Tax Alert – Potential Change to the Capital Gains Inclusion Rate

Although the government has not yet announced the release date of the 2020 Federal Budget, it will likely occur in February or March.

In recent weeks there has been 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 when its 2020 Budget is released, the speculation is that the rate would increase to either 66.67% or 75%.

The table below shows the effective personal tax rate on a capital gain for an Alberta resident in the highest tax bracket in 2020 at the current capital gains inclusion rate and at the capital gains inclusion rates if one of the speculated increases occurs.

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

Thanks!

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