Potential Change to the Capital Gains Inclusion Rate

The 2017 Federal Budget will likely be released sometime in March or April, the government has not yet announced the Budget release date.

In recent weeks and months, there has been increasing speculation that the Budget may include a change to the capital gains inclusion rate.

Currently, the capital gains inclusion rate is 50%.  If the government does propose to increase the capital gains inclusion rate in the 2017 Budget, the speculation is that the rate would increase to either 66.67% or 75%.

Below is a table which shows the effective tax rate on a capital gain for an Alberta resident in the highest tax bracket in 2017 at the current capital gains inclusion rate and at the capital gains inclusion rates if one of the speculated increases occurs.

2017 Top Marginal Rates for an Alberta resident

Current
Capital Gains
@ 50%
Speculated
Capital Gains
@ 66.67%
Speculated
Capital Gains
@ 75%
24% 32% 36%

At this time any increase to the capital gains inclusion rate is speculation only.  However, if you own capital assets, the sale of which would result in a significant capital gain, please do not hesitate to contact us to discuss planning options that may be available to your specific situation.

Thanks!

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