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Last updated: January 04 2017
Increased Capital Gains Inclusion Rates Coming?
Most respondents to Knowledge Bureau’s final poll of 2016 answered yes when asked, “Do you think the 2017 federal budget will increase capital gains income inclusion rates to raise tax dollars?” We’ll have to wait for the details of the budget, expected early in the new year, to see what actually happens. Only 41% said no to the question.
The history of the capital gains inclusion rate has been speckled by change over the years and reflects both changes in economic times and governments’ various responses to them. It is worthwhile reviewing them in anticipation of the upcoming Federal Budget; but in addition, because dispositions of personal residences starting in 2016 may require a review of the changes in taxation on that asset class over the years:
Significant Dates in Capital Gains Taxation and Valuation Days
| Prior to 1972: | Capital gains were not taxable in Canada |
| December 22, 1971: | Valuation day for Canadian publicly traded securities |
| December 31, 1971: | Valuation day for all other capital property |
| January 1, 1972: | Capital gains inclusion rate is 50%; Two tax-exempt principal residences per household (legally married spouses) |
| December 31, 1981: | Valuation day - one tax exempt principal residence per household |
| January 1, 1985: | Capital Gains Exemption is introduced at lifetime limit of $500,000 |
| January 1, 1987: | Capital Gains Exemption is capped at $100,000, but $500,000 Super Exemption remains for qualifying farms and small business corporations |
| January 1, 1988: | Capital gains inclusion rate increases to 66 2/3 % |
| January 1, 1990: | Capital gain inclusion rate increases to 75% |
| January 1, 1993: | One tax-exempt principal residence per common-law couple (opposite sex) |
| February 22, 1994: | Capital Gains Election date, re elimination of $100,000 Capital Gains Exemption |
| January 1, 1998: | Same sex couples could elect conjugal status with the result that only one tax exempt residence is allowed per couple |
| February 27, 2000: | Capital gains inclusion rate drops to 66 2/3 % |
| October 18, 2000: | Capital gains inclusion rate drops to 50% |
| January 1, 2001: | Same sex couples are now limited to one tax exempt residence per conjugal relationship (no election) |
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Thanks to all who responded to our poll. Please give some thought to our question for January:
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