CARP members are reacting to the recent 2024 federal budget announcement regarding higher capital gains taxes, effective June 25.
The capital gains tax is the tax individuals pay when selling an asset or capital property. Capital gains are the profits from that sale. Common types of capital properties include cottages, securities (such as stocks, bonds and units of a mutual fund trust), land, buildings and equipment you use in a business or a rental operation, according to the Canada Revenue Agency’s website.
Instead of paying tax on half of all gains as per current rules, individuals will pay tax on half of gains under $250,000 and on two-thirds of gains over $250,000. Companies will pay tax on two-thirds of all gains.
The government frames this strategy, which it claims will generate $19.4-billion in revenue over five years, as part of a “tax fairness” plan in which wealthier people pay more to fund its spending promises.
The government said the change will affect the wealthiest 0.13 per cent, about 12 per cent of Canada’s corporations, as well as Canadians with an average income of $1.42 million.
Former Liberal finance minister Bill Morneau criticized the proposed changes to capital gains last week, saying it’s “clearly a negative to our long-term goal, which is growth in the economy, productive growth and investments.”
But CARP is concerned that the proposed change will not just impact those in an elite income bracket. Many CARP members who have a much more modest income than $1.4 million are concerned. Such individuals include middle income entrepreneurs who are without government or employer pensions, and instead who rely on their businesses, personal savings or income properties. These individuals are very concerned that the Government of Canada is going to arbitrarily take away part of their personal pension fund, lowering their standard of living and materially changing their retirement.
Pension funds (government and private) strive for growth and stability with some of them offering guarantees. CARP members cannot understand why the Department of Finance thinks such a destabilizing action, as proposed in the budget, would be acceptable to the many Canadians who by choice, or circumstance, have built their own retirement.
One of our members is typical of this situation. Like many others he chose Canada through immigration in 1967 at 19 years old with $150 in his pocket. Now at 76 years he notes, “I am faced with the Government dipping its hand into my retirement.” He feels targeted simply because he did the responsible thing by working hard and becoming self-sufficient.
CARP joins other stakeholders in calling for a reversal of the capital-gains measure. Stay tuned.
