After causing outrage in the Conservative Party, the federal government’s plan to increase the inclusion rate for capital gains after $250,000 also makes the Bloc Québécois fear possible repercussions on owners of small buildings in Quebec.
“We want to ensure fairness, for example the owner of a small plex who paid this to finance his retirement, we do not want him to be unduly affected” by the new tax measure, explained Bloc member Gabriel Ste-Marie.
The member for Joliette had just listened to the arguments of the Corporation of Real Estate Owners of Quebec (CORPIQ), passing through Ottawa on Thursday to be heard by the parliamentary finance committee. Its director of economic affairs, Paul Cardinal, deplored in front of elected officials the “tile” represented by the increase in the capital gains inclusion rate, ratified Tuesday by all elected officials except the conservatives and two independents.
“It penalizes people who own small rental properties in Quebec, and who are, in a very high proportion, middle class people. […] “It’s certain that making a gain of $250,000 on a building that you bought 25 years ago is not exceptional,” argued Mr. Cardinal.
His arguments resonated within the Bloc, “for the principle” of subjecting the very rich to a tax rate comparable to that of the rest of taxpayers. The second opposition party does not want the measure to end up offending the owners of buildings with a few housing units, “the Quebec model”, who risk declaring a large capital gain only once in their life, at the time sales.
Hope for compromise
MP Gabriel Ste-Marie has committed to trying to exclude them from the announced increase in the capital gains inclusion rate by convincing the government to modify the bill on this subject, expected for the fall.
For their part, elected officials from the Conservative Party of Canada alleged in the House that a large section of society is at risk of paying more taxes, even for taxpayers who earn less than $120,000 per year, such as farmers. , welders, carpenters, restaurateurs, fishermen or electricians. And this, despite assurances to the contrary from the Department of Finance of Canada.
The Liberal government formalized at the beginning of the week in a motion one of the main new measures announced during the 2024 budget, namely to now subject two dollars out of three to the tax on capital gains for those who declare the most , i.e. more than $250,000 in earnings for individuals. According to officials’ calculations, only 40,000 taxpayers will have to pay more taxes, or 0.13% of the population.
A residential building that is resold for more than the price at which it was purchased causes its owner to realize a capital gain. CORPIQ would like an exemption for the sale of a first residential building, for example, or a calculation that allows a capital gain made over several decades to be spread over time.
Cast in concrete
Canada’s Finance Minister, Chrystia Freeland, tried to reassure small owners on Thursday during a visit to Montreal. “A couple who has a duplex or triplex is not going to pay additional taxes on the first $500,000 of profits from the sale of their rental units,” she explained.
She also recalled that a capital gain realized following the sale of a principal residence is not subject to tax, and that various exemptions are also provided, such as for small business owners and farmers. .
Even if Mme Freeland has already mentioned that capital gains taxation is not a “partisan” issue, she invited voters to “consider [les] motivations” of his political adversaries who try to “protect a tax system that favors the most well-off”.
To find out if she could amend the bill on this subject which must be tabled this fall, as the Bloc Québécois wishes, her office redirected The duty towards statements by Mme Freeland who show no flexibility regarding the measure that is proposed. The text must be unveiled this summer as a legislative proposal, before being formally presented to elected officials upon their return from the summer break.