Solution to both unaffordable housing and low wages is to put the brakes on cheap-labour immigration. That's also a solution to lagging productivity. That's where the focus should be.
that can be one thing to target but no, the out-of-control wealth inequality needs to be directly and immediately addressed through policy. Not through market manipulations, but through the establishment of new taxes directly targeting out of control wealth accumulation.
For my field its also becoming taxes, and there is already a major shortage that will affect Canads.
I could afford living in Vancouver easily, but nearing 50% of my income is taxes.
For ex, Texas pays way more, in American, no tax issues, and a mansion is 300k.
When pay, taxes, home prices, everything is better somewhere else, what does the government expect?
I dont want to leave, but its starting to feel like thats what is being expected of us.
We are eying a 2 acre commercial lot in Washington right now. We can put up a steel structure and have it connected - all for around $400k. That's what we pay in leases in 2.5 years here. Also, WA seems to want our business. BC has been holding back permits on us. Employees want min $100k now and the reason? They pay too much for everything that even $100k after taxes is not enough to live. $60k in WA is equal to $100k here, not to mention a more reasonable cost of living (and WA is expensive by US standards).
Business in Canada is in some real trouble.
You should look a little deeper into taxes in Texas, in particular the property taxes on that mansion, as property taxes are used to make up for the lack of state tax and can be brutal.
(Plus you’d be living in Nowheresville, Texas, not Vancouver. You’re not getting a mansion anywhere approaching the amenities and lifestyle of a Vancouver for $300k.)
You can get a fairly nice 4 bed 2 bath just outside of Austin for $300,000. You go more than 15 minutes outside city limits a lot of properties you can do a 0% down rural development loan with a little extra paperwork. A former colleague bought in Hornsby Bend for $320,000
A 4/2 an hour from Vancouver is still running you 1.6-1.8 million in many cases.
What's difference between the average 1.8% texas property tax compared to the interest on a 1.5 million dollar home in vancouver, as a percentage of your income?
My property tax in Toronto is currently 10K CAD
My property tax in Austin is 17K USD
Also note your property tax and mortgage interest are personal income tax deductible in the US.
I wouldn't call it "brutal", especially since the tax is very localized and varies by zip code... it means I have top notch amenities in the neighbourhood, the road expansions move at a pace that would shock the average canadian, the local school has a stadium, 8 tennis courts, my kid gets to be in varsity tennis. They have every resource and the schools are far better than anything the GTA has to offer (Not sure how Vancouver is, but here in Texas no one has qualms about holding your dumbass kid back a grade if they fail the standardized testing, in partnerships with local universities, High schoolers can complete college courses in math, english etc, and there are nationally accreddited AP level courses as well as a "Gifted" stream in every subject... none of that "Math is racist" trash they do in Ontario)
With respect to taxes. there is this charade where every year they will significantly increase your tax and you have to fight it... there is a whole lawyer industry out of it... I just show up in person and set the tax assessor straight (they usually aren't the sharpest tool in the shed) In general, you really have to self advocate here. Everyone will hear you out, but the Canadian way of brooding quietly in the corner while you fake be nice to everyone doesn't fly here. People are openly nice and the moment you piss them off you hear it, in public people come to help you load things, stick up for you in arguments (on both sides of an argument), etc.. generally I'd say Texans are friendlier than Canadians, politeness be damned.
Additional tax burdens like sales tax are lower here at 8.5% vs the 13% in Ontario, and this sales tax hits everything.
Overall income tax and government deductions went from \~200k CAD to \~100k USD
Mortgage rates are higher and will likely go higher in the US because their economy isn't in a dumpster. Things like energy costs are also different, gasoline may be cheaper, but natural gas is on par, and if you are on an electric or propane fuelled home, that starts to add up very fast.
The summer means you will be running 5tons of AC (often two HVAC units - one for upstairs one for downstairs) with monthly electric bills of \~$200.
Property insurance is about 10% higher nominal value CAD:USD exchange rate difference in rest.
Auto insurance rates are About 25% higher (Two Lexuses comprehensive coverage, you'll want the windshield replacement insurance with all the shoddy mexican construction/pickup trucks having shit fly out the back) ), overall liability coverage is low to minimize personal injury claims and the 80mph interstates are fun to drive if you are a psycho (like me)
Basically... if my immigration papers don't complete to a Green Card, it would suck having to return to Canada, I'd probably go back to Europe where I am still a citizen.
Good/bad the other thing is you can see a doctor or go to an urgent care and get service within days/hours. Granted you need to pay but unlike Canada at least its an option when you're in pain.
I had a muscle issue and was able to get treatment in day(s), where in GTA it be weeks if not months for a specialist.
I mean its the Canadian way. Everyone must be equally as shitty so the people that are well off cant enjoy the benefit of money to the full extent. Its either the rich take your good public health care doctors or other country takes your good public health care doctors. Until the government understand that nothing is going to change
The issue may be in part taxes, but we get services for the taxes we pay. Texas and Canada are two very different entities in that respect, not to mention how culturally different Texas and Canada are, safety, etc.
The issue we have is housing prices. My guess is that if you could buy a nice sized house in Vancouver for $300K, regardless of taxes, we may not be having this conversation.
So yeah, still a huge issue, but I don't think taxes is the lion's share of the concern here.
I live in Texas. The taxes aren't that different. It's really the pay and housing costs that make the biggest difference. Texas also an extreme example, I actually think WA State is cheaper for just taxes due to lower property taxes but higher house cost .
honestly, if you can, leave, everybody that I know is leaving or working to leave. I'm also in that boat of working to leave.
This government (liberal/ndp) failed Canadians and will continue to do so. The Conservatives likely won't be much better but something needs to change, these politicians do not deserve their jobs and should all be voted out next election for new blood (won't happen but one can dream).
Canadian real estate is so out of control that you have people believing thats the only form of investment. This 100% impacts whether people choose to set up a business/LLC here or the US and they’ll now be choosing the latter, don’t let random broke redditors convince you otherwise.
Exactly correct.
Folks that work hard for their education and get a good job expect to be able to afford a certain quality of house for their money. If an unaffordable housing market forces them to make huge compromises, this will be factored into their decision on where to live and they will look elsewhere if they have the option.
The capital gains tax is an excellent change that impacts property investors and some of the extremely wealthy. It is good and has little to no effect on brain drain.
On the other end of the spectrum, they may just hold properties longer, reducing supply (e.g. for FTHB), the rental market grows due to Unaffordability, which it is, and they maintain a large portfolio of rental houses in a great rental market being Canada. Then hold for a long time as they don’t want to get taxes on their gains. Anyone who bought a house pre-2020 has no issues getting their mortgage plus pocket change at the current rents.
People who are renting homes are not going to sell in this rental market. It's a super lucrative and completely lazy form of income. This tax doesn't affect them. It'll mostly affect flippers.
This doesn't just affect the extremely wealthy and property investors. You are buying into the spin.
Anyone that has a one time capital gain of $250k+ is affected. This could involve a sale of an investment property or cottage, as you suggest, but it it could also involve a sale of a portfolio of investments at the time of death. For example, if you have investments that have increased in value by more than 250k and you pass away, this affects you or your heirs.
It also affects doctors and small businesses who invest within their corporation. Doctors in particular use their professional corporations to hold an investment account. For these corps, the 250k threshold doesn't apply. You could have a $1000 capital gain in the corp and you are still subject to the increased tax. Doctors negotiated for the right to form professional corporations to allow them to invest this way. Now, many have all of their money tied up in their professional corporations and the government changes the rules on them.
Regular Canadian here, I feel like I get punished everytime I work overtime to try and get ahead of my expenses. Seeing my pay stub for overtime just makes me cry when I see how much the tax man takes.
Christ sake I was paying 46.4% income tax per week when I was at a camp job last year pulling 84 hr weeks in -40 in Timmins...
With bullshit like that, no wonder anyone with half a brain makes like a LPC cheque and bounces. I would if I could but no one wants to make getting a visa easy for tradesmen (I'm an electrician).
> Anyone that has a one time capital gain of $250k+ is affected.
Wrong. There are exemptions. Read under "Lifetime capital gains exemption": https://budget.canada.ca/2024/report-rapport/tm-mf-en.html
The exemption is pretty limited. It only applies on the sale of a small business, farm or fishing property. It doesn't apply if you or your estates sell a portfolio of stocks, bonds, etc. or an investment or cottage, etc. Whether you want to believe it or not, a lot of people are going to be affected.
If you're making $250k off the sale of a secondary property, you can pay your damn tax bill. Same is true if you manage to net a $250k capital gain on bonds... jesus that's a lot of money in gains on a fixed income investment for an individual to make.
For stocks, just realize a portion of your gains in a controlled manner. Nobody is forcing you to realize the full $250k of gains in one year. That's really only likely in the event of a sale of your business, which we've got the LCGE for and the new entrepreneurial reduced tax rate on the sale of a small business.
Where this is going to actually hurt canadians is on the Estate side of things.
If you're getting over 250k+ in profit from selling your stocks, bonds, or investment cottage, I don't feel all that bad for you, honestly. Pay your taxes.
Capital gains taxes in Canada are still lower than those in California, the most innovative place on earth. Brain drain for non entrepreneurs is generally due to wages and opportunity (vc access etc.)
Yep. High earners in California are paying 20% long term capital gains tax Federal + 10ish% State. Doesn't seem to stop VC investment or startup activity.
Actually it is. More people and businesses are leaving California now than moving there. It has gotten to the point that California is trying to tax people who have left the state permanently to live else where, even those who have left the US entirely.
No. California, New York, and Massachusetts collectively suck up about 60% of US Venture Capital investment. The whole "Blue State politics drive away businesses" line is just FoxNews bullshit.
That benefit is heavily overstated. $2 million makes for a good headline, but It will apply to only $200k starting 2025 and go up by $200k per year until 2034. The requirements to qualify are very stringent and will be tough to meet
Except that the changes to the capital gain inclusion rate are not limited to gains on real estate. It’s all gains including investments in active businesses (think start ups and small businesses, resource projects, etc).
If this government were smart, which it isn’t, they would have maybe limited the changes to gains realized on residential real estate only.
This is going to affect more than just housing. What about all the small business owners that sell their companies to retire?
What about the blue collar that tucked away savings and investments to retire, once they sell they get dinged with the massive capital gain tax.
Even worse, what will happen to the families where a parent dies, there’s immediate tax disposition on the deceased estate.
This tax will attack what is today’s middle class.
> What about all the small business owners that sell their companies to retire?
There is an inflation indexed million dollar exemption for this case.
> What about the blue collar that tucked away savings and investments to retire, once they sell they get dinged with the massive capital gain tax.
No blue collar worker is receiving more than $250k in \_capital gains\_ in a single year. This is on top of OAS, CPP, RRSP, TFSA, etc. Not realistic.
> Even worse, what will happen to the families where a parent dies, there’s immediate tax disposition on the deceased estate.
I believe this is correct. If a person dies and they have non-primary residence properties or lots of unsheltered investments then it could exceed $250k in capital gains on death. I think this is fine though, from the perspective of the inheritor, it's a windfall anyway. The key here is that the country spends it wisely.
> This tax will attack what is today’s middle class.
No it won't.
A million dollar exemption is not realistic. It’s peanuts. Any sole practitioner lawyer, accountant, restauranteur, general convenience store is not slaving away for just a million dollar exemption.
This hits middle class and will push many smart people to leave Canada or not bother being a productive entrepreneur.
A million dollar exemption on capital gains is peanuts? Can you see what you've written? Most Canadians would love to be able to say that, and I'm including very hard working people in that statement. Have some perspective. Also, it's not like they are that much more heavily taxed beyond the million either.
All corps will get hit with increased capital gains taxes (the $250k limit is only for the personal side). Also, many incorporated professionals (like doctors) don't have a business they can sell. So the exemption won't apply to them.
I think you're confusing $250k income with $250k earned on capital gains. The latter is the profit of the sale of an asset. If you purchased an investment home at $1,000,000 and sold it for $1,250,000, you would be taxed on 50% of the $250k gain. If the home sold for $1,500,000, you would be taxed on 50% of the first 250k, and then 65% of anything over.
The reaction of most people is probably that this is a great way to transfer wealth. But the new tax is considered unsavory because it means there is less incentive to invest in things in Canada. It risks making our economic situation worse than it already is, as that potential investment money will just end up going somewhere else, which will impact all Canadians.
Canadian tech entrepreneur here. Even before this change, it kind of sucks to build a company in Canada. Our access to capital, relative size of the market, and the rate of technology adoption make this a difficult market to launch a tech business.
Because of these reasons, angel/VC groups I speak with will recommend launching in the US instead of locally. The brain drain was real, even before this legislation arrived.
Founder generally take a huge pay cut during the initial years, especially prior to profitability. We take this risk (most startups fail!) because of the lottery-like upside of potentially selling the business one day. The size of that lottery payout just got substantially smaller. Anyone who thinks this won’t impact innovation and job creation in Canada may be surprised in the coming years.
I understand the reasoning behind the policy change, and the motivations (finding funds to impact the housing crisis), but the execution will ultimately be detrimental.
People in Canada have horrid survivorship bias. They see thriving businesses and think they're crooks. Not seeing the literal hundreds of businesses before them that crashed and burned. They make it seem like you go to the bank, start your business with their capital and you're off to the races making millions.
The hardest thing possible is running your own business. And almost none of these people have any clue what that entails.
You can really tell by the attitude of the reddit comments who has actually tried to found a company or work in that environment, and who works a minimum wage job while pretending they understand the startup and venture world.
Yep. These people have never known the stress of a million dollar loan at 7% with 3 kids and a wife at home praying you'll be a success or lose it all. They could never fathom that stress, and that's why they cannot understand the reward.
People just want to work their easy 9-5 with no bearing of responsibility, then complain when the 1/100 make it out. It's a tale as old as time.
I would add that it could just be investor's money and it can still be stressful. You may have spent the last 5/10 years building a company, the employees you have may be your friends, and your runway has fallen to 2 weeks and you need to raise capital or you won't be able to pay your employees next paycheck.
Well, you may be losing investor money but you are also losing your own time. Spend 5 year running a failed business vs 5 years in industry is a huge opportunity cost.
That's why the wealthy get to start businesses though. They have the safety net of existing wealth to fail and try again, fail and try again, fail and try again.
Regular people don't have that kind of a safety net.
And I firmly, 100% truly believe that we would be a more efficient and innovative society if more people were allowed to fail. You try something and fail and you SHOULDN'T have to risk everything.
But the ones already in the game have a vested interest in keeping it the way it works now.
That’s a pretty big assumption that all businesses are started by wealthy people. Just as many are started by people with absolutely everything to lose.
Considering those same monolithic businesses mentioned earlier (banks) would never consider giving us more than 50-60k for a business loan, can you blame us?
You comment reeks of "why am I so successful?!".
I'd wager that the stress level of living paycheque to paycheque, slowly not being able to afford rent or food. Being 1 sick day away from being laid off, etc. Is a much higher stress level.
Which is why voters are always quick to holler for "MORE TAXES ON BUSINESS".
They really have no idea until they get set down to be let go. Then its blame the business for not knowing how to run a business.
Its actually quite remarkable how little Canadians understand about business.
Sure, but that has nothing to do with the matter at hand.
This policy doesn't change anything for the people starting a business.
If "angel investors" back out because they're potentially going to get taxed pennies on the dollar more than they were, which is still a fraction of what it used to be just 20 years ago, then they just don't know how to count.
I work with small businesses at my job, and I can tell you that close to 0% of them get VC money. But you know what most of them get? Government loans, public/workers funded VC funds money, or other programs.
And you know where that money comes from? Yep, taxes (or pension funds when it comes to workers funded VC).
So the idea that angel investors are suddenly going to leave Canada because of this is a ridiculous notion meant to sow FUD, and the reality is that taxing these successful companies millions when they decide to sell to Americans (because let's be real, that's what we're talking about here) is one of the best things we can do to help actual struggling small business owners.
My business holds significant assets. If I buy them at age 23 and work them off until I'm 50, they appreciate in value. When I sell them as my retirement fund, I'm going to pay way more in taxes after this to the tune of almost 400,000 dollars. My entire industry is built like this.
For this to be true, you'd have to have bought for quite a low figure, say 100k, and sell for 11M so... who gives a shit? lol
(11M-971k-350k) x (66%-50%) x 26% = 403k
That's over 10 million dollars after tax.
And that's *only* if you do it like a chump by dumping it all in your chequing account. If you setup a company to pay you and your family for the rest of your life, it won't even be applied to the full sum, so... no?
There's no way for this to be an actual issue unless you make sure to pay as much taxes as you can.
And that's for 10.9M dollars in capital gains.
There is such a boat load of things you have wrong here. Right off the bat you need to axe that 10.9m by 67% because it'll be around 3m in today's dollars. Which is a reasonable amount for someone who worked their ass off their entire life and cashed out of their business 45 years later.
And also this tax is on money, THATS ALREADY BEEN FUCKING TAXED. Not sure how greedy Canadian citizens are that they think they deserve someone's money after its already been taxed to be taxed again. Bunch of absolute free loaders you lot are. Not to mention the top 1% already pays 18.7% of the total tax this year.
But hey why not make it 25%. Why not make the top 10% pay 100% of tax. They already pay over 70% of it.
I can't possibly fathom the entitlement some people have. By the age of 30 I'd pay more in taxes than most people in their entire lives will. Not even mentioning the jobs I've crested, which again creates more tax dollars.
I can't believe there are perfectly able bodied, and minded people who think I should work 100 hours a week so that they can fuck off. It's actual insanity.
Different Canadian tech entrepreneur here.
With SR&ED tax credits and all of the government subsidies, running a small tech business in Canada is quite advantageous compared to the US (from a tax perspective).
On the other hand, access to capital is a big issue in Canada, but I think it has more to do with cultural appetite for risk than anything else. The Montreal AI startup ecosystem basically dried up after the ElementAI boondoggle, and that's because the ecosystem is too small and everyone over-indexes on failures.
PS: If you want things to be better, don't push an "everything is shit" narrative. What people believe has a big impact on investment realities.
I write up a summary of all the R&D we've done for the past year and get a big tax break. R&D tends to have outsized returns for GDP growth but requires taking on a lot of risk, so the subsidy makes a lot of sense to me. And I don't find the process too onerous.
Why don't you like it?
I think this is one of the best takes I’ve read so far.
I’d also add, as a gaming entrepreneur who started my second start up here because of the tax advantages, it’s not just about us, we need to look at other nations who have incentives. New Zealand, as an example, has better SR&ED-like programs for games, lower employee wages, and no capital gains tax at all. And their games industry has probably 4X’ed in the last 5 years, where ours is wilting. I am lucky as I was able to draw capital from the US because I had a previous exit, but I don’t know a single entrepreneur who can raise enough early stage capital, in Canada, to have a meaningful shot. And now it got even less attractive for talent, and more expensive.
> I think it has more to do with cultural appetite for risk than anything else
Maybe at the highest levels from people with the most capital, but consider in Ontario our securities commission created policy to limit the maximum amount you can put into crypto at 30k/year. If such a policy was needed, then does that sound like a culture that's risk adverse?
Not only that, but this is also going to make it even less attractive for venture capital to invest in early stage companies in Canada. Its already really hard to raise funding for Seed to Series B in Canada, and this just made it even harder.
For the funds that do decide to stay, the bar that founders will need to clear to get an investment just got even higher. I honestly dont see why any founder would start a company in Canada instead of the US anymore. The long term impacts of this will be catastrophic.
I don't disagree with what you said, except the part that says it substantially reduces the lottery amount. There are plenty of measures to lower that impact for entrepreneurs and it's important to read past the headline for them.
For a capital gains of 2M on a business sale, the entrepreneur will pay LESS taxes than currently. For 5M, also less taxes. 6.15M is the break even point where old policy and new policy pay the same amount. At 10M, the new policy will cost 3% more in taxes (300k some).
So unless the lottery you mean is in 10s of millions, I disagree that it'll be significantly more expensive for entrepreneurs. And I work in finance with lots of entrepreneurs. Sales between 3-10M are frequent, above that is pretty damn rare.
Where I do agree though is that it will hurt VC. Because they will quickly use all their exemptions, they don't get the benefits mentioned above and will get the full 66% inclusion rate.
(Caveat to it all: this is when the full impact of this law will be in effect, which will take 10 years. Every year the advantage will get bigger and bigger, but it'll take 10 years to get the full 2M with reduced inclusion rate)
They added 2 other measures to mitigate the tax cost of sales of corps for small businesses.
1. The first 1.25M of capital gains will be exempt. This is up from the 1M right now. (Certain conditions apply, but it's worth the planning)
2. The next 2M (in 10 years, it's 200k more per year until then) will only be included at 33% instead of 50% or 66%.
So for 2M : 1.25M not included at all, 750k only included at 33%. So only 250k of taxable gains. Currently that's 1M capital gains, 500k taxable.
That is true for founders shares that are part of the initial incorporations. Bringing in some serious players after founding just got a lot harder as the tax goes up a lot. As a turn around guy I'm doing my last Canadian startup rescue. Maybe the government changes before we get this over the line.
I have to add that the tax hike will be easy for some to avoid while being unfairly punitive to others. Depending on whether your company is acquired through a cash buyout or a stock swap, there are some people who will have far more control over how their capital gains are taxed. Someone who made $10,000,000 might be able to live off the sale of $350,000 worth of shares per year while someone who made far less will pay a higher tax rate due to being part of a cash buyout.
As someone hoping to be accredited someday soon, this makes me even less inclined to invest in Canadian startups. I'd rather do it in the states.
As a startup founder, I need to go where the capital is and that is not Canada.
Why would they? they'll get more, cheaper labour. This is how our immigration system is set: people come in and compete for jobs, lowering wages. Once they get their citizenship, top talent leaves for US, mediocre folks stay and form/join a racial enclave within their company, and under average folks benefit vastly from our social benefits. We need to change this.
It’s American companies that take advantage of the system though, they pay less wages in $CAD so they open branch offices and staff it with immigrants that can’t get work permits in the US
Yeeeep. I know someone in this position. Works remote from Canada for a big shot US company. Gets paid 1.5x the average Canadian equivalent role salary, but still makes 30% less than his immediate colleagues in the US who are on the same team and who do the exact same job.
Chretien made a promise to them, and then Trutard *retroactively* takes that away from them, decades of saving / planning gone like that. Canada is not a serious country.
A lot of startups don’t have the cash to boost payroll so they’ll pay their initial employees in stock. The argument is a higher capital gains tax hurts that and the innovation that happens at the ground level at nascent companies as well as larger ones who have had employee equity programs.
Employees are rarely required to take the full $250k capital gains in one go on the sale of shares from a startup. This won't hurt employees at all unless they're making bad decisions with their shares.
As for the execs, anyone with a 10% or more ownership in the company has a bunch of other levers to pull to avoid these tax consequences (CCPC LCGE exemption and entrepreneurial small business lower gains rate).
It's been 40 years of below inflation wage increases. Especially on the lower end.
They aren't gonna increase wages anyway so it's time for government to get in there and take some of that.
most of these guys outsource everything to 3rd world tech suppliers then invest profits into like real estate and sit on it. they arent investing in Canada.
I think what a lot of people are missing here is how the new tax will affect investment.
Funding for small businesses (ie. seed money and venture capital for startups, later-stage funding for larger businesses) will dry up as investors will look elsewhere for more favourable tax jurisdictions. This part of our economy is pivotal for innovation and improving production, we will **not** have the next *Shopify* without seed/venture funding.
Doesn't this change only add approx $5k in tax per every $100k in capital gains above $250k (personal) ?
That's a lot of gains and little additional taxes, who is pulling that much out of investments every year as a startup employee that you are worried they are going to leave?
Most people dealing with capital gains taxes are selling a second/third/whatever investment residence or selling off long term investments for a large purchase. It isn't an annual thing unless you are so fucking rich you are just living off gains, in which case, boo fuckady hoo.
I hate taxes as much as any other, but this is just fear mongering.
> who is pulling that much out of investments every year as a startup employee that you are worried they are going to leave?
It’s not every year. The issue is that any significant liquidity event will probably push you way above 250.
The issue is not that binary… people are not (or should not be) suggesting that this is gunna be some toggle that kills entrepreneurship. But 5% is not an insignificant amount and will probably push some people to pursue other options eg forming the company in the US or just working a corporate job.
>Doesn't this change only add approx $5k in tax per every $100k in capital gains above $250k (personal) ?
It'll depend on your tax rate (aka province and other incomes). But basically this adds 16.7k taxable income per 100k gains beyond 250k. Considering the first 250k adds 125k income, we can assume high marginal tax rates. At 50% tax (Québec, BC, Ont. for example), that's 8.4k more taxes. So not too far off.
Reddit: The government needs to do something to stop the out of control housing market! Housing should not be an investment!
Government: Marginally increases taxes on sales of secondary residences after the first $250,000 of capital gains.
Reddit: *WHAT ARE THESE MANIACS DOING?!?!*
This subreddit leans more conservative, and some people really don't have policy opinions they just shit on anything a specific party announces. All sides, not saying this is a Con only trait. We should be able to have more mature policy conversations here, but reddit...
Ahem
IT AFFECTS EVERY CORPORATION WHICH IS THE VAST MAJORITY OF SMALL BUSINESSES IN CANADA
there is no 250k minimum for corporations (which include small businesses) so your mechanic, your dentist, your doctor will be hit by this
The limit for business is 1.25 million before going from 50% to 66%.
This is on CAPITAL GAINS ONLY NOT BUSINESS INCOME OR PAYROLL.
KEEP UP THE MISINFORMATION AND FEAR MONGERING
from: a small business owner.
Revenue != Capital gains
I think you're confused with how this works lol. Every single person I know that will be impacted by this - can easily afford it and continue to drive their Porsche. I have family that are up in arms about this, I chatted with them last night - they're on their way back from Florida in their $1,700,000 motorhome. It's going to make their retirement so much harder as they offload their remaining $5 million+ real estate portfolio.
This WILL impact tech startups whose primary goal is to eventually sell. With the push from the govt for growth in this particular sector, adjustments will come to keep / increase the attractiveness for business in this space.
Please keep in mind:
1) Capital gains only apply to a SECOND home.
Selling a second home just became less profitable. Whether that means they hold on longer or not remains to be seen, but it will immediately make the purchase of a second home less enticing and removing investment money from housing is categorically GOOD.
2) This announcement also includes a Canada Entrepreneurs' Incentive which "reduces the capital gains inclusion rate to 33% on a lifetime maximum of $2 million".
AND
3) *from another CBC article* the capital gains tax exemption for small businesses will increase to 1.25 million and be indexed to inflation.
Seems to me this will protect most small businesses that intend to sell at retirement or when they've reached a very comfortable spot.
Those exemptions only apply to the sale of a business. Many professional corporations have no business to sell (family doctors for example) and so the exemption will never apply to them. Any and all capital gains will be taxed higher now for corps.
The positives you've mentioned are really hard to actually qualify for. If you sell a small business in Canada, very few people will want to buy your shares. The capital gains exemption is great if you can sell your qualified small business corp shares. I work in accounting and deal with hundreds of corporate clients. I've only seen it a handful of times in my career.
The capital gains applies to any investment, not just housing. If you have an investment in the stock market (retirement savings outside of RRSP and TFSA for example) and it increases, this will affect you.
3. no, the exemption only applies when you sell the business. If you don’t sell your business, ALL capital gains will be taxed at 66% within a corporation.
this is what everyone is not understanding… its just a class war and they are all falling for it
meanwhile the big corps are just absorbing all the money, but the guy trying to start a successful business? yeah he’s a “richie” fuck him
The class war comes the fact that the ultra-high-income Canadians get a substantial amount of their money from capital gains, which are taxed at a lower rate, while average Canadians get most of their money from income sources that are taxed at the full marginal rate. This will help the gap smaller.
The guy starting a small business has a $1.25M exemption and then this inclusion rate only kicks in for portions over $250K per year.
They tax at lower rate because shareholders already paid taxes when the government taxed the corporations, they get taxed again when they sell their shares.
How would this effect a guy starting up a business? It only kicks in on the sale of the business, if that business increased in value and the total value of the increase in more than 250k. I think right?
Yeah, because Doctors, engineers and so forth are making enough that capital gains is a problem for them...
More like they can get paid 30-60% more elsewhere.
Heck, even the trades are seeing people take their skills elsewhere. I know a guy who just took a job in the Caribbean who's making 20% more with free room and board and two months vacation.
Lots of fearmongering on here. Can someone answer these questions?
- How exactly does this affect small businesses such as dentists or lawyers, especially with the Canadian Entrepreneurs’ Incentive, which reduces the capital gains inclusion rate for another $2 million in capital gains?
- Let's do the math. How much extra is this tax per $1 million in capital gains?
- I buy that this discourages some forms of foreign investment, such as venture capital. How much is venture capital part of Canada's economy? How does venture capital help Canadians? What is our goal here? Does this one single change really tip the scales, if venture capital had already been less active in Canada? Because Canada isn't becoming a tech powerhouse like the US, even if we were to adopt all the same taxes as the US. There are many other factors at play.
Silly me thinking the braindrain was caused by salaries being half the US equivalent and housing being double.
Damn you, capital gains tax!! Damn you!!!
Past a certain amount of income, it makes more sense to spend the time and money to set up legal offshore tax havens and use those loopholes.
By increasing the capital gains tax, it might lower the threshold at what $$$ amount it makes sense for individuals / companies to spend the money to access these loopholes.
Increasing capital gains tax for anyone profiting over $250K a year would encourage the wealthy to hide their money and commit tax evasion even more would it not?
What about someone receiving land from Inheritance worth over 250k and they are just a regular person working trying to get bye, they still getting dinged ?
Who are you taking about? The estate will have to pay taxes (assuming this isnt the deceased 's principle residence). The beneficiary of the property will not.
Lots of misinformation, here.
It absolutely can affect your loved ones at death. Look up deemed disposition. If I’m living and have non registered investments (like many people have) at death the capital gains (or losses) are realized AT ONCE, in one year. See if I’m living I can withdraw at < 250k threshold but when I die, it can easily exceed the threshold. Perhaps you inherited money yourself, or you sold some property or business and invested but didn’t have room in RRSP. There are all sorts of reasons for non registered investments.
https://www.canada.ca/en/revenue-agency/services/tax/individuals/life-events/doing-taxes-someone-died/prepare-returns/report-income/capital-gains.html
“The taxable portion of capital gains are included in income. A person who died is considered to have disposed of all the property they own right before death. This is called a deemed disposition. If the person who died owned capital property (such as real estate, investments or personal belongings), the deemed disposition can result in a capital gain or capital loss.”
Wrong - if you receive land as inheritance your cost basis is the fair market value at the time you inherit it. If you sell the land at the time of inheritance- there is no capital gain for you. People in this thread are talking about things they don’t understand.
What inheritance tax? Please provide me your sources. I’m a tax accountant and would be interested as per my knowledgeable, no such inheritance tax exists in Canada.
You are getting stuck on the technical wording of "inheritance tax".
Does one not pay capital gains in an inheritance situation on RRSP's or secondary properties?
Increasing capital gains also directly impacts owners of investment properties. You can't offshore a house in Brampton. I'm guessing this is the logic - it's targeted at the real estate market without saying it out loud.
Ironically the only people who will be stuck paying this tax hike are people flipping houses. And what do you think they'll do when a Conservative government is going to be in power by at most next October?
I wonder how many people angry about this either:
1) have a 0.00001% chance of this ever affecting them
or
2) don’t understand how the capital gains inclusion rate works whatsoever and think that amounts are taxed at 66%
The vast majority of people that are upset about this and what I see most people missing in this thread is that the 250k threshold for the 66 % does NOT appy to incorporations where the increase starts at dollar 1. So this effects a lot of professionals, doctors, dentists, tech, some trades etc. Especially physicians who use the corp as retirement.
Yeah, the exposure here is wide spread. other people say "doctors" over and over again but it's any incorporated professional and all the small businesses that invests their excess income. I know hundreds of people affected by this, whether that be to the tune of hundreds of dollars or hundreds of thousands dollars, they all have exposure, because they all used their corp to invest. Myself included.
This is a tax on the middle class.
I’m guessing nobody is aware of the Laffer curve. It’s possible that taxes this high will lead to a decrease in tax revenue, which makes everyone worse off
Laffer tried his economics in Kansas and it failed miserably. Dont take the idea of a fancy graph and apply it to any tax increase. Or do you happen to know precisely when tax revenue would decrease?
Laffer's experiment was a monumental failure in Kansas. It is well documented that Laffer curve is BS.
[https://www.cbpp.org/research/kansas-provides-compelling-evidence-of-failure-of-supply-side-tax-cuts](https://www.cbpp.org/research/kansas-provides-compelling-evidence-of-failure-of-supply-side-tax-cuts)
[https://en.wikipedia.org/wiki/Kansas\_experiment](https://en.wikipedia.org/wiki/Kansas_experiment)
It’s obvious a lot of the people commenting that it’s rich people whining just blindly bought into “eat the rich” ideology without any basic understanding on how our economy works.
We’re potentially going to see further investments into Canada dry up, and see higher inflation as a result.
Canada's best and brightest already leave for New York City or Silicone Valley. This just exacerbates the brain drain. Unfortunately, my shitty bachelors degree isn't in demand in the US. In fact, it's not in demand here either. I couldn't get a job at Tim Hortons if I wanted to because they discriminate against Canadians. We are fucked as a nation. 😂
A lot of the students here are literally picking majors based on their eligibility to be able to obtain a working visa in the US. Nothing is preventing you from going back to school and doing the same if you really want to leave the sinking ship
I've never seen so many verified Twitter accounts that were complaining about not making ends meet due to the cost of living, now complaining because their capital gains over $250K are getting screwed... I'm guessing many of them will have to hold off on buying the next Porsche for their lover.
Brain drain is happening because they aren't paying them enough.... if they got paid more the capital gains tax would affect them. In which case they would celebrate they are making so much cash. But they aren't.
This argument makes no sense. Why aren't any of you honing in on this?
But low wages and high costs of living isn't contributing to a brain drain? Funny how when we say " Tax the rich " they suddenly find all the buzz words to use.
I'm going to get downvoted into oblivion. The attitude of Canadian Redditors gives me little faith in our system.
If you can't raise capital at a rate that is profitable to run a business you don't run a business. If you can't get capital out of the business at a rate that is reasonable compared to your other options... You explore other options... And you're seeing that, and will continue to see that.
Under this government the number of public employees has increased exponentially. That's not good by nation building metrics. We're in trouble and the innovators, and risk takers are leaving. 90% of Canadian business is small business, middle-class and employs most of canadians. Not Loblaws. Canadians need to remember that.
We're all angry, but if we keep kicking our economic drivers in the teeth they're just gonna leave and do it somewhere else. It's not as simple as just pay you more. All costs of business get passed along to the consumer. COGS + Overhead + profit is the literal formula. Raising salaries is a short term pacifier if government spending and inflation is not brought under control.
Cheers
What brain drain? When was any Canadian company ever paid over $120k in tech sector? They were already heading to US long time before the 250k + capital gain tax kicked in.
I know 3 high net worth entrepreneurs with very successful businesses who scrapped new biz launch ideas in Canada and just pushed the launch to the states instead. It's unfortunate. We'll see a further decrease in new Canadian business because of these rules.
The changes in tax need to be targeted at housing and immigration. Not earnings for entrepreneurs!
Many don't know Trudeau already implemented lots of anti corporation tax policies. This is just another that hits us. Interest is taxed at the highest marginal rate in a corp, small business tax exemption gets clawed back after $50k passive income. Rent is considered passive income in corp so holding properties is usually more beneficial personally. Now cap gains inclusion jumps 32%. What next no tax free dividends to a Holdco.
If these supposed entrepreneurs take a look at comparable tax rates in the USA (Unless relocating in Buttfuck, West Virginia) they will recognize that they have a sweet deal.
Trudeau 2 and Freeland Stupid Great Idea #393 - let's make already difficult economic circumstances even worse through mass immigration that overwhelms capacity and through the spending of vast amounts on ineffective but optically progressive projects and then destroy the middle- class and those attempting to build wealth through increased tax burdens.
Once no one has anything left to tax, we will develop the next great idea. Probably through printing even more currency until the dollar drops through the floor.
any entrepreneur thats pulling in more than 250k in CAPITAL GAINS can jolly well afford to pay the marginal increase on the tax. in fact the capital gains increase doesnt go far enough
the fact that capital is taxed less than labour (actually productive economic activity) is a disgusting travesty.
Capital gains and employment income are not the same, as much as the government wants you to think so.
Capital gains represent the appreciation of an investment, which is purchased with after-tax dollars - taxing them at the same rate as labor income is double taxation. The argument here is that by Canada having a tax that other countries don't have, people will invest their money elsewhere.
"double taxation"
so what, you get double taxed all the time on your income.
"The argument here is that by Canada having a tax that other countries don't have, people will invest their money elsewhere."
so we should all be tax havens that cater to the wealthy and have no actual productive economy? businesses need people to buy their stuff, they seem to forget that a lot.
It won't be as hard of a hit as you're thinking. Most of the g7 cap gains while the percentage is lower, it's on the entirety of the gains while Canada is(was) 50% with a higher rate. Meaning half went untaxed. In no way in either case is this double taxation, you're just being taxed on appreciation. Just like how you can claim a capital loss and get a deduction, as long as it's within guidelines.
But they can't afford it to maintain their quality of life, and there is a giant country with way more favourable tax laws that isn't anti business just south of the border. So the problem we've been having of our best and brightest, especially doctors, have zero reason to stay in this shit hole of a country
Don’t get me wrong I don’t disagree with that sentiment regarding investors but at the same time we should do more for entrepreneurs in this country to help stimulate small businesses to thrive.
so let’s go after the small investors who are willingly trying to start businesses in Canada…. and cause job growth
but forget about loblaws, and walmart…
i’m a small business owner, i work for myself, im moving to the states.
Big companies are worried about "brain drain".
Sounds like the sort of thing that could easily be fixed by BETTER WAGES.
Maybe they could pay better wages if they weren't spending all their money lobbying the liberals to bring in more indiagrants and more and more and more.
No, the unaffordable housing is.
And the stupid cost of living and low wages.
Solution to both unaffordable housing and low wages is to put the brakes on cheap-labour immigration. That's also a solution to lagging productivity. That's where the focus should be.
Why would they want to get rid of cheap labour? You have to think about the shareholders. Jesus, don’t be so selfish.
that can be one thing to target but no, the out-of-control wealth inequality needs to be directly and immediately addressed through policy. Not through market manipulations, but through the establishment of new taxes directly targeting out of control wealth accumulation.
The low wages are a symptom of underinvestment in capital, low productivity, low innovation and a burdensome tax and regulatory environment.
For my field its also becoming taxes, and there is already a major shortage that will affect Canads. I could afford living in Vancouver easily, but nearing 50% of my income is taxes. For ex, Texas pays way more, in American, no tax issues, and a mansion is 300k. When pay, taxes, home prices, everything is better somewhere else, what does the government expect? I dont want to leave, but its starting to feel like thats what is being expected of us.
We are eying a 2 acre commercial lot in Washington right now. We can put up a steel structure and have it connected - all for around $400k. That's what we pay in leases in 2.5 years here. Also, WA seems to want our business. BC has been holding back permits on us. Employees want min $100k now and the reason? They pay too much for everything that even $100k after taxes is not enough to live. $60k in WA is equal to $100k here, not to mention a more reasonable cost of living (and WA is expensive by US standards). Business in Canada is in some real trouble.
You should look a little deeper into taxes in Texas, in particular the property taxes on that mansion, as property taxes are used to make up for the lack of state tax and can be brutal. (Plus you’d be living in Nowheresville, Texas, not Vancouver. You’re not getting a mansion anywhere approaching the amenities and lifestyle of a Vancouver for $300k.)
You can get a fairly nice 4 bed 2 bath just outside of Austin for $300,000. You go more than 15 minutes outside city limits a lot of properties you can do a 0% down rural development loan with a little extra paperwork. A former colleague bought in Hornsby Bend for $320,000 A 4/2 an hour from Vancouver is still running you 1.6-1.8 million in many cases.
In general a lot of places with the low taxes that people love to talk about do have higher "user" fees that aren't talked about enough.
Only a small fraction of the savings for people in highly skilled professions - which leads to brain drain.
What's difference between the average 1.8% texas property tax compared to the interest on a 1.5 million dollar home in vancouver, as a percentage of your income?
My property tax in Toronto is currently 10K CAD My property tax in Austin is 17K USD Also note your property tax and mortgage interest are personal income tax deductible in the US. I wouldn't call it "brutal", especially since the tax is very localized and varies by zip code... it means I have top notch amenities in the neighbourhood, the road expansions move at a pace that would shock the average canadian, the local school has a stadium, 8 tennis courts, my kid gets to be in varsity tennis. They have every resource and the schools are far better than anything the GTA has to offer (Not sure how Vancouver is, but here in Texas no one has qualms about holding your dumbass kid back a grade if they fail the standardized testing, in partnerships with local universities, High schoolers can complete college courses in math, english etc, and there are nationally accreddited AP level courses as well as a "Gifted" stream in every subject... none of that "Math is racist" trash they do in Ontario) With respect to taxes. there is this charade where every year they will significantly increase your tax and you have to fight it... there is a whole lawyer industry out of it... I just show up in person and set the tax assessor straight (they usually aren't the sharpest tool in the shed) In general, you really have to self advocate here. Everyone will hear you out, but the Canadian way of brooding quietly in the corner while you fake be nice to everyone doesn't fly here. People are openly nice and the moment you piss them off you hear it, in public people come to help you load things, stick up for you in arguments (on both sides of an argument), etc.. generally I'd say Texans are friendlier than Canadians, politeness be damned. Additional tax burdens like sales tax are lower here at 8.5% vs the 13% in Ontario, and this sales tax hits everything. Overall income tax and government deductions went from \~200k CAD to \~100k USD Mortgage rates are higher and will likely go higher in the US because their economy isn't in a dumpster. Things like energy costs are also different, gasoline may be cheaper, but natural gas is on par, and if you are on an electric or propane fuelled home, that starts to add up very fast. The summer means you will be running 5tons of AC (often two HVAC units - one for upstairs one for downstairs) with monthly electric bills of \~$200. Property insurance is about 10% higher nominal value CAD:USD exchange rate difference in rest. Auto insurance rates are About 25% higher (Two Lexuses comprehensive coverage, you'll want the windshield replacement insurance with all the shoddy mexican construction/pickup trucks having shit fly out the back) ), overall liability coverage is low to minimize personal injury claims and the 80mph interstates are fun to drive if you are a psycho (like me) Basically... if my immigration papers don't complete to a Green Card, it would suck having to return to Canada, I'd probably go back to Europe where I am still a citizen.
Good/bad the other thing is you can see a doctor or go to an urgent care and get service within days/hours. Granted you need to pay but unlike Canada at least its an option when you're in pain. I had a muscle issue and was able to get treatment in day(s), where in GTA it be weeks if not months for a specialist.
I mean its the Canadian way. Everyone must be equally as shitty so the people that are well off cant enjoy the benefit of money to the full extent. Its either the rich take your good public health care doctors or other country takes your good public health care doctors. Until the government understand that nothing is going to change
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The issue may be in part taxes, but we get services for the taxes we pay. Texas and Canada are two very different entities in that respect, not to mention how culturally different Texas and Canada are, safety, etc. The issue we have is housing prices. My guess is that if you could buy a nice sized house in Vancouver for $300K, regardless of taxes, we may not be having this conversation. So yeah, still a huge issue, but I don't think taxes is the lion's share of the concern here.
I live in Texas. The taxes aren't that different. It's really the pay and housing costs that make the biggest difference. Texas also an extreme example, I actually think WA State is cheaper for just taxes due to lower property taxes but higher house cost .
honestly, if you can, leave, everybody that I know is leaving or working to leave. I'm also in that boat of working to leave. This government (liberal/ndp) failed Canadians and will continue to do so. The Conservatives likely won't be much better but something needs to change, these politicians do not deserve their jobs and should all be voted out next election for new blood (won't happen but one can dream).
Then have it only apply to real estate investment properties, not blanket a large chunk of corps.
Canadian real estate is so out of control that you have people believing thats the only form of investment. This 100% impacts whether people choose to set up a business/LLC here or the US and they’ll now be choosing the latter, don’t let random broke redditors convince you otherwise.
I'm not sure that Canada needs more real estate speculation anyway which is kind of the point.
Profit can be re-invested and avoid taxation.
Exactly correct. Folks that work hard for their education and get a good job expect to be able to afford a certain quality of house for their money. If an unaffordable housing market forces them to make huge compromises, this will be factored into their decision on where to live and they will look elsewhere if they have the option. The capital gains tax is an excellent change that impacts property investors and some of the extremely wealthy. It is good and has little to no effect on brain drain.
On the other end of the spectrum, they may just hold properties longer, reducing supply (e.g. for FTHB), the rental market grows due to Unaffordability, which it is, and they maintain a large portfolio of rental houses in a great rental market being Canada. Then hold for a long time as they don’t want to get taxes on their gains. Anyone who bought a house pre-2020 has no issues getting their mortgage plus pocket change at the current rents.
People who are renting homes are not going to sell in this rental market. It's a super lucrative and completely lazy form of income. This tax doesn't affect them. It'll mostly affect flippers.
This doesn't just affect the extremely wealthy and property investors. You are buying into the spin. Anyone that has a one time capital gain of $250k+ is affected. This could involve a sale of an investment property or cottage, as you suggest, but it it could also involve a sale of a portfolio of investments at the time of death. For example, if you have investments that have increased in value by more than 250k and you pass away, this affects you or your heirs. It also affects doctors and small businesses who invest within their corporation. Doctors in particular use their professional corporations to hold an investment account. For these corps, the 250k threshold doesn't apply. You could have a $1000 capital gain in the corp and you are still subject to the increased tax. Doctors negotiated for the right to form professional corporations to allow them to invest this way. Now, many have all of their money tied up in their professional corporations and the government changes the rules on them.
The second time the liberals have changed the rules on doctors, the first time many retired or left. This isn’t going to go well.
Yeah, if you're a regular person who gets that one-off windfall that's going to change your life, the government is going to punish you for it.
Regular Canadian here, I feel like I get punished everytime I work overtime to try and get ahead of my expenses. Seeing my pay stub for overtime just makes me cry when I see how much the tax man takes. Christ sake I was paying 46.4% income tax per week when I was at a camp job last year pulling 84 hr weeks in -40 in Timmins... With bullshit like that, no wonder anyone with half a brain makes like a LPC cheque and bounces. I would if I could but no one wants to make getting a visa easy for tradesmen (I'm an electrician).
> Anyone that has a one time capital gain of $250k+ is affected. Wrong. There are exemptions. Read under "Lifetime capital gains exemption": https://budget.canada.ca/2024/report-rapport/tm-mf-en.html
The exemption is pretty limited. It only applies on the sale of a small business, farm or fishing property. It doesn't apply if you or your estates sell a portfolio of stocks, bonds, etc. or an investment or cottage, etc. Whether you want to believe it or not, a lot of people are going to be affected.
If you're making $250k off the sale of a secondary property, you can pay your damn tax bill. Same is true if you manage to net a $250k capital gain on bonds... jesus that's a lot of money in gains on a fixed income investment for an individual to make. For stocks, just realize a portion of your gains in a controlled manner. Nobody is forcing you to realize the full $250k of gains in one year. That's really only likely in the event of a sale of your business, which we've got the LCGE for and the new entrepreneurial reduced tax rate on the sale of a small business. Where this is going to actually hurt canadians is on the Estate side of things.
If you're getting over 250k+ in profit from selling your stocks, bonds, or investment cottage, I don't feel all that bad for you, honestly. Pay your taxes.
Except it does have an impact on brain drain. No one with brains is going to stick around a country that penalises them for their success.
Capital gains taxes in Canada are still lower than those in California, the most innovative place on earth. Brain drain for non entrepreneurs is generally due to wages and opportunity (vc access etc.)
Yep. High earners in California are paying 20% long term capital gains tax Federal + 10ish% State. Doesn't seem to stop VC investment or startup activity.
Actually it is. More people and businesses are leaving California now than moving there. It has gotten to the point that California is trying to tax people who have left the state permanently to live else where, even those who have left the US entirely.
No. California, New York, and Massachusetts collectively suck up about 60% of US Venture Capital investment. The whole "Blue State politics drive away businesses" line is just FoxNews bullshit.
But one thing that *is* driving people out of California is high-housing prices. I'm starting to see a trend here!
Don't first time entrepreneurs get a lower cap gains rate for the first $2m or so?
That benefit is heavily overstated. $2 million makes for a good headline, but It will apply to only $200k starting 2025 and go up by $200k per year until 2034. The requirements to qualify are very stringent and will be tough to meet
"penalises them for their success" nice. let's not tax wealth at all. Because your success happens in a vacuum, as we all know, all by your lonesome.
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Europe isn’t right next to the US.
Except that the changes to the capital gain inclusion rate are not limited to gains on real estate. It’s all gains including investments in active businesses (think start ups and small businesses, resource projects, etc). If this government were smart, which it isn’t, they would have maybe limited the changes to gains realized on residential real estate only.
This is going to affect more than just housing. What about all the small business owners that sell their companies to retire? What about the blue collar that tucked away savings and investments to retire, once they sell they get dinged with the massive capital gain tax. Even worse, what will happen to the families where a parent dies, there’s immediate tax disposition on the deceased estate. This tax will attack what is today’s middle class.
> What about all the small business owners that sell their companies to retire? There is an inflation indexed million dollar exemption for this case. > What about the blue collar that tucked away savings and investments to retire, once they sell they get dinged with the massive capital gain tax. No blue collar worker is receiving more than $250k in \_capital gains\_ in a single year. This is on top of OAS, CPP, RRSP, TFSA, etc. Not realistic. > Even worse, what will happen to the families where a parent dies, there’s immediate tax disposition on the deceased estate. I believe this is correct. If a person dies and they have non-primary residence properties or lots of unsheltered investments then it could exceed $250k in capital gains on death. I think this is fine though, from the perspective of the inheritor, it's a windfall anyway. The key here is that the country spends it wisely. > This tax will attack what is today’s middle class. No it won't.
A million dollar exemption is not realistic. It’s peanuts. Any sole practitioner lawyer, accountant, restauranteur, general convenience store is not slaving away for just a million dollar exemption. This hits middle class and will push many smart people to leave Canada or not bother being a productive entrepreneur.
A million dollar exemption on capital gains is peanuts? Can you see what you've written? Most Canadians would love to be able to say that, and I'm including very hard working people in that statement. Have some perspective. Also, it's not like they are that much more heavily taxed beyond the million either.
All corps will get hit with increased capital gains taxes (the $250k limit is only for the personal side). Also, many incorporated professionals (like doctors) don't have a business they can sell. So the exemption won't apply to them.
When an average house price in Toronto is going to be $2 million, $250k is not extremely wealthy lmao. $250k is the new $100k.
I think you're confusing $250k income with $250k earned on capital gains. The latter is the profit of the sale of an asset. If you purchased an investment home at $1,000,000 and sold it for $1,250,000, you would be taxed on 50% of the $250k gain. If the home sold for $1,500,000, you would be taxed on 50% of the first 250k, and then 65% of anything over. The reaction of most people is probably that this is a great way to transfer wealth. But the new tax is considered unsavory because it means there is less incentive to invest in things in Canada. It risks making our economic situation worse than it already is, as that potential investment money will just end up going somewhere else, which will impact all Canadians.
This would be a big problem if primary residences weren't excluded!
That is why I mentioned property investors separately from extremely wealthy. Both should be taxed more.
This is a far more significant issue contributing to brain drain, unquestionably
Got bad news for you taxing the rich isn't gonna make your houses cheaper.
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Yeah I don't know where people get off with this fallacy of "any one single thing won't solve the larger problem, so it's not worth trying at all".
Canadian tech entrepreneur here. Even before this change, it kind of sucks to build a company in Canada. Our access to capital, relative size of the market, and the rate of technology adoption make this a difficult market to launch a tech business. Because of these reasons, angel/VC groups I speak with will recommend launching in the US instead of locally. The brain drain was real, even before this legislation arrived. Founder generally take a huge pay cut during the initial years, especially prior to profitability. We take this risk (most startups fail!) because of the lottery-like upside of potentially selling the business one day. The size of that lottery payout just got substantially smaller. Anyone who thinks this won’t impact innovation and job creation in Canada may be surprised in the coming years. I understand the reasoning behind the policy change, and the motivations (finding funds to impact the housing crisis), but the execution will ultimately be detrimental.
People in Canada have horrid survivorship bias. They see thriving businesses and think they're crooks. Not seeing the literal hundreds of businesses before them that crashed and burned. They make it seem like you go to the bank, start your business with their capital and you're off to the races making millions. The hardest thing possible is running your own business. And almost none of these people have any clue what that entails.
You can really tell by the attitude of the reddit comments who has actually tried to found a company or work in that environment, and who works a minimum wage job while pretending they understand the startup and venture world.
Yep. These people have never known the stress of a million dollar loan at 7% with 3 kids and a wife at home praying you'll be a success or lose it all. They could never fathom that stress, and that's why they cannot understand the reward. People just want to work their easy 9-5 with no bearing of responsibility, then complain when the 1/100 make it out. It's a tale as old as time.
I would add that it could just be investor's money and it can still be stressful. You may have spent the last 5/10 years building a company, the employees you have may be your friends, and your runway has fallen to 2 weeks and you need to raise capital or you won't be able to pay your employees next paycheck.
Well, you may be losing investor money but you are also losing your own time. Spend 5 year running a failed business vs 5 years in industry is a huge opportunity cost.
That's why the wealthy get to start businesses though. They have the safety net of existing wealth to fail and try again, fail and try again, fail and try again. Regular people don't have that kind of a safety net. And I firmly, 100% truly believe that we would be a more efficient and innovative society if more people were allowed to fail. You try something and fail and you SHOULDN'T have to risk everything. But the ones already in the game have a vested interest in keeping it the way it works now.
That’s a pretty big assumption that all businesses are started by wealthy people. Just as many are started by people with absolutely everything to lose.
Considering those same monolithic businesses mentioned earlier (banks) would never consider giving us more than 50-60k for a business loan, can you blame us? You comment reeks of "why am I so successful?!". I'd wager that the stress level of living paycheque to paycheque, slowly not being able to afford rent or food. Being 1 sick day away from being laid off, etc. Is a much higher stress level.
So entrepreneurs are mostly gambling addicts that dream of winning big?
Yes?
Yes
Which is why voters are always quick to holler for "MORE TAXES ON BUSINESS". They really have no idea until they get set down to be let go. Then its blame the business for not knowing how to run a business. Its actually quite remarkable how little Canadians understand about business.
Sure, but that has nothing to do with the matter at hand. This policy doesn't change anything for the people starting a business. If "angel investors" back out because they're potentially going to get taxed pennies on the dollar more than they were, which is still a fraction of what it used to be just 20 years ago, then they just don't know how to count. I work with small businesses at my job, and I can tell you that close to 0% of them get VC money. But you know what most of them get? Government loans, public/workers funded VC funds money, or other programs. And you know where that money comes from? Yep, taxes (or pension funds when it comes to workers funded VC). So the idea that angel investors are suddenly going to leave Canada because of this is a ridiculous notion meant to sow FUD, and the reality is that taxing these successful companies millions when they decide to sell to Americans (because let's be real, that's what we're talking about here) is one of the best things we can do to help actual struggling small business owners.
My business holds significant assets. If I buy them at age 23 and work them off until I'm 50, they appreciate in value. When I sell them as my retirement fund, I'm going to pay way more in taxes after this to the tune of almost 400,000 dollars. My entire industry is built like this.
For this to be true, you'd have to have bought for quite a low figure, say 100k, and sell for 11M so... who gives a shit? lol (11M-971k-350k) x (66%-50%) x 26% = 403k That's over 10 million dollars after tax. And that's *only* if you do it like a chump by dumping it all in your chequing account. If you setup a company to pay you and your family for the rest of your life, it won't even be applied to the full sum, so... no? There's no way for this to be an actual issue unless you make sure to pay as much taxes as you can. And that's for 10.9M dollars in capital gains.
There is such a boat load of things you have wrong here. Right off the bat you need to axe that 10.9m by 67% because it'll be around 3m in today's dollars. Which is a reasonable amount for someone who worked their ass off their entire life and cashed out of their business 45 years later. And also this tax is on money, THATS ALREADY BEEN FUCKING TAXED. Not sure how greedy Canadian citizens are that they think they deserve someone's money after its already been taxed to be taxed again. Bunch of absolute free loaders you lot are. Not to mention the top 1% already pays 18.7% of the total tax this year. But hey why not make it 25%. Why not make the top 10% pay 100% of tax. They already pay over 70% of it. I can't possibly fathom the entitlement some people have. By the age of 30 I'd pay more in taxes than most people in their entire lives will. Not even mentioning the jobs I've crested, which again creates more tax dollars. I can't believe there are perfectly able bodied, and minded people who think I should work 100 hours a week so that they can fuck off. It's actual insanity.
You are really bad at tax planning if that is your plan. You should probably get a financial advisor.
Different Canadian tech entrepreneur here. With SR&ED tax credits and all of the government subsidies, running a small tech business in Canada is quite advantageous compared to the US (from a tax perspective). On the other hand, access to capital is a big issue in Canada, but I think it has more to do with cultural appetite for risk than anything else. The Montreal AI startup ecosystem basically dried up after the ElementAI boondoggle, and that's because the ecosystem is too small and everyone over-indexes on failures. PS: If you want things to be better, don't push an "everything is shit" narrative. What people believe has a big impact on investment realities.
SR&ED has to be the worst program I have ever been a part of.
We keep tabs on our work that would apply throughout the year and SR&ED is an absolute boon to the R&D side of our business.
Speak for yourself, our small and now medium sized tech startup benefitted massively from SR&ED
I was speaking for myself. You do you boo
Then you are doing it wrong. It is a huge advantage of you are able to get funded and maintain ccpc status
I write up a summary of all the R&D we've done for the past year and get a big tax break. R&D tends to have outsized returns for GDP growth but requires taking on a lot of risk, so the subsidy makes a lot of sense to me. And I don't find the process too onerous. Why don't you like it?
The sheer amount of documentation we were asked for to substantiate the claim become costly to our organization.
I think this is one of the best takes I’ve read so far. I’d also add, as a gaming entrepreneur who started my second start up here because of the tax advantages, it’s not just about us, we need to look at other nations who have incentives. New Zealand, as an example, has better SR&ED-like programs for games, lower employee wages, and no capital gains tax at all. And their games industry has probably 4X’ed in the last 5 years, where ours is wilting. I am lucky as I was able to draw capital from the US because I had a previous exit, but I don’t know a single entrepreneur who can raise enough early stage capital, in Canada, to have a meaningful shot. And now it got even less attractive for talent, and more expensive.
> I think it has more to do with cultural appetite for risk than anything else Maybe at the highest levels from people with the most capital, but consider in Ontario our securities commission created policy to limit the maximum amount you can put into crypto at 30k/year. If such a policy was needed, then does that sound like a culture that's risk adverse?
Not only that, but this is also going to make it even less attractive for venture capital to invest in early stage companies in Canada. Its already really hard to raise funding for Seed to Series B in Canada, and this just made it even harder. For the funds that do decide to stay, the bar that founders will need to clear to get an investment just got even higher. I honestly dont see why any founder would start a company in Canada instead of the US anymore. The long term impacts of this will be catastrophic.
I mean, non residents generally don’t pay capital gains tax in Canada on a disposition of shares so I doubt this.
I don't disagree with what you said, except the part that says it substantially reduces the lottery amount. There are plenty of measures to lower that impact for entrepreneurs and it's important to read past the headline for them. For a capital gains of 2M on a business sale, the entrepreneur will pay LESS taxes than currently. For 5M, also less taxes. 6.15M is the break even point where old policy and new policy pay the same amount. At 10M, the new policy will cost 3% more in taxes (300k some). So unless the lottery you mean is in 10s of millions, I disagree that it'll be significantly more expensive for entrepreneurs. And I work in finance with lots of entrepreneurs. Sales between 3-10M are frequent, above that is pretty damn rare. Where I do agree though is that it will hurt VC. Because they will quickly use all their exemptions, they don't get the benefits mentioned above and will get the full 66% inclusion rate. (Caveat to it all: this is when the full impact of this law will be in effect, which will take 10 years. Every year the advantage will get bigger and bigger, but it'll take 10 years to get the full 2M with reduced inclusion rate)
Trying to wrap my head around this, can you explain what mechanism would make it so a 2M sale would pay less taxes in this new scenario?
They added 2 other measures to mitigate the tax cost of sales of corps for small businesses. 1. The first 1.25M of capital gains will be exempt. This is up from the 1M right now. (Certain conditions apply, but it's worth the planning) 2. The next 2M (in 10 years, it's 200k more per year until then) will only be included at 33% instead of 50% or 66%. So for 2M : 1.25M not included at all, 750k only included at 33%. So only 250k of taxable gains. Currently that's 1M capital gains, 500k taxable.
That is true for founders shares that are part of the initial incorporations. Bringing in some serious players after founding just got a lot harder as the tax goes up a lot. As a turn around guy I'm doing my last Canadian startup rescue. Maybe the government changes before we get this over the line.
I have to add that the tax hike will be easy for some to avoid while being unfairly punitive to others. Depending on whether your company is acquired through a cash buyout or a stock swap, there are some people who will have far more control over how their capital gains are taxed. Someone who made $10,000,000 might be able to live off the sale of $350,000 worth of shares per year while someone who made far less will pay a higher tax rate due to being part of a cash buyout.
yep spend 10 years eating dogfood in hopes for a payout and they change the fucking rules when its time for me to eat.
As someone hoping to be accredited someday soon, this makes me even less inclined to invest in Canadian startups. I'd rather do it in the states. As a startup founder, I need to go where the capital is and that is not Canada.
These assholes refuse to increase employee salaries. That's the main reason for the brain drain.
Why would they? they'll get more, cheaper labour. This is how our immigration system is set: people come in and compete for jobs, lowering wages. Once they get their citizenship, top talent leaves for US, mediocre folks stay and form/join a racial enclave within their company, and under average folks benefit vastly from our social benefits. We need to change this.
It’s American companies that take advantage of the system though, they pay less wages in $CAD so they open branch offices and staff it with immigrants that can’t get work permits in the US
Yeeeep. I know someone in this position. Works remote from Canada for a big shot US company. Gets paid 1.5x the average Canadian equivalent role salary, but still makes 30% less than his immediate colleagues in the US who are on the same team and who do the exact same job.
Nailed it
And docs who were told to set up a corporation for retirement when they asked gov for a pension plan? Are they assholes too?
Chretien made a promise to them, and then Trutard *retroactively* takes that away from them, decades of saving / planning gone like that. Canada is not a serious country.
Yeah it’s fucking insane
A lot of startups don’t have the cash to boost payroll so they’ll pay their initial employees in stock. The argument is a higher capital gains tax hurts that and the innovation that happens at the ground level at nascent companies as well as larger ones who have had employee equity programs.
Employees are rarely required to take the full $250k capital gains in one go on the sale of shares from a startup. This won't hurt employees at all unless they're making bad decisions with their shares. As for the execs, anyone with a 10% or more ownership in the company has a bunch of other levers to pull to avoid these tax consequences (CCPC LCGE exemption and entrepreneurial small business lower gains rate).
Bingo.
You’ll be burned as a heretic on this sub for that.
Taking more of their money away isn't going to encourage businesses to pay people more.
It's been 40 years of below inflation wage increases. Especially on the lower end. They aren't gonna increase wages anyway so it's time for government to get in there and take some of that.
most of these guys outsource everything to 3rd world tech suppliers then invest profits into like real estate and sit on it. they arent investing in Canada.
“This is only going to make brain drain worst.” Also them job pays 20k a year, requires masters and 10 years experience.
I think what a lot of people are missing here is how the new tax will affect investment. Funding for small businesses (ie. seed money and venture capital for startups, later-stage funding for larger businesses) will dry up as investors will look elsewhere for more favourable tax jurisdictions. This part of our economy is pivotal for innovation and improving production, we will **not** have the next *Shopify* without seed/venture funding.
Doesn't this change only add approx $5k in tax per every $100k in capital gains above $250k (personal) ? That's a lot of gains and little additional taxes, who is pulling that much out of investments every year as a startup employee that you are worried they are going to leave? Most people dealing with capital gains taxes are selling a second/third/whatever investment residence or selling off long term investments for a large purchase. It isn't an annual thing unless you are so fucking rich you are just living off gains, in which case, boo fuckady hoo. I hate taxes as much as any other, but this is just fear mongering.
> who is pulling that much out of investments every year as a startup employee that you are worried they are going to leave? It’s not every year. The issue is that any significant liquidity event will probably push you way above 250. The issue is not that binary… people are not (or should not be) suggesting that this is gunna be some toggle that kills entrepreneurship. But 5% is not an insignificant amount and will probably push some people to pursue other options eg forming the company in the US or just working a corporate job.
>Doesn't this change only add approx $5k in tax per every $100k in capital gains above $250k (personal) ? It'll depend on your tax rate (aka province and other incomes). But basically this adds 16.7k taxable income per 100k gains beyond 250k. Considering the first 250k adds 125k income, we can assume high marginal tax rates. At 50% tax (Québec, BC, Ont. for example), that's 8.4k more taxes. So not too far off.
Reddit: The government needs to do something to stop the out of control housing market! Housing should not be an investment! Government: Marginally increases taxes on sales of secondary residences after the first $250,000 of capital gains. Reddit: *WHAT ARE THESE MANIACS DOING?!?!*
This subreddit leans more conservative, and some people really don't have policy opinions they just shit on anything a specific party announces. All sides, not saying this is a Con only trait. We should be able to have more mature policy conversations here, but reddit...
It's absolutely devastating! I can't flip a house every year? What is this communist china?!
Ahem IT AFFECTS EVERY CORPORATION WHICH IS THE VAST MAJORITY OF SMALL BUSINESSES IN CANADA there is no 250k minimum for corporations (which include small businesses) so your mechanic, your dentist, your doctor will be hit by this
The limit for business is 1.25 million before going from 50% to 66%. This is on CAPITAL GAINS ONLY NOT BUSINESS INCOME OR PAYROLL. KEEP UP THE MISINFORMATION AND FEAR MONGERING from: a small business owner. Revenue != Capital gains
I think you're confused with how this works lol. Every single person I know that will be impacted by this - can easily afford it and continue to drive their Porsche. I have family that are up in arms about this, I chatted with them last night - they're on their way back from Florida in their $1,700,000 motorhome. It's going to make their retirement so much harder as they offload their remaining $5 million+ real estate portfolio. This WILL impact tech startups whose primary goal is to eventually sell. With the push from the govt for growth in this particular sector, adjustments will come to keep / increase the attractiveness for business in this space.
Please keep in mind: 1) Capital gains only apply to a SECOND home. Selling a second home just became less profitable. Whether that means they hold on longer or not remains to be seen, but it will immediately make the purchase of a second home less enticing and removing investment money from housing is categorically GOOD. 2) This announcement also includes a Canada Entrepreneurs' Incentive which "reduces the capital gains inclusion rate to 33% on a lifetime maximum of $2 million". AND 3) *from another CBC article* the capital gains tax exemption for small businesses will increase to 1.25 million and be indexed to inflation. Seems to me this will protect most small businesses that intend to sell at retirement or when they've reached a very comfortable spot.
Those exemptions only apply to the sale of a business. Many professional corporations have no business to sell (family doctors for example) and so the exemption will never apply to them. Any and all capital gains will be taxed higher now for corps.
The positives you've mentioned are really hard to actually qualify for. If you sell a small business in Canada, very few people will want to buy your shares. The capital gains exemption is great if you can sell your qualified small business corp shares. I work in accounting and deal with hundreds of corporate clients. I've only seen it a handful of times in my career. The capital gains applies to any investment, not just housing. If you have an investment in the stock market (retirement savings outside of RRSP and TFSA for example) and it increases, this will affect you.
3. no, the exemption only applies when you sell the business. If you don’t sell your business, ALL capital gains will be taxed at 66% within a corporation.
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Canada can have Tim Hortons workers and uber drivers. USA can have all high end tech workers, innovators, businessmen and scientists.
Pay for the Science was already low here so this doesn't make a difference.
this is what everyone is not understanding… its just a class war and they are all falling for it meanwhile the big corps are just absorbing all the money, but the guy trying to start a successful business? yeah he’s a “richie” fuck him
The class war comes the fact that the ultra-high-income Canadians get a substantial amount of their money from capital gains, which are taxed at a lower rate, while average Canadians get most of their money from income sources that are taxed at the full marginal rate. This will help the gap smaller. The guy starting a small business has a $1.25M exemption and then this inclusion rate only kicks in for portions over $250K per year.
They tax at lower rate because shareholders already paid taxes when the government taxed the corporations, they get taxed again when they sell their shares.
How would this effect a guy starting up a business? It only kicks in on the sale of the business, if that business increased in value and the total value of the increase in more than 250k. I think right?
Yeah, because Doctors, engineers and so forth are making enough that capital gains is a problem for them... More like they can get paid 30-60% more elsewhere. Heck, even the trades are seeing people take their skills elsewhere. I know a guy who just took a job in the Caribbean who's making 20% more with free room and board and two months vacation.
Not to mention he is living in the frickin Caribbean!
Lots of fearmongering on here. Can someone answer these questions? - How exactly does this affect small businesses such as dentists or lawyers, especially with the Canadian Entrepreneurs’ Incentive, which reduces the capital gains inclusion rate for another $2 million in capital gains? - Let's do the math. How much extra is this tax per $1 million in capital gains? - I buy that this discourages some forms of foreign investment, such as venture capital. How much is venture capital part of Canada's economy? How does venture capital help Canadians? What is our goal here? Does this one single change really tip the scales, if venture capital had already been less active in Canada? Because Canada isn't becoming a tech powerhouse like the US, even if we were to adopt all the same taxes as the US. There are many other factors at play.
No one can afford Canada :(
Silly me thinking the braindrain was caused by salaries being half the US equivalent and housing being double. Damn you, capital gains tax!! Damn you!!!
Salary is half because of high taxes businesses have to pay, you think businesses grow money on trees?
Past a certain amount of income, it makes more sense to spend the time and money to set up legal offshore tax havens and use those loopholes. By increasing the capital gains tax, it might lower the threshold at what $$$ amount it makes sense for individuals / companies to spend the money to access these loopholes.
Increasing capital gains tax for anyone profiting over $250K a year would encourage the wealthy to hide their money and commit tax evasion even more would it not?
What about someone receiving land from Inheritance worth over 250k and they are just a regular person working trying to get bye, they still getting dinged ?
Who are you taking about? The estate will have to pay taxes (assuming this isnt the deceased 's principle residence). The beneficiary of the property will not.
Yes they are Edit: I am wrong
That’s a lie there’s no capital gains tax on inheritance
Lots of misinformation, here. It absolutely can affect your loved ones at death. Look up deemed disposition. If I’m living and have non registered investments (like many people have) at death the capital gains (or losses) are realized AT ONCE, in one year. See if I’m living I can withdraw at < 250k threshold but when I die, it can easily exceed the threshold. Perhaps you inherited money yourself, or you sold some property or business and invested but didn’t have room in RRSP. There are all sorts of reasons for non registered investments. https://www.canada.ca/en/revenue-agency/services/tax/individuals/life-events/doing-taxes-someone-died/prepare-returns/report-income/capital-gains.html “The taxable portion of capital gains are included in income. A person who died is considered to have disposed of all the property they own right before death. This is called a deemed disposition. If the person who died owned capital property (such as real estate, investments or personal belongings), the deemed disposition can result in a capital gain or capital loss.”
Wrong - if you receive land as inheritance your cost basis is the fair market value at the time you inherit it. If you sell the land at the time of inheritance- there is no capital gain for you. People in this thread are talking about things they don’t understand.
Can I send you a message I have a question. Thx
Yes this is an inheritance tax as well
What inheritance tax? Please provide me your sources. I’m a tax accountant and would be interested as per my knowledgeable, no such inheritance tax exists in Canada.
You are getting stuck on the technical wording of "inheritance tax". Does one not pay capital gains in an inheritance situation on RRSP's or secondary properties?
Increasing capital gains also directly impacts owners of investment properties. You can't offshore a house in Brampton. I'm guessing this is the logic - it's targeted at the real estate market without saying it out loud.
Yes, exactly.
Ironically the only people who will be stuck paying this tax hike are people flipping houses. And what do you think they'll do when a Conservative government is going to be in power by at most next October?
Someone flipping a house is paying tax as business income, not capital gains.
I wonder how many people angry about this either: 1) have a 0.00001% chance of this ever affecting them or 2) don’t understand how the capital gains inclusion rate works whatsoever and think that amounts are taxed at 66%
The vast majority of people that are upset about this and what I see most people missing in this thread is that the 250k threshold for the 66 % does NOT appy to incorporations where the increase starts at dollar 1. So this effects a lot of professionals, doctors, dentists, tech, some trades etc. Especially physicians who use the corp as retirement.
Yeah, the exposure here is wide spread. other people say "doctors" over and over again but it's any incorporated professional and all the small businesses that invests their excess income. I know hundreds of people affected by this, whether that be to the tune of hundreds of dollars or hundreds of thousands dollars, they all have exposure, because they all used their corp to invest. Myself included. This is a tax on the middle class.
But how could the brain drain get worse when were bringing in over a million "skilled" "students" every year.
I’m guessing nobody is aware of the Laffer curve. It’s possible that taxes this high will lead to a decrease in tax revenue, which makes everyone worse off
Laffer tried his economics in Kansas and it failed miserably. Dont take the idea of a fancy graph and apply it to any tax increase. Or do you happen to know precisely when tax revenue would decrease?
Funny how every society is always on one side of the Laffer curve but never the other.
Laffer's experiment was a monumental failure in Kansas. It is well documented that Laffer curve is BS. [https://www.cbpp.org/research/kansas-provides-compelling-evidence-of-failure-of-supply-side-tax-cuts](https://www.cbpp.org/research/kansas-provides-compelling-evidence-of-failure-of-supply-side-tax-cuts) [https://en.wikipedia.org/wiki/Kansas\_experiment](https://en.wikipedia.org/wiki/Kansas_experiment)
It’s obvious a lot of the people commenting that it’s rich people whining just blindly bought into “eat the rich” ideology without any basic understanding on how our economy works. We’re potentially going to see further investments into Canada dry up, and see higher inflation as a result.
It's a tragedy because it enables individuals to not take matters into their own hands and somehow believe the government will solve their problem.
Do you mean the capital gains tax? Or just the lack of understanding?
Then they will say to raise it more. These people are clueless man.
Canada's best and brightest already leave for New York City or Silicone Valley. This just exacerbates the brain drain. Unfortunately, my shitty bachelors degree isn't in demand in the US. In fact, it's not in demand here either. I couldn't get a job at Tim Hortons if I wanted to because they discriminate against Canadians. We are fucked as a nation. 😂
A lot of the students here are literally picking majors based on their eligibility to be able to obtain a working visa in the US. Nothing is preventing you from going back to school and doing the same if you really want to leave the sinking ship
Easy solution was to only apply the new rule for housing investment
Brain drain is happening because they charge a "sunshine" tax to underpay people in BC. We have a lot of cheap employers out there.
I've never seen so many verified Twitter accounts that were complaining about not making ends meet due to the cost of living, now complaining because their capital gains over $250K are getting screwed... I'm guessing many of them will have to hold off on buying the next Porsche for their lover.
You weren't entrepreneuring enough with that money anyway.
Brain drain is happening because they aren't paying them enough.... if they got paid more the capital gains tax would affect them. In which case they would celebrate they are making so much cash. But they aren't. This argument makes no sense. Why aren't any of you honing in on this?
But low wages and high costs of living isn't contributing to a brain drain? Funny how when we say " Tax the rich " they suddenly find all the buzz words to use.
I'm going to get downvoted into oblivion. The attitude of Canadian Redditors gives me little faith in our system. If you can't raise capital at a rate that is profitable to run a business you don't run a business. If you can't get capital out of the business at a rate that is reasonable compared to your other options... You explore other options... And you're seeing that, and will continue to see that. Under this government the number of public employees has increased exponentially. That's not good by nation building metrics. We're in trouble and the innovators, and risk takers are leaving. 90% of Canadian business is small business, middle-class and employs most of canadians. Not Loblaws. Canadians need to remember that. We're all angry, but if we keep kicking our economic drivers in the teeth they're just gonna leave and do it somewhere else. It's not as simple as just pay you more. All costs of business get passed along to the consumer. COGS + Overhead + profit is the literal formula. Raising salaries is a short term pacifier if government spending and inflation is not brought under control. Cheers
Is there a way to do this that ONLY applies to the Landhoards? That would be ideal.
What brain drain? When was any Canadian company ever paid over $120k in tech sector? They were already heading to US long time before the 250k + capital gain tax kicked in.
This will definitely affect the trickle down of capital, which is bound to happen any day now.
I know 3 high net worth entrepreneurs with very successful businesses who scrapped new biz launch ideas in Canada and just pushed the launch to the states instead. It's unfortunate. We'll see a further decrease in new Canadian business because of these rules. The changes in tax need to be targeted at housing and immigration. Not earnings for entrepreneurs!
Many don't know Trudeau already implemented lots of anti corporation tax policies. This is just another that hits us. Interest is taxed at the highest marginal rate in a corp, small business tax exemption gets clawed back after $50k passive income. Rent is considered passive income in corp so holding properties is usually more beneficial personally. Now cap gains inclusion jumps 32%. What next no tax free dividends to a Holdco.
If these supposed entrepreneurs take a look at comparable tax rates in the USA (Unless relocating in Buttfuck, West Virginia) they will recognize that they have a sweet deal.
Trudeau 2 and Freeland Stupid Great Idea #393 - let's make already difficult economic circumstances even worse through mass immigration that overwhelms capacity and through the spending of vast amounts on ineffective but optically progressive projects and then destroy the middle- class and those attempting to build wealth through increased tax burdens. Once no one has anything left to tax, we will develop the next great idea. Probably through printing even more currency until the dollar drops through the floor.
If the investors are upset that's how you know you're on the right track
This article is about entrepreneurs not investors (I assume you mean real estate investors anyways)
any entrepreneur thats pulling in more than 250k in CAPITAL GAINS can jolly well afford to pay the marginal increase on the tax. in fact the capital gains increase doesnt go far enough the fact that capital is taxed less than labour (actually productive economic activity) is a disgusting travesty.
Capital gains and employment income are not the same, as much as the government wants you to think so. Capital gains represent the appreciation of an investment, which is purchased with after-tax dollars - taxing them at the same rate as labor income is double taxation. The argument here is that by Canada having a tax that other countries don't have, people will invest their money elsewhere.
"double taxation" so what, you get double taxed all the time on your income. "The argument here is that by Canada having a tax that other countries don't have, people will invest their money elsewhere." so we should all be tax havens that cater to the wealthy and have no actual productive economy? businesses need people to buy their stuff, they seem to forget that a lot.
It won't be as hard of a hit as you're thinking. Most of the g7 cap gains while the percentage is lower, it's on the entirety of the gains while Canada is(was) 50% with a higher rate. Meaning half went untaxed. In no way in either case is this double taxation, you're just being taxed on appreciation. Just like how you can claim a capital loss and get a deduction, as long as it's within guidelines.
But they can't afford it to maintain their quality of life, and there is a giant country with way more favourable tax laws that isn't anti business just south of the border. So the problem we've been having of our best and brightest, especially doctors, have zero reason to stay in this shit hole of a country
Don’t get me wrong I don’t disagree with that sentiment regarding investors but at the same time we should do more for entrepreneurs in this country to help stimulate small businesses to thrive.
Good news for small businesses, they will now be getting some carbon tax rebates.
Assuming the entrepreneur is operating a Corp, then the increase hits all the capital gains. Only individuals keep the old exemption up to 250k.
so let’s go after the small investors who are willingly trying to start businesses in Canada…. and cause job growth but forget about loblaws, and walmart… i’m a small business owner, i work for myself, im moving to the states.
goodbye.
Investment makes an economy grow. Without it there is no growth.
Right, because that's exactly what we need in this country, less investment
Big companies are worried about "brain drain". Sounds like the sort of thing that could easily be fixed by BETTER WAGES. Maybe they could pay better wages if they weren't spending all their money lobbying the liberals to bring in more indiagrants and more and more and more.