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The Canada Revenue Agency (CRA) has announced its intention to administer the proposed increase in the capital gains inclusion rate from 50% to 67%, effective June 25, 2024, despite the legislation not yet being officially enacted. This change would apply to capital gains exceeding $250,000, with principal residences remaining exempt. The CRA plans to provide updated forms for individuals, trusts, and corporations by January 31, 2025, and has extended the filing deadline to March 3, 2025, for certain entities to accommodate these changes.

John Oakey, Vice President of Taxation at Chartered Professional Accountants of Canada (CPA Canada), emphasizes that taxpayers must decide whether to file their 2024 taxes based on the current 50% inclusion rate or the proposed 67% rate. Filing under the proposed rate could result in a refund if the legislation doesn't pass, while filing under the current rate might necessitate an amended return with potential interest penalties if the changes are enacted. Oakey notes that the CRA cannot compel taxpayers to file based on proposed legislation, as it is not yet law.

The CRA's approach aligns with the provisional implementation of taxation, a customary practice in the House of Commons to prevent market disruptions. However, until Parliament formally enacts the legislation, taxpayers face uncertainty in their filing decisions. Oakey advises that each taxpayer must weigh the potential consequences of either choice, considering the possibility of legislative changes occurring after the April 30 tax filing deadline.

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