Trudeau Government Announces Tax Hike on Wealthy Canadians in Federal Budget to Fund Housing

By Leira Aquino

Apr 16 2024, 22:40 PM EDT

Canada PM Justin Trudeau — Canadian Prime Minister Justin Trudeau's government introduced a tax increase targeting wealthy Canadians in its federal budget to support housing initiatives and tackle cost-of-living concerns. PATRICK DOYLE/AFP via Getty Images

In a move aimed at bolstering housing initiatives and addressing concerns over the cost of living, Canadian Prime Minister Justin Trudeau's government unveiled Tuesday a tax increase targeting wealthy Canadians as part of its federal budget, Associated Press reported.

The focal point of the budget is the proposal to hike the capital gains inclusion rate, impacting the taxable share of profits from asset sales.

New Tax Hike Targets Wealthy Canadians

Under the new tax hike, the taxable portion of capital gains exceeding $250,000 Canadian (US$181,000) would rise from half to two-thirds.

This measure, expected to affect only 0.1% of Canadians, aims to generate nearly $20 billion Canadian (US$14.5 billion) in revenue over five years.

Finance Minister Chrystia Freeland addressed the expected backlash, acknowledging that "No one likes paying more tax, even - or perhaps particularly - those who can afford it the most."

She urged Canada's affluent segments to consider the broader societal implications, asking, "What kind of Canada do you want to live in?"

Budget's $53B Spending Addresses Economic Justice

The budget, with a hefty $53 billion Canadian (US$38 billion) in new spending, is a significant step towards addressing economic justice concerns for younger generations.

However, it also sets a cap on the federal deficit at $40 billion Canadian (US$29 billion), reflecting fiscal responsibility amidst expansive spending plans.

The tax change targets both individuals and companies with capital gains exceeding the designated threshold.

The government estimates that this measure will impact around 40,000 individuals and 307,000 companies.

Notably, the budget introduces other tax modifications benefiting entrepreneurs, such as raising the lifetime capital gains exemption and unveiling the Canadian Entrepreneurs' Incentive.

The budget's provisions also extend to the real estate sector, which will impact homeowners with secondary properties.