In the recent federal budget, the government proposed increasing the capital gains tax inclusion rate from 50 percent to approximately 67 percent on gains greater than $250,000. This proposed change is intended to target the wealthiest 0.13 percent of Canadians, but an unintended consequence is that many average Canadian families could have to sell their much-treasured cottages if they are unable to pay the higher tax when the cottage passes from one generation to the next.
With rising property values over the years, the capital gains triggered on transfer of cottages to the next generation has become more of an issue, and this capital gains tax rate increase will make it more challenging. Multiple generations and siblings are sharing the financial burden of rising property taxes, higher maintenance costs, and the overall increased cost of living to be able to keep their beloved properties in the family for future generations. That is not the profile of the ultra-wealthy. Over half a million family cottages across Canada are facing similar challenges.
The capital gains tax changes are set to take effect on June 25, 2024 and will affect many families that do not fall into the targeted demographic. There is currently an opportunity to persuade the federal government to reevaluate these changes as the government has not yet announced details on the legislation. Please consider sending an email to your MP to illustrate how this proposed change to the capital gains tax will affect you and the many average Canadian families who have dedicated their lives to maintaining family cottages in Georgian Bay. You can send an email to your MP by using our Do Gooder tool here. It only takes a minute and all that is required is a name, email address, and postal code.
News Stories & Additional Resources
- GBA Weighs In on the Proposed Rate Increase for Annual Capital Gains – May 2024
Georgian Bay Association ‘Encouraging Folks Not to Sell’ with Increase in Capital Gains Tax Looming – Parry Sound North Star, May 18, 2024 - Government to Force Vote on Capital Gains Tax Hike – Globe & Mail, June 8, 2024
- Why the Government Should Reconsider the New Capital Gains Tax Rate – Cottage Life, May 22, 2024
- Cottage Succession Planning – FOCA
This is intended for general information purposes only. While we have attempted to provide information that is helpful for our readers, GBA does not provide tax, legal or accounting advice and accepts no legal liability for the contents of this article. Ensure you check original sources for additional details and updates. For advice regarding your personal taxation and filing needs, please contact your own tax professional or accounting advisor.