February 10, 2017
Potential change to Canada's Capital Gains Taxation?
2017 Federal Budget - Changes to Capital Gains?
There has been considerable speculation that the upcoming 2017 Federal Budget will increase the amount of Capital Gain that is subject to taxation. Since 2000, Capital Gains taxation has been at 50%, down from the high of 75% imposed during the entire decade of the 1990's. A capital gain occurs when you dispose of property, such as real estate, a stock, bond or mutual fund, for more than you paid for it. Capital Gains taxation does not apply to an individual's principal residence.
Any change in the level of taxation will have tax consequences for investors looking to divest of their real estate in a post-budget environment. Depending on the intended timeline of disposition, an investor might elect to put in place a preemptive strategy that would mitigate the potential tax liability of a sale in the future. MNP, one of Canada's leading accounting firms, has developed a strategy to maximize after-tax proceeds in the event the Capital Gains tax is introduced.
Please read the following attachment and contact MNP with any questions.
Potential Changes To Capital Gains Rate
2016 Capital Gains Changes
In October of 2016 the Canada Revenue Agency brought in changes in the way Capital Gains on ones Principal Residence are REPORTED. While there remains no taxation on Capital Gains on a Principal Residence, prior to 2016 a taxpayer was not required to report this non-taxable Capital Gain. Pay attention to this change - if you don't the penalty for non-reporting can be significant. Why is CRA doing this? Apparently it is for better administration, but there are a few other theories as well.
Reporting the Sale of Your Principal Residence