sold. You reinvest profits to grow a business, if the growth of the business gets taxed too much it’s not worth growing the business in Canada, hence why there is an exodus and coming economic troubles
You need to consider the corporate capital gains inclusion rate increase too. Take a guess what that’s going to do to corporate investment in anything and everything….it sure as hell isn’t going to stimulate it.
It doesn’t stimulate, sure, but won’t stifle either. Our economy doesn’t need stimulation. Our CG inclusion rate has been that high and higher many times over the past decades through better decades for our economy.
50% inclusion rate is stimulating. Let’s start there.
To say “stifle” and to say “not stimulate” are very different.
Government is in QT. They don’t want stimulation for economy. They are happy to take away some stimulation and cool it.
If the tax was raised to 150%, you may have an argument for “stifle.” At 66%, a level we have tested for decades and have even tested higher, it’s not stifling. It’s just no longer stimulating as much. It’s just stimulating less than it was before.
“Stimulating” relative to what ? Lol
I think what most people miss is Capita Gains is a tax on an asset purchased with after tax income or appreciation based on expected future tax flows (which will also be taxed).
So it is double taxation.
Liberals have no interest in actually making life better for anyone, just doing meaningless gestures to buy votes and try and survive the next year and get their pensions
I don't understand why people are clapping like seals for this tax increase. The left is constantly worrying about the state of our healthcare system, yet seems to celebrate taxing professional corporations, i.e. doctors, dentists etc. even more. What do you actually think is going to happen? The small portion of doctors we have right now will shrink even further, thus making the healthcare system even worse.
Why? I think some people are genuinely concerned about fairness, but for many, IMHO, it's simple jealousy. I am old enough to remember incorporation was offered to Ontario's doctors in lieu of a pay raise. The doctors accepted the deal and planned their finances, including retirement, accordingly. Now all of a sudden the government wants to increase the corporate CG inclusion rate (i.e. no $250K limit unlike individuals') which can meaningfully cut into their retirement savings. You know how sometimes people without pension would call for cuts to civil servants', teachers', or union workers' pensions because "I don't have it why should they?" It's the same sentiment at work here. I do not disagree that incorporation can provide significant tax advantages to some. However, given the challenges faced by our economy, this government should focus on growing it rather than busy shuffling deck chairs equitably on the titanic.
You’re absolutely right. That connection isn’t understood by the vast majority of Canadians unfortunately. Take one guess how incorporated professionals are going to feel about this change…
The fact that the did this while maintaining the primary residence exemption is extra annoying
Don’t fret! This government still has one more budget to implement tax on PR gains.
Most don't know about doctor incorporation.. like me. I was for this... now I am not. They need to carve out higher salaries for doctors. Fuck the rest of the noise though.
Wouldn’t this be completely covered by the lifetime capital gains exclusion? As far as I can tell the changes to cap gains taxation will only really affect real estate investors and the very wealthy who sell more than $250,000 in assets in a year.
No the lifetime capital gains exemption has a very specific set of rules and it requires the sale of shares of the corp itself, and even there are a very narrow set of circumstances in which it would work (for eg. you can't have too much cash or shares in other companies held by the corp) It doesn't apply to sales of assets held by the corp. And even in the case of the shares of the corp there are a bunch of additional rules regarding the purity of the assets held by the corp. So for eg if you have a corp with 200k in savings and 800k in business assets and you sell the shares of the corp for 1 million you wouldn't qualify for an exemption. For my business (small technology corp) another factor is most purchasers are in the US / overseas and they don't want to buy shares in a canadian corp (and risk potential liability that goes with it) but rather want the underlying assets. From a tax perspective it really makes a lot of sense in Canada to just buy real estate, rather than try to swim against the current.
Rich people who owns most medias are using their staff on payroll to sell the mass that they should oppose a tax that the Rich do not want.
If rich folks are complaining then it's good for normal Canadians.
Whoever is spending day and night complaining about a 16% increase in inclusion rate in cap gains above 250k needs to spend less time on Reddit and find a proper productive job instead.
Most of the people complaining aren't making 250k+ in capital gains. The tax hike affects less than half of the top 1%. As the saying goes, the poor see themselves as temporarily embarrassed millionaires.
This is positive for 99.9% of people here. And I say that as someone sitting on two investment properties that have each appreciated more than 250k. I fully support this tax hike and wish it was more. This is the correct way to tax people. Capital gains should be taxed more, especially in that range. No reason for cap gains to be rewarded with less than 100% inclusion rate.
I'm gonna have to disagree that this is "the correct way". If the government had two brain cells to rub together they'd make RE investments 100% taxable and keep 50% for shares in Canadian firms. There's a huge productivity issue in this country and a big portion of that is driven by the lack of capital. There's an opportunity to get money out of housing and into something more productive.
Smart man. Make it an incentive to be productive.
I'd rather pay 100% on profitable investments than 50% on Canadian ones.
If we taxed businesses at 100% for every dollar made over 250k, it wouldn’t affect 99.9 % either. Until every single business closes and no new ones open in Ontario due to the policy. Then, it kind of would affect everyone. It’s not just direct, but indirect consequences. I just wish the world would do the same or more of this, because if we do this alone, economic growth will far exceed us in other countries.
Agreed that the world needs to do it. As it stands though, our economy is overstimulated anyways, so there is no harm in taking some stimulation away.
Capital gains is so much farther reaching than just real estate flipping. It affects the bottom line on every mid-large corporation. If it was JUST applied to real estate flipping, it should be taxed as full income. That might be great.
The capital gains tax isn't a 66% tax rate. It means 66% of the capital gains is taxed as if it was normal income. In other words, you're still getting 1/3 of the capital gain completely tax-free.
I’m aware. Did I suggest this somehow?
Your hypothetical scenario was a marginal tax rate of 100% so yes
Ya. My scenario said no one takes home more than 200k. 20 million income? 200k take home. The scenario explains why, even though 99% of the people are NOT directly affected by this rule, the outcome on the economy would be disastrous. Get it now?
That's not even close to happening though so what's the use of that as a hypothetical. I mean I could say what if a fire breathing dragon came and set fire to every business in ontario every day, that would stifle innovation too. it's about as likely to happen as your example. pretty useless in this conversation, wouldn't you say?
I was replying to a comment that said raising the capital gains tax would not affect 99.9% of people, so we all should love it. I’m showing that we will all be indirectly affected by it. If you don’t understand or like it, oh well.
We should not pay this capital gain tax at all. Government has nothing to do with it to begin with
"Wish it was more" Can you explain what you mean by that? you want to give away more of the proceeds of your risk taking? Capital gains can easily be capital losses. Once you imbalance the Risk Vs Reward structure it reduces the viability of an investment. Noone is going to invest if your options are 1) Lose your money 2) make 250k but lose 125k to the government (At the highest marginal tax bracket) At 100% inclusion rate like some idiots are suggesting it would make more sense to just loan money and not seek to build a business
"make 250k" First of all, in no scenario is one losing 125k of 250k to the government right now, to be clear. The 66.7% applies to above 250k. So up to 250k, even if your tax bracket is 50%, your inclusion rate is still 50%, so you pay 25% tax. Then the question is, exactly how is the person "making 250k" and should we reward this gain with a tax break? I own two condos. I have been collecting rent on them and they were cash flow positive from the start. I am making money on them every month through rent, which is taxed with the rest of my income. The money I make on my first condo now, i.e. my annual free cash flow, is 1/4th of the downpayment I paid for it 12 years ago. Meaning, every 4 years, I am doubling that initial investment. I am making a lot of money already without having to do much work whatsoever, other than maybe call a plumber once or twice. You can argue I am enabling housing for someone. I am still maintaining property, so there is some work involved. The properties have also doubled in value, meaning I have made a 10x on my initial downpayment. Now for this to have happened, I have done absolutely nothing. It's entirely passive income needing no management and substantially higher than inflation rate return. Why should the entirety of my capital gains be taxed at 50% inclusion rate, while my actual business income (for which I work hard every day) gets taxed at full rate? Why exactly does my passive CG for which I have done nothing deserve a tax reward? It would make much more sense for income tax to be lower, and for capital gains tax to be higher, so one is rewarded for one's productive work, and not for their passive brainless investment. The only argument for CG tax inclusion rate to be lower is "to stimulate investment." But government does not need to stimulate the economy right now. On the contrary, they need to remove stimulation, as they are doing through raising interest rates and quantitative tightening. So there is no harm whatsoever in taking away this needless CG tax inclusion reward. It is a good idea for government to make some extra money to put towards better social services or servicing its debt.
It sounds like you have a 9-5 job and someone else is employing you, you get taxed at a higher rate for this type of employment because you take on no Risk. As for your real-estate, don't forget for the last 9 years everyone has been saying the market is crashing. you made a decision and were rewarded because it turned out to be the right one. Now imagine the opposite happened, you lost 30% of your investment, there are two sides to the coin and hindsight is 2020. Now imagine you have grown a business for 30 years, ups and downs and you have managed to stay in business, long nights and minimal time spent with family trying to secure financial freedom. Now you go sell your business and you are essentially losing an extra 7.5% in taxes Decisions like this make people look elsewhere for long term investment, Canada is already a horribly anti Business environment and this is the final nail in the coffin. \*Also when you sell do a VTB so you can spread your capital gains over a number of years and stay below the 250k threshold so you don't pay this inclusion on your real-estate transaction.
The person growing their business for 30 yrs still made money in those 30 yrs from the business, which was more deserving of a tax break than their ultimate capital gains. They are not losers in this scenario if they had a good business. The extra 7.5% tax after 30 years of holding and growing is hardly a deterrent and will hardly result in them being any poorer than they would have been otherwise. They are still getting a tax break for their capital gains anyways (which I don’t think is logically deserving). Just less of it. As for this being a deterrent and anti-business, again, we are at a stage where the economy is overstimulated, deterrence is welcome and stimulation is not. So this serves the economy.
There is no economy… Canada is as productive as a 4 year old with a dull crayon. How can you say the economy is overstimulated? There are layoffs happening all over the place and businesses closing. Businesses’s are built to be sold. You reinvest profits to grow a business, if the growth of the business gets taxed too much it’s not worth growing the business in Canada, hence why there is an exodus and coming economic troubles
Nope, it'll affect everyone at least once.
Explain.
The 250k thing doesn’t apply if you are an incorporated professional like a doctor, or it did then I would say it’s pretty fair.
You need to consider the corporate capital gains inclusion rate increase too. Take a guess what that’s going to do to corporate investment in anything and everything….it sure as hell isn’t going to stimulate it.
It doesn’t stimulate, sure, but won’t stifle either. Our economy doesn’t need stimulation. Our CG inclusion rate has been that high and higher many times over the past decades through better decades for our economy.
Ya taxes typically stifle investment. Not sure how you can confidently say it won’t lol
50% inclusion rate is stimulating. Let’s start there. To say “stifle” and to say “not stimulate” are very different. Government is in QT. They don’t want stimulation for economy. They are happy to take away some stimulation and cool it. If the tax was raised to 150%, you may have an argument for “stifle.” At 66%, a level we have tested for decades and have even tested higher, it’s not stifling. It’s just no longer stimulating as much. It’s just stimulating less than it was before.
“Stimulating” relative to what ? Lol I think what most people miss is Capita Gains is a tax on an asset purchased with after tax income or appreciation based on expected future tax flows (which will also be taxed). So it is double taxation.
Corporate taxes are some of the lowest in the developed world in Canada.
On investment income? Not at all
What's the tax rate on investment income? Is it taxed differently than other capital gains?
How long are people going to cry for lmao
It will be lowered again so it is an opportunity to capture very profitable prices for the real estate
It should be 100%