Understanding the Capital Gains Inclusion Rate Increase

Given the uncertainty around the proposal’s enactment, taxpayers have two options for filing their taxes:

1. Filing Based on the Proposed 2/3 Inclusion Rate

   • If the proposal is not enacted, taxpayers may need to amend their returns later, which could lead to refund delays and administrative burdens.

   • If the proposal is passed, no further action will be needed.

2. Filing Based on the Existing 50% Inclusion Rate
   • If the proposal does not pass, no adjustments will be required.
   • If the proposal is enacted, taxpayers will have to amend their returns to reflect the 2/3 rate, which could result in tax liabilities and possible interest penalties.

For corporations and trusts with a filing deadline before March 3, 2025, the CRA has indicated relief from arrears interest and penalties. However, this relief expires on March 3, 2025, making it crucial to strategize tax filings effectively.

At SAV Associates, we can help you assess your tax situation, file appropriately, and minimize risks associated with these proposed changes. Contact us today to ensure you’re making the right tax decisions!