As the date of the federal elections in Canada for 2025 approaches, the issue of capital gains tax is at the forefront of political and economic debate, amid indications of a potential modification to the current tax system, sharp divergence in the positions of major parties, and increasing concern among investors and asset owners.

What is capital gains tax?

This tax is imposed on the profits resulting from the sale of capital assets such as real estate (non-primary), stocks, or investment funds. Currently, 50% of the profits are taxed according to taxable personal income, but there are calls to increase this percentage, especially on large gains, as a tool for achieving what is known as "tax fairness."

The Liberal government: Review under consideration

Although there has been no official announcement yet, leaks suggest that the Liberal government is considering raising the inclusion rate to 66% or more for profits exceeding a certain annual threshold, while keeping small gains within the current system, in an attempt to increase revenues without affecting small investors.

The Conservatives: Against any increase

The Conservative Party strongly opposes any amendment, asserting that it would undermine investor confidence, impact self-directed retirement plans, and hurt the real estate sector, at a time when Canadians are already suffering from rising living costs and interest rates.

The New Democrats and Greens: In favor of tax fairness

In contrast, the New Democratic Party, along with the Green Party, supports higher taxes on large profits, considering it a means to redistribute wealth and fund housing, healthcare, and education programs, especially in light of the widening gap between the rich and the rest of the citizens.

Expected impacts on Canadians

• Owners of investment properties: Fear a decline in the value of their assets and reduced returns.

• Self-directed retirement plans (RRSP and TFSA): Some changes may affect the future returns of these investments.

• Entrepreneurship: Some startups or individual investors may hesitate to sell assets or reinvest their profits.

• Low-income individuals: According to supporters of the amendment, the new system will keep them safe from changes, and they may even benefit from the new tax revenues in the form of social support.

Between politics and accounting

Analysts emphasize that any change in the tax must be carefully considered to avoid market shocks or capital flight, especially as Canada is already experiencing a relatively slow economic growth.

In light of these divisions, the capital gains tax is expected to be one of the main topics of electoral debates, and to become a benchmark for measuring each party's vision for the future of the Canadian economy, between those calling for a rebalancing and those advocating for stimulating growth and investment.