Faced with the concerns of certain plex owners, the Minister of Finance, Chrystia Freeland, affirms that the increase in capital gains tax proposed by the federal budget would only affect the better off.
The federal budget proposes that the capital gains inclusion rate increase from 50% to 66% from the threshold of $250,000, as of June 25. Quebec will also follow suit at the federal level.
Several Canadian media have reported criticism from plex owners, who consider themselves unfairly affected by this measure which targets the better off.
Mme Freeland argues that several terms of the tax measure protect middle-class owners. She mentioned, at a press conference in Montreal on Monday to promote her budget, that the capital gain on the main residence is not affected.
In other words, the owner-occupier of a plex would not pay tax on the proportion of the capital gain linked to his residence, only on the gains linked to the space he rents.
She points out that the taxation of the first annual tranche of capital gains of $250,000 remains unchanged. This also means that an owner couple would not be affected for the first $500,000 of the capital gain, she specifies.
“For us it was very important to target this change, not to the middle class, but especially to the better off,” she insists.
The increase in capital gains has been criticized by the business community. Last Friday, the president and CEO of the National Bank, Laurent Ferreira, said he feared that the measure would discourage investment, by making Canada less competitive compared to the United States.
For his part, Mme Freeland judges that the tax increase is necessary to finance new federal programs, in particular to promote housing accessibility. “To finance these investments in the middle class, including young Canadians, we will ask the better off to contribute a little more to enable these investments which are so necessary now. »
The measure would affect a relatively small number of individuals, according to the Ministry of Finance. Only 40,000 Canadians have declared capital gains of more than $250,000 annually. This would represent 0.13% of taxpayers, or 13% of the famous 1%.
Mme Freeland was in Montreal on Monday to promote the federal budget unveiled last week. On the sidelines of a visit to the premises of Montreal mushroom producer Lab. Grenouille rouge, she put forward the aid of $60 million over five years to the organization Futurpreneur Canada, provided for in the budget.
Criticisms of the provinces
The federal budget has also been criticized by the provinces, who denounce an encroachment on their jurisdictions.
The provincial premiers wrote to Prime Minister Justin Trudeau, in a letter released Friday, to ask him to “refrain from encroaching” on their areas of jurisdiction.
Questioned on the subject Monday, Mme Freeland said she is hopeful she will find common ground with the provinces. “I am convinced that in the end, we will find win-win solutions,” she assures.
She gave the example of the national daycare program while the network of early childhood centers (CPE) already existed in Quebec. “For this reason, we had a conversation with Quebec and we decided to send the money directly to the province of Quebec to build more spaces in daycares. »
When the agreement was unveiled in 2021, the prime ministers of Canada, Justin Trudeau, and of Quebec, François Legault, spoke of an agreement of $6 billion over five years to create “tens of thousands of places”.