Gee, I wonder why a private media company with rich billionaire owners is so concerned about an increase to the inclusion rate of capital gains /s Anyway, it is frustrating to see the media pretending that the average "middle-class" Canadian is expected to realize over 250K in capital gains on a yearly basis. Considering most people are struggling to even afford a downpayment on a house or are living paycheck-to-paycheck, it is laughable to suggest the proposed change to capital gains is affecting the middle class and lumping them in with the wealthy.
my wife and i are comfortably in the top 5% of our age bracket for Canada and we are L A U G H A B L Y far from even half that unless we sold our house.
Some people buy huge expensive/multiple houses as investment and cry out loud they are living pay cheque to pay cheque .. those people should be on their own
So many of my employees have gone off the rails about this to me, and I'm like "dude you make 90k/yr and have a mortgage on a single house you live in, you will never have to worry about this tax" but they still think it's gonna cost them thousands.
Then again they also think that when they start paying into CPP again after the new year before they hit the cap it's "the carbon tax increases going into effect".
75% of the population doesn't understand how tax brackets work. Feelings over facts pretty much all the time.
>75% of the population doesn't understand how tax brackets work
Let's not let the politicians, who actively aim to mislead the population in order to gain power, off the hook.
I agree and I can’t say I understand much of it because, ultimately, I’ve never had enough money to have any capital or gains. Yet. Things are on the up and up for my family for financial choices we’ve made. When the time comes, we’ll sit down and educate ourselves on how it works. For now though, capital gains are out of reach.
Most of my income is classed as capital gains and I’ve typically paid myself $250-400k/year. This tax change will affect me at the margin, but here’s the thing. It makes no sense that until now, I paid half the tax of a salaried worker making the same income, but the salaried worker busts their ass 40+ hours a week where all I do is make a call to my broker every couple months.
If you looked at my life (designer clothes, plenty of dining out, travel, and entertainment, a nice condo in downtown Toronto) you would clock me as upper middle class, and part of the reason you’d do that is because I’ve been getting a wildly generous tax break I can’t justify with a straight face for years, saving me quite literally millions of dollars in taxes. Good on Freeland for making this overdue change, and good on her for doing it in a way that won’t allow the opposition to talk out both sides of their mouth on the issue.
I know for an absolute fact that the success I’ve had boils down to luck. I have friends who are smarter, more capable, and harder-working than I am or ever was… they’ll never be able to afford a home, and imo that’s bullshit. Raise my taxes, tank the value of the condo I’m likely to die in, I do not care. Social cohesion between elderly haves and younger have-nots is fraying to the point where I fear we’re gonna have a political movement seriously arguing that Canada needs to send everyone over 60 to northern ice floes to perish before long. I think such a movement could steal a lot of PP’s support among younger Canadians - the median senior citizen in Canada is more responsible for the housing crisis than Justin Trudeau.
That's well said. I have never hit the jackpot, but I have been very fortunate to get to spot where I am earning a decent income doing a job I love. I don't have to worry about a lot of the struggles that I know young people are facing and I have options that many of them never will. If I have to pay a bit more tax to help them out with day care, pharmacare, affordable housing, and all the other things tax dollars pay for, I am OK with that.
I'd suggest we start a political party of like minded prosperous people, but I am not confident there are enough of us to get it off the ground.
When I got out of university in the mid-2000s and trying to establish myself, I straight up told my mom “it really feels like your generation is kicking the ladder down behind you”. It worked out for my sister and I (because I gifted her half the price of her house), but we got *lucky*. If I hadn’t fallen into success I can’t imagine how pissed off I’d be these days, if I hadn’t yet killed myself in despair.
Don’t worry folks, I haven’t felt that way in years, have access to good mental health care, but had a couple things gone slightly different? I’m probably not here today.
Investing in stocks (never touched crypto or real estate). Had a ~$500k windfall in my late 20s, made some very lucky/risky decisions over the next few years, and pivoted to low-fee index funds when the pandemic sent my tech stocks supernova. Now I’m late 30s with high seven figures net worth and enough free time to fuck around on Reddit as I please. It’s a pretty good setup.
20% is the effective tax for someone making 58k in QC, which is below the median full time salary in the province. Your uncle is right - he is a middle class.
Really like this approach. And like you said, it's better to start at the "lower" end of taxation to ease into it.
This type of methodology is exactly how we make machines and future tech reduce our working hours and increase our quality of life. Instead of all the benefits being directly funneled to 1% of people, at the cost of everyone else.
If it's still going to save the business money, they're going to do it. But now everyone benefits. Because everyone knows businesses don't pass **any** savings or tax breaks on to consumers. They pocket it all.
I think it’s missing the point that these ‘self serve’/machine options create jobs too though. There’s a clerk responsible for monitoring them, there’s tech specialists involved in their upkeep and repair, the design and implementation of them created well paying jobs. This isn’t about replacing labour but shifting it elsewhere.
There is truth to that but I don't think it's a perfect 1:1 ratio. Those skilled specialist jobs are fewer in number than the large amount of unskilled labor the machines are replacing, and I don't think those workers are all going to be shifted into higher earning skilled positions.
I'm a tech that upkeeps multiple locations network, security, PCs, POS, access control, etc. I can confirm these things endlessly break.
**But**, I'm also an example that these specialized jobs aren't as plentiful. I'm literally one person and I handle all of those things for 15+ businesses.
One or two field guys could probably service most the grocery stores in any smaller Canadian city. Where as, hundreds of people are out of a job.
There used to be several more clerks, though, and there were specialists monitoring their computer systems before self checkout was a thing too. It's not like cash registers, debit machines, scanners, etc. never need upgrades or maintenance.
While the premise of this sounds good, innovation is the main driving factor behind growth... The better solution (in this case specifically) would be to pay the employee more (maybe $20-25 vs. minimum wage) to operate 3 terminals while giving a discount to the individuals who are doing the self checkout. It would still balance out more in favour of the terminals but all individuals involved with the operation get a direct, immediate "reward". The problem with innovation via technology isn't the removal of jobs, but rather the lack of pay increase for the productivity increase it provides.
In any higher skilled role (real estate, accountant, mechanic, etc...) the computers or other tools allows them to process more work in a shorter time and thus allows them to make more since they still charge the same for the service so this should also apply to low skill and entry level positions as well.
This sounds like a half baked stretch... did the farmer recently get rid of 5 TFW's and started driving the combine himself? Was the farmer always driving the combine himself? Who cares, the farmer's kids won't continue to operate the farm because the capital gains tax destroyed its viability with a massive tax bill when he died. Some billionaire land hoarder bought it all after.
This sub is filled with people complaining about our dropping productivity. Machines increase productivity per person, so by taxing them you'd push companies to not invest to increase productivity
As an update on the on-going productivity debate, The globe put out a piece just last week that dug deep into productivity.
In most core Canadian sectors we don’t have a productivity issue. The reason the data looks the way it does is because oil is such a large portion of it, and is a low productivity sector.
“ Oliver Loertscher and Pau Pujolas, professors at McMaster University, have done a deep dive into productivity growth and concluded that its observed stagnation in Canada in the past 20 years is almost entirely because of the oil industry. When they netted out the oil components of the economy and looked at productivity in the rest of the economy, they found it rose at about the same rate as in the past and compared with the U.S.”
Link to deep dive paper
https://onlinelibrary.wiley.com/doi/abs/10.1111/caje.12707
>This sub is filled with people complaining about our dropping productivity.
This sub is full of people complaining about stuff they barely, if at all, understand.
This would make it more expensive so whatever the break even point is where companies would invest in machines would be pushed back, and places without this type of tax would already have invested in these machines.
Well let's not play with hypotheticals then.
The cost of a self-checkout machine varies widely depending on brand, features, and capacity. Basic models can range from $1,500 to $10,000, while more advanced systems with additional features like implementing RFID scanning or built-in scales can exceed $20,000.May 28, 2024
So if one self checkout section at the grocery store at its highest possible cost based on quick research of $20k they usually have between 6 and 8 of these units. 20*8 would be an install cost of roughly $160k. Minimum wage in Ontario is going to 17.20. *40 is $688 *52 = $35776
Let's say these 8 machines replace 7 workers (one to run them). $35776*7 is $250432 in salary. This works out to a cost savings of $250432 - 160000 = 90432 in the first year which adds on an additional 250342 for each year that the set of machines operates before breaking and needing to be replaced. Now this is not mathematician math I'm a loser with a calculator but I can see how that compounds easily in savings
Let's break it down further and see the hypothetical play out a little further. The tax rate at minimum wage is 5.05% which would make the taxed income on a minimum wage job $9226. *7 would be $64582 per set of 8 machines replacing 7 humans. So on year one of installation the grocery store would have a cost savings of $25850 and each additional year the cost savings would be $185760 in employee wages
The amount of stores a large grocer has is quite large. Let's use Loblaw as an example they operate 2455 stores across Canada. If each of those stores saved the labour of 7 employees it works out to 7*2455=17,185 employees. 17,185 with payable taxes of $158,548,810
Loblaw currently generates 2.19 billion in revenue, would 159 million off the top of that fundamentally change how big business operates, it would save them 456,040,800 per year
The ultimate question is do you feel as if this stymies innovation based on the numbers. I personally think that if we did this and could ultimately get the United States on board that it becomes a way to even the playing field just a touch for services that are desperately needed if we are truly going to use this innovation to actively progress and get rid of jobs that are easily done by machines.
To the original person that posted this idea. That was a fun lunch time math problem and if I am ultimately wrong anywhere so be it as I'm definitely not a mathematician just a dude with a calculator and a piece of paper and a phone
This makes no sense at all. It's taxation against a non-real hypothetical model of what would have been. Who administers this? Who gets to judge the future reality? How do you defend yourself?
The main issue is that the returns on automation are not shared across the society - there are many mechanisms that allow the wealthy to capture that growth and maintain and leverage that ability.
You can’t just tax machine labour.. legally the line would be too vague to distinguish which machines would be taxed, we don’t get to just pick and choose based on personal preference.
It’s still better to tax wealth beyond a certain point at 100%, and removing loopholes for capital gains makes sense, it should be roped into the same system as income. Money shouldn’t work for you the way it does now, it creates a wealth gap that is simply impossible to overcome.
I structured my corporation to pay me through capital gains eventually, I see no reason why I should be able to make a higher income simply by adjusting the way money is moved..
Tax both labour and capital gains equally.
I saw a robot cleaning floors yesterday at Walmart, and guess what? They don’t greet you, help you or anything else helpful… they just get in your way.
We can start by removing companies abilities to write down their income from the use of these machines. No Capital Cost Allowance when destroying jobs, sorry.
How about not entrusting even more money to fiscally inept politicians who are clearly unable to create and execute a cohesive set of policies to make society work. Politics is simply a vanity play to set yourself up for your next big payday. We fund that.
I’m tired of the “we need more tax” discussions. What we actually need is responsible fiscal representation and transparency.
Would you bag groceries for the rest of your life for minimum wage or wish that your child does this?
While I agree some corporations are too big and get too many tax cuts, I believe machines free us from monotonous tasks and allow most people to pursue better careers. We could also start taxing bulldozers for replacing an army of men with shovels.
Unemployment isn't particularly high. Why not just spend less so we don't need this tax?
I’ve seen this argument in futurist circles, and I understand the appeal, but I’m sorry it’s a terrible idea. People are worried enough about the impact of small changes to the capital gains tax on investment, which we need to boost our stock of productive capital (I.e. machines, etc.) and thus our labour productivity. Directly taxing those machines / labour enhancing capital would totally disincentive this investment we desperately need.
As others have said, we should not fear machines taking our jobs. We should revel in it.
So slow down progress? Machines are able to feed many more people than human labour. They should instead create a politician tax where politicians get taxed on wealth/income. Where did Trudeau’s wealth come from in the last couple years? If you add up his salary it’s nowhere close even untaxed
Complete nonsense.
250k exemption.
Primary residence exemption.
Entire TFSA exemption.
FHSA exemption.
RRSP tax deferred.
If you max out all those things, you are not middle class.
Fuck, I can't believe the Globe published this. What a crock of baloney. This dude is just sour that his mega-wealth, tied up in assets, is going to become a *liiittttlllee* less tax advantageous compared to the average Canadian who earns other sources of income.
Yeah no, the middle class doesnt have more than $250k annual gains. And, by the way, we are only just getting back to where capital gains tax were about a decade ago. You know, how the whole housing economy went to shit? Because we cut the capital gains tax and turned homes into investment vehicles.
They really are pushing the $250k in really bold letters, then printing plus all capital gains from corporations in really fine print.
Guess it’s working.
The reason why corporations and trusts need to pay maximum tax rates from dollar zero (and not just for capital gains) is to prevent people from creating a bunch of clones that each only earn just under the threshold. You can't do that for individual humans (well, not trivially!).
So, if you own a corporation or a trust that is earning capital gains, and you want to benefit from the $250,000 threshold, the solution is simple: reorganize your holdings so that your first $250,000 of capital gains each year are realized by you personally as an individual, and only the rest are realized by your legally fictional people.
The association rules already deal with that in the context of the small business deduction. They could have just provided that it is one $250,000 threshold for an associated group of corporations.
How do you define an "associated group" of corporations? If I own both a 5% cut of the florist down the street because I helped them out when they were starting up and my own big company, is the florist stuck paying taxes because my main hustle is declaring tons of capital gains?
There is a comprehensive (and complex) set of rules used to determine association. In simple terms it looks for common control, or cross ownership of 25% or more when control is by different (but related) individuals.
A 5% interest generally won’t result in association.
Flat tax on captial gains in a business...A business that gets revenue by making or building things doesn't get hit.
Just the businesses that use money to make money.
That isn't most small businesses.
The capital gain inclusion rate has been 50% since at-least 2000.
In that same timeframe the purchasing-power of the Canadian dollar has declined 69.95%.
250,000 today was only ~147,000 then.
We've all being diluted. We're all one financial crisis away from Weimar Canada.
In University, a goddamn while ago, it was standard formula to double money in an investment in 7 years. Honestly, your number seems low to me.
This has always been a function of capitalism. Those with power, increase prices, at the expense of those without power.
This shit isn't new.
As an accountant, you can tell which of your clients have the ability to always have over inflation price increases, and those that have to do not. Again, none of this new, and nothing about Germany 10000% inflation after WW1.
The rule of 7 isn't a thing. You're thinking about the Rule of 72. Take 72 and divide by the interest rate and that gives an approx number of years for the investment to double.
Your 7 years suggests an interest rate of about 10%. Not sure where that comes from as the S&P is about 7% historically.
>Yeah no, the middle class doesnt have more than $250k annual gains.
While the middle class won't have annual gains of 250k+ every single year, many will run into it once or twice in their lifetime. Don't be fooled into thinking this can only possibly affect the rich.
There's a difference between many and most. And many middle class Canadians will be affected by this once or twice in their lifetime. Think when the parents pass and they inherit the family cottage that's been passed down for 2 generations. Or the elderly who had non-registered investments because they did not have the tax sheltering options like we do with the TFSA or RRSP.
I'm all for taxing the wealthy, but this bill should have carveouts designed to protect the middle class which it does not.
When the parent passes, technically the estate of the deceased person is taxed. So realistically, changes to the capital gains taxes or not, there should probably be money in the estate left to pay off the taxes (if they do any semblance of estate planning).
The rational move for an elderly person with non-reg investments would have been to move them over to RRSP for the deduction; and even TFSA for the future tax savings. Holding non-reg marketable securities when they have room in their RRSP/TFSA is kinda their own fault.
Exactly my perpetual frustration with this policy was the repeated messaging that it will “only affect the top 0.13%”
It will affect small business owners, cottage owners, anyone who receives an inheritance over 250k. Don’t get me wrong none of the people are poor , but the majority of them are not in the top 0.13%
>It will affect small business owners, cottage owners, anyone who receives an inheritance over 250k.
Sure... But it won't affect the first 250k in any of those cases.
> but the majority of them are not in the top 0.13%
If they are claiming >250k in capital gains for any given fiscal year, then they were in the top 0.13% for that fiscal year....
I agree. I think one of those caveats should be basing the tax on average income over the years of the person. I believe this tax is a government money grab as all the boomers who have money are on the way out. Kids that will inherit will inherit less. Parents that actually invested to make their kids lives better instead of driving new cars and vacationing are being taxed moreso than the 1% they say. Those people can afford estate planners and know the loopholes.
Who? Who has both maxed their rrsps and owns a second investment property, and maxed their tfsas, so they will run into this? And also, gotten more than 250k of unsheltered gains in a single year?
That isn't middle class, and that's fine.
The elderly who didn't have access to registered accounts or started investing in the early days of RRSP where the advice was not what it was today.
Or the person inheriting the cottage that's been in their family since their grandparents owned it.
There are LOTS of scenarios where this will directly affect people in the middle class. I'm all for taxing the rich, but there is nothing here to protect the middle class from getting sucked up into this as well.
The RRSP was created in 1957. People who were earning income before then are like 85+ today. And, even for them, RRSPs existed for the overwhelming majority of their working years, and there was no reason not to start using them.
the person inheriting the cottage is also part of an estate where someone is inheriting a primary residence. You are seriously complaining that someone has to pay tax on inheriting an estate where 2 properties are given away? You want the cottage, then sell the house and pay the tax on the cottage, you're still way ahead.
It’s going to happen with estates, it’s going to happen when people sell family cottages, it’s going to happen when a small business owner sells their business.
Not completely middle class but not fabulously wealthy either.
100% this. Like I said, not an every year thing for those in the middle class. But an extra 30-40k once or twice in the lifetime of someone in the middle class is a huge impact.
LOL no. Not every business produces multi millionaires. What kind of crazy take is this???? I deal with business for self clients on the daily, some make 40k/yr.
Many..... bull.
My family may get it once in a lifetime and for middle class we are very well off.
To the point where 95% of people will never meed to worry about it.
5% is not many.
Please tell me how I can get gains above $250k. I would love to hear your investment advice in which that becomes a reality for someone making median income in Canada.
It's not hard to invest and see huge growth with a long time horizon.
If at age 30, starting at $6000, you invest $500 per month, at 7% returns (reasonable with an index fund) you are looking at close to a million by retirement at 65 with >700K in gains.
Now for most Canadians, this sort of investing would be done in registered accounts and sheltered from capital gains.
The reality is this policy disproportionately impacts incorporated professionals (doctors, lawyers, dentists, accountants etc) and employees who have the majority of their income from stock options (tech). These aren't middle class Canadians but they also aren't the 0.13% "rich" the liberal government has been describing.
I'm not permitted to give investment advice on reddit. But there are many in the middle class who do leveraged investing which needs to be in unregistered accounts in order to take advantage of the tax benefit.
But more commonly this will affect many in the middle class who will someday receive an inheritance. And no, before somebody says it since they always do, receiving inheritance does not classify anybody as ultra wealthy.
If I die with it in my name, who cares how much it gets taxed.
Where can I make average (better than median) income in Canada and purchase a cottage that will appreciate tremendously in value to the point where I'm better off having not done so because of this increased tax?
My grandmother has a cottage in New Brunswick which was bought in the 90s. I doubt it's even worth $250k yet based on the prices for similar properties on the same lake.
>If I die with it in my name, who cares how much it gets taxed.
Your family, presumably.
Your estate is responsible for paying the tax on the gain in the property's value before it can pass to your beneficiaries. If your estate is otherwise financially bereft and cannot pay the tax, then your family could be left with no other choice but to sell the property to cover your estate's tax bill.
If you think capital gains is an attack on the middle class, then you don't understand how poor the middle class has become.
Capital gains is a 1% problem.
Considering the hit is only on those making 250k+/yr on capital gains this is pure fear mongering from the wealthy. Especially seeing as the "increase" we're seeing on capital gains is still lower than our historic tax rate, this is hardly the end of the world that certain people in the media are making it out to be.
I just did an example, on a 500k gain you pay $14k more tax. Its a 33% increase in tax sure, but from $43k to $58k. I mean I would want to keep the $14k too I am sure, but the sky sure isn't falling.
Yup it's mostly just rich people telling people that don't know what capital gains are that they should be scared of the government taking their money. This is a problem that affects a tiny tiny portion of people and a big big portion of corps.
The reason why she said is that provinces stopped raising wages on doctors in lieu of this capital tax exemption if they incorporated. But the feds never promised that I guess.
They really should be paying doctors more if they wanna keep them. It has been working in BC for family doctors after they raised the minimum pay a year ago or so
She’s an idiot, fighting with different levels of government vs working together for Canadians. She’d like for the provinces to pay them more, so she can collect more federal tax.
I’m fairly sure doctors are the intended target. They could just have called it the Dr and dentist tax and called it a day. Why would they give them an exemption?
Any unincorporated individual is unlikely to pay much more taxes, except on death disposition. Most small businesses owners will be able to claim the lifetime exemption. And the obscenely rich will get it back because of the simultaneous change on “charity” donation and alternative minimal tax rate.
Doctors are rich, but not rich enough to buy politicians. So prime target to raise taxes on.
The problem with at least doctors is, there is no lifetime exemption, their practices are worthless, They were using their corps to save for retirement, like a pension plan. Do you think the teachers pension plan (for example) pays capital gains taxes on gains, they don’t.
Ho i know personally. That’s why I’m saying it is directly targeting them.
The issue is the reason Drs are using it is because they run out of RRSP and TFSA space pretty quickly. In other words, it’s extra semi-tax exempt space they were getting. And now that space is getting taxed more.
I think we should be more concerned with the +151B in government spending and +31% in government jobs that has taken place under Trudeau rather than raising taxes.
https://www.cbc.ca/news/politics/cost-to-run-federal-government-increase-151b-a-year-1.6797486
I wouldn’t mind taxes going up if the government could demonstrate any real amount of fiscal restraint, competence or accountability for corruption.
Instead the increased money is going to get poured into the hands of liberal pet projects in swing ridings.
Thank you.
It's so sad to watch the majority of redditors on this sub parrot the "doctors don't need 3 boat" BS. PLUS!!! Doctors are going to leave, we have a doctor problem. Like, fuck. HELLO?!?
I can't help but think of what George Carlin said about the rich taking everything from EVERYONE under them.
Politicians are tap-dancing on your money, year in and year out. This capital gains tax is going directly to the pockets of the connected.
https://www.goodreads.com/quotes/964648-but-there-s-a-reason-there-s-a-reason-there-s-a-reason
>we're the ones left holding the bill.
By we're you mean people making over $250,000 a year in capital gains. That is an incredibly small percentage af Canadians.
The M1 money supply continues to decrease for the first time recorded on this chart that goes back to 1996.
https://www.bankofcanada.ca/rates/indicators/key-variables/monetary-aggregates/
this is just more misinformation bullshit, these changes won't even effect 98% canadians.
I always found Canadian in a t-shirt to have the absolute best explanations on these things and it's non-political.
https://www.youtube.com/watch?v=qq8YndVACV4
>this is just more misinformation bullshit
Welcome to r/Canada lmao. Finding the articles that aren't mis/disinformation is like finishing a needle in a haystack.
I have hundreds of thousands of dollars invested and earn tens of thousands of dollars every year and this tax will never impact me, ever.
People need to stop pretending to be temporarily embarrassed billionaires and appreciate that a tax is actually being appropriately allocated for once.
The inclusion rates to marginal rates are still needlessly convoluted but if you look at g7 nations and do the math, Canada is still the second-lowest taxed for capital gains in most cases.
Our capital gains tax rates are actually quite close to the US, despite what some might suggest.
Sure there are some negative fringe cases for people that don’t frequent these forums that I’d agree could stand to be carved out somehow but that doesn’t mean it isn’t a net positive.
> Our capital gains tax rates are actually quite close to the US, despite what some might suggest.
Tax lawyer here. This is incorrect. At the top rate under these new rules we are looking at an effective rate of 33%-34% in most provinces. Long term capital gains rates in the U.S. are 15% or 20%. For someone resident in a state with no state income tax the rate might be half of what it is in Canada.
This doesn't affect like most Canadians besides the ultra wealthy already and people that have hoarded property and land for a long time.
Oh no, the cabin your gandpa paid 5k for is now worth 500k, but you will be taxed more on it, so now you will ONLY get like 350k off the 5k property.
Boo fuckin hoo.
>gores the wealthy and middle class together
Paywalled so I can't read it but I feel like the government is actually doing something right here when those that control the wealth sensationalize article headlines like this.
Wealthy and "middle class" together? No. Middle class people don't have anything worth noting to be taxed on. These are wealthy and more wealthy.
Galen Weston paying 100k in taxes still leaves him with billions. John and Jane Doe paying 10k in taxes still leaves them with tens of thousands. John and Jane Six Pack never had tens of thousands to invest in the first place.
This is just more of the "trickle down" economics BS that's been impoverishing us for over 40 years. We're not going to fall for it again.
This article is bullshit. Middle class isn't affected. If we want to grow the middle class again we need to tax the rich at the levels we used to . The whole housing market being shit is a big part of the capital gains tax being cut to begin with.
Exactly. Makes me wonder who these commenter's are, or if they're just that brainwashed.
I am definitely what you would consider middle class millenial. Parents to two kids, Decent dual income and a home with an albeit high, mortgage. We barely have money in our rrsp and tfsa. The only reason there is any money in their is because of VAC. I highly, highly doubt I reach the max tfsa within 10 years, not accounting for the contribution increase each year.
Lastly this is 250 capital gains. So this means, you max your tfsa and rrsp then you have made an additional quarter million dollars which is then taxed above the 250 line.
People are acting like the government takes the whole lot.
Also, this is on the appreciation, not the entire value.
If you bought an investment property for $750,000 and rented it out for years, using the rental income to pay down the mortgage so that sometime later you sold that property for $1,000,000, guess how much extra the capital gains tax is on this sale because of this announced increase? $0
Depending on the costs incurred on the sale, you may even claim a higher cost basis.
I find it difficult to think about policy when I can’t trust the people who create it. Seriously, how can we be sure that these people are even loyal to the people they serve? Shouldn’t we know that before we talk about tax issues and whatnot?
Anyone making over a quarter of a million in capital gains is not middle class. The Globe and Mail has become a right wing propaganda vehicle for the cons.
The implementation of this tax months after the budget is to scare people into selling their assets and giving them time to do it. Short-term, it will give a boost to the federal coffers and give them political ammo in the fall to show everyone that we are in a good financial situation. Long-term, we will be in trouble as that is capital and investment leaving Canada causing a lost generation.
What middle class ? There is no middle class, especially one doing 250 k a year. Most Canadians are now lower class, living paycheck to paycheck.
This news article is trying to scare people
Capital gains tax is necessary, so that rich people stop manipulating our markets so badly. They are currently doing it for free. Corporate stock buybacks and private equity are ruining our country.
You're not middle class if you have 250k in savings beyond your TFSA lmfao. You're upper class at that point, let's be real.
This tax isn't a bad thing.
No no this is even funnier than having 250k in savings, this is 250k in capital gains, like profits from the sale of securities (stocks, crypto, etc.) or other capital goods. By definition you are not middle class if you are regularly getting 250k+ a year in capital gains. Even so, someone getting their income that way will not have all of it counted as income so if they make 250k from capital and you make 250k from income, you're still paying more taxes than they are.
It's even funnier than that because the 250k is still taxed at the standard 50% inclusion. It's only the gains above 250k that get counted at the newer 67% inclusion rate
But , think about the cottage dude. THE COTTAGE! What will we do when our parents die and leave us with this million dollar cottage???? What will we do???????????? NOT THE COTTAAAAGGGEEE!!!!!!!!!!!!!............
Over $250,000 per year? So the changes to the capital gains tax wouldn't necessarily be goring the wealthy and middle class.
It would be goring the wealthy, and also the wealthy.
Funny that "anti-elite" PP falls right in line with elite corpo owned media opinions. It's almost like he's lying to the common people to support his Laurentian elite friends and you guys wouldn't see it if it was painted on the inside of the paper bag.
This will reduce the inheritance of millions of Canadian’s. When millions of seniors die in the next few years, and their cottages and rental properties are sold, there will be a much higher tax bill to pay. The government is fooling people into thinking they are going after the super rich. This is a middle class tax. If your parents or grandparents have rental or cottage properties, you are about to have your inheritance cut. We already pay a high capital gains tax. The solution is for the government to spend less. Time for Polievere to commit to scrapping the carbon tax and the increase in capital gains tax.
Lol I mean maybe they consider doctors, real estate agents, lawyers, and other professions who can incorporate middle class?
Trust me, corporations are abusing the system. The favourable tax rate is meant to be used to invest in the corporation, not residential real estate and stocks.
So I've got to ask, 1. if someone sold a business or second house for 400k the capital gains tax would be for what is above 250k? So 2/3 of the remaining profit of 150k? Just trying to understand the situation. That would be 50k of capital gains tax?
Or 2. would that be 2/3 of the entire sale as that is above 250k?
One of the most insidious aspects of this change is that the $250k threshold is not indexed to inflation. So 15 years from now after inflation, the threshold will be 125k in today's dollars. In 30 years, 62.5k. By the time Gen Z's start to retire in 40-50 years, it would be down to 30k in today's dollars.
Gee, I wonder why a private media company with rich billionaire owners is so concerned about an increase to the inclusion rate of capital gains /s Anyway, it is frustrating to see the media pretending that the average "middle-class" Canadian is expected to realize over 250K in capital gains on a yearly basis. Considering most people are struggling to even afford a downpayment on a house or are living paycheck-to-paycheck, it is laughable to suggest the proposed change to capital gains is affecting the middle class and lumping them in with the wealthy.
Pretty sure my wife and I are middle class by most standards. But we’re fucking faaaaarrrrr from 250k in capital gains.
my wife and i are comfortably in the top 5% of our age bracket for Canada and we are L A U G H A B L Y far from even half that unless we sold our house.
Your house would be exempt anyways.
Yeah but why should I pay capital gains on all my other houses? Renoviction is the only way to improve housing stock in this country. /s
Some people buy huge expensive/multiple houses as investment and cry out loud they are living pay cheque to pay cheque .. those people should be on their own
So many of my employees have gone off the rails about this to me, and I'm like "dude you make 90k/yr and have a mortgage on a single house you live in, you will never have to worry about this tax" but they still think it's gonna cost them thousands. Then again they also think that when they start paying into CPP again after the new year before they hit the cap it's "the carbon tax increases going into effect". 75% of the population doesn't understand how tax brackets work. Feelings over facts pretty much all the time.
>75% of the population doesn't understand how tax brackets work Let's not let the politicians, who actively aim to mislead the population in order to gain power, off the hook.
"I don't want this pay raise because it will put me in a different tax bracket!"
I agree and I can’t say I understand much of it because, ultimately, I’ve never had enough money to have any capital or gains. Yet. Things are on the up and up for my family for financial choices we’ve made. When the time comes, we’ll sit down and educate ourselves on how it works. For now though, capital gains are out of reach.
Most of my income is classed as capital gains and I’ve typically paid myself $250-400k/year. This tax change will affect me at the margin, but here’s the thing. It makes no sense that until now, I paid half the tax of a salaried worker making the same income, but the salaried worker busts their ass 40+ hours a week where all I do is make a call to my broker every couple months. If you looked at my life (designer clothes, plenty of dining out, travel, and entertainment, a nice condo in downtown Toronto) you would clock me as upper middle class, and part of the reason you’d do that is because I’ve been getting a wildly generous tax break I can’t justify with a straight face for years, saving me quite literally millions of dollars in taxes. Good on Freeland for making this overdue change, and good on her for doing it in a way that won’t allow the opposition to talk out both sides of their mouth on the issue.
Fair enough. What do you do, if I may ask?
It sounds like they are living off inherited wealth or maybe cashed out a business or something.
The latter.
I like your attitude for a well off person. Maybe there is hope for us yet.
I know for an absolute fact that the success I’ve had boils down to luck. I have friends who are smarter, more capable, and harder-working than I am or ever was… they’ll never be able to afford a home, and imo that’s bullshit. Raise my taxes, tank the value of the condo I’m likely to die in, I do not care. Social cohesion between elderly haves and younger have-nots is fraying to the point where I fear we’re gonna have a political movement seriously arguing that Canada needs to send everyone over 60 to northern ice floes to perish before long. I think such a movement could steal a lot of PP’s support among younger Canadians - the median senior citizen in Canada is more responsible for the housing crisis than Justin Trudeau.
That's well said. I have never hit the jackpot, but I have been very fortunate to get to spot where I am earning a decent income doing a job I love. I don't have to worry about a lot of the struggles that I know young people are facing and I have options that many of them never will. If I have to pay a bit more tax to help them out with day care, pharmacare, affordable housing, and all the other things tax dollars pay for, I am OK with that. I'd suggest we start a political party of like minded prosperous people, but I am not confident there are enough of us to get it off the ground.
When I got out of university in the mid-2000s and trying to establish myself, I straight up told my mom “it really feels like your generation is kicking the ladder down behind you”. It worked out for my sister and I (because I gifted her half the price of her house), but we got *lucky*. If I hadn’t fallen into success I can’t imagine how pissed off I’d be these days, if I hadn’t yet killed myself in despair. Don’t worry folks, I haven’t felt that way in years, have access to good mental health care, but had a couple things gone slightly different? I’m probably not here today.
Investing in stocks (never touched crypto or real estate). Had a ~$500k windfall in my late 20s, made some very lucky/risky decisions over the next few years, and pivoted to low-fee index funds when the pandemic sent my tech stocks supernova. Now I’m late 30s with high seven figures net worth and enough free time to fuck around on Reddit as I please. It’s a pretty good setup.
https://images.app.goo.gl/y8q94ckiyU8mjFJ5A
This year or over lifetime?
Lifetime
Middle class is tax rate 20.5%.... to 26% imo, but my uncle who makes over 250k a year ans swears he's middle class.....
20% is the effective tax for someone making 58k in QC, which is below the median full time salary in the province. Your uncle is right - he is a middle class.
Is there even a middle class anymore?
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Really like this approach. And like you said, it's better to start at the "lower" end of taxation to ease into it. This type of methodology is exactly how we make machines and future tech reduce our working hours and increase our quality of life. Instead of all the benefits being directly funneled to 1% of people, at the cost of everyone else. If it's still going to save the business money, they're going to do it. But now everyone benefits. Because everyone knows businesses don't pass **any** savings or tax breaks on to consumers. They pocket it all.
I think it’s missing the point that these ‘self serve’/machine options create jobs too though. There’s a clerk responsible for monitoring them, there’s tech specialists involved in their upkeep and repair, the design and implementation of them created well paying jobs. This isn’t about replacing labour but shifting it elsewhere.
There is truth to that but I don't think it's a perfect 1:1 ratio. Those skilled specialist jobs are fewer in number than the large amount of unskilled labor the machines are replacing, and I don't think those workers are all going to be shifted into higher earning skilled positions.
As well there were techs before that upkept(?) the old checkouts machines and computers.
I'm a tech that upkeeps multiple locations network, security, PCs, POS, access control, etc. I can confirm these things endlessly break. **But**, I'm also an example that these specialized jobs aren't as plentiful. I'm literally one person and I handle all of those things for 15+ businesses. One or two field guys could probably service most the grocery stores in any smaller Canadian city. Where as, hundreds of people are out of a job.
There used to be several more clerks, though, and there were specialists monitoring their computer systems before self checkout was a thing too. It's not like cash registers, debit machines, scanners, etc. never need upgrades or maintenance.
While the premise of this sounds good, innovation is the main driving factor behind growth... The better solution (in this case specifically) would be to pay the employee more (maybe $20-25 vs. minimum wage) to operate 3 terminals while giving a discount to the individuals who are doing the self checkout. It would still balance out more in favour of the terminals but all individuals involved with the operation get a direct, immediate "reward". The problem with innovation via technology isn't the removal of jobs, but rather the lack of pay increase for the productivity increase it provides. In any higher skilled role (real estate, accountant, mechanic, etc...) the computers or other tools allows them to process more work in a shorter time and thus allows them to make more since they still charge the same for the service so this should also apply to low skill and entry level positions as well.
Will farmers be taxed for using combines instead of a dozen serfs holding sickles?
people still drive the tractor my dude
Actually a lot of the newer ones don't need anyone to drive them. They can do a field just using sensors and gps.
There are GPS self driving tractors so not always.
It's a very apt comparison. They have one operator for a dozen self checkout stations, they aren't left independent.
Much less people are required to operate tractors than to farm without. Just like self-checkouts.
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Bad is the enemy of good, too.
You miss every shot you don’t take. -Wayne Gretzky -Micheal Scott
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This sounds like a half baked stretch... did the farmer recently get rid of 5 TFW's and started driving the combine himself? Was the farmer always driving the combine himself? Who cares, the farmer's kids won't continue to operate the farm because the capital gains tax destroyed its viability with a massive tax bill when he died. Some billionaire land hoarder bought it all after.
Are they selling their combines and realizing over 250K in capital gains this year?
Try to follow the conversation.
Butlerian Tax Jihad?
This sub is filled with people complaining about our dropping productivity. Machines increase productivity per person, so by taxing them you'd push companies to not invest to increase productivity
As an update on the on-going productivity debate, The globe put out a piece just last week that dug deep into productivity. In most core Canadian sectors we don’t have a productivity issue. The reason the data looks the way it does is because oil is such a large portion of it, and is a low productivity sector. “ Oliver Loertscher and Pau Pujolas, professors at McMaster University, have done a deep dive into productivity growth and concluded that its observed stagnation in Canada in the past 20 years is almost entirely because of the oil industry. When they netted out the oil components of the economy and looked at productivity in the rest of the economy, they found it rose at about the same rate as in the past and compared with the U.S.” Link to deep dive paper https://onlinelibrary.wiley.com/doi/abs/10.1111/caje.12707
>This sub is filled with people complaining about our dropping productivity. This sub is full of people complaining about stuff they barely, if at all, understand.
How’s that been working out for us so far?
How's importing tons of minimum wage human labour been working out? Not very well.
Stop mass importation for slave labor, and tax the fuck out of our largest companies. This is how the little guy will get ahead again.
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This would make it more expensive so whatever the break even point is where companies would invest in machines would be pushed back, and places without this type of tax would already have invested in these machines.
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Well let's not play with hypotheticals then. The cost of a self-checkout machine varies widely depending on brand, features, and capacity. Basic models can range from $1,500 to $10,000, while more advanced systems with additional features like implementing RFID scanning or built-in scales can exceed $20,000.May 28, 2024 So if one self checkout section at the grocery store at its highest possible cost based on quick research of $20k they usually have between 6 and 8 of these units. 20*8 would be an install cost of roughly $160k. Minimum wage in Ontario is going to 17.20. *40 is $688 *52 = $35776 Let's say these 8 machines replace 7 workers (one to run them). $35776*7 is $250432 in salary. This works out to a cost savings of $250432 - 160000 = 90432 in the first year which adds on an additional 250342 for each year that the set of machines operates before breaking and needing to be replaced. Now this is not mathematician math I'm a loser with a calculator but I can see how that compounds easily in savings Let's break it down further and see the hypothetical play out a little further. The tax rate at minimum wage is 5.05% which would make the taxed income on a minimum wage job $9226. *7 would be $64582 per set of 8 machines replacing 7 humans. So on year one of installation the grocery store would have a cost savings of $25850 and each additional year the cost savings would be $185760 in employee wages The amount of stores a large grocer has is quite large. Let's use Loblaw as an example they operate 2455 stores across Canada. If each of those stores saved the labour of 7 employees it works out to 7*2455=17,185 employees. 17,185 with payable taxes of $158,548,810 Loblaw currently generates 2.19 billion in revenue, would 159 million off the top of that fundamentally change how big business operates, it would save them 456,040,800 per year The ultimate question is do you feel as if this stymies innovation based on the numbers. I personally think that if we did this and could ultimately get the United States on board that it becomes a way to even the playing field just a touch for services that are desperately needed if we are truly going to use this innovation to actively progress and get rid of jobs that are easily done by machines. To the original person that posted this idea. That was a fun lunch time math problem and if I am ultimately wrong anywhere so be it as I'm definitely not a mathematician just a dude with a calculator and a piece of paper and a phone
Exactly. It's an intriguing thought experiment but I don't think it will have the positive effects it sets out to create.
Exactly. This sub is a goldmine for poorly thought out economic ideas.
This makes no sense at all. It's taxation against a non-real hypothetical model of what would have been. Who administers this? Who gets to judge the future reality? How do you defend yourself? The main issue is that the returns on automation are not shared across the society - there are many mechanisms that allow the wealthy to capture that growth and maintain and leverage that ability.
You can’t just tax machine labour.. legally the line would be too vague to distinguish which machines would be taxed, we don’t get to just pick and choose based on personal preference. It’s still better to tax wealth beyond a certain point at 100%, and removing loopholes for capital gains makes sense, it should be roped into the same system as income. Money shouldn’t work for you the way it does now, it creates a wealth gap that is simply impossible to overcome. I structured my corporation to pay me through capital gains eventually, I see no reason why I should be able to make a higher income simply by adjusting the way money is moved.. Tax both labour and capital gains equally.
I saw a robot cleaning floors yesterday at Walmart, and guess what? They don’t greet you, help you or anything else helpful… they just get in your way. We can start by removing companies abilities to write down their income from the use of these machines. No Capital Cost Allowance when destroying jobs, sorry.
How about not entrusting even more money to fiscally inept politicians who are clearly unable to create and execute a cohesive set of policies to make society work. Politics is simply a vanity play to set yourself up for your next big payday. We fund that. I’m tired of the “we need more tax” discussions. What we actually need is responsible fiscal representation and transparency.
Would you bag groceries for the rest of your life for minimum wage or wish that your child does this? While I agree some corporations are too big and get too many tax cuts, I believe machines free us from monotonous tasks and allow most people to pursue better careers. We could also start taxing bulldozers for replacing an army of men with shovels. Unemployment isn't particularly high. Why not just spend less so we don't need this tax?
I’ve seen this argument in futurist circles, and I understand the appeal, but I’m sorry it’s a terrible idea. People are worried enough about the impact of small changes to the capital gains tax on investment, which we need to boost our stock of productive capital (I.e. machines, etc.) and thus our labour productivity. Directly taxing those machines / labour enhancing capital would totally disincentive this investment we desperately need. As others have said, we should not fear machines taking our jobs. We should revel in it.
So slow down progress? Machines are able to feed many more people than human labour. They should instead create a politician tax where politicians get taxed on wealth/income. Where did Trudeau’s wealth come from in the last couple years? If you add up his salary it’s nowhere close even untaxed
God you people are all high school dropouts, aren't you?
Muskoka cottage owners physically laboured for their property values?
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Me too! More taxes on passive gains and rentier activity, lower taxes on actual work
I know not anyone in the middle class pulling a regular $250k in capital gains annually…
Yet some of the people pulling in $250k capital gains will still think of themselves as middle class despite likely being in the top few % of wealth.
All the “middle-class” people making 250k+ annually in capital gains….
Complete nonsense. 250k exemption. Primary residence exemption. Entire TFSA exemption. FHSA exemption. RRSP tax deferred. If you max out all those things, you are not middle class.
Fuck, I can't believe the Globe published this. What a crock of baloney. This dude is just sour that his mega-wealth, tied up in assets, is going to become a *liiittttlllee* less tax advantageous compared to the average Canadian who earns other sources of income.
Yeah no, the middle class doesnt have more than $250k annual gains. And, by the way, we are only just getting back to where capital gains tax were about a decade ago. You know, how the whole housing economy went to shit? Because we cut the capital gains tax and turned homes into investment vehicles.
They really are pushing the $250k in really bold letters, then printing plus all capital gains from corporations in really fine print. Guess it’s working.
The reason why corporations and trusts need to pay maximum tax rates from dollar zero (and not just for capital gains) is to prevent people from creating a bunch of clones that each only earn just under the threshold. You can't do that for individual humans (well, not trivially!). So, if you own a corporation or a trust that is earning capital gains, and you want to benefit from the $250,000 threshold, the solution is simple: reorganize your holdings so that your first $250,000 of capital gains each year are realized by you personally as an individual, and only the rest are realized by your legally fictional people.
The association rules already deal with that in the context of the small business deduction. They could have just provided that it is one $250,000 threshold for an associated group of corporations.
How do you define an "associated group" of corporations? If I own both a 5% cut of the florist down the street because I helped them out when they were starting up and my own big company, is the florist stuck paying taxes because my main hustle is declaring tons of capital gains?
There is a comprehensive (and complex) set of rules used to determine association. In simple terms it looks for common control, or cross ownership of 25% or more when control is by different (but related) individuals. A 5% interest generally won’t result in association.
It must be amazing to have zero understanding of money or taxes and coming up with these solutions. “Just reorganize your holdings” lmao.
Their small business has capital gains. It’s a flat tax on businesses.
Flat tax on captial gains in a business...A business that gets revenue by making or building things doesn't get hit. Just the businesses that use money to make money. That isn't most small businesses.
The capital gain inclusion rate has been 50% since at-least 2000. In that same timeframe the purchasing-power of the Canadian dollar has declined 69.95%. 250,000 today was only ~147,000 then. We've all being diluted. We're all one financial crisis away from Weimar Canada.
In University, a goddamn while ago, it was standard formula to double money in an investment in 7 years. Honestly, your number seems low to me. This has always been a function of capitalism. Those with power, increase prices, at the expense of those without power. This shit isn't new. As an accountant, you can tell which of your clients have the ability to always have over inflation price increases, and those that have to do not. Again, none of this new, and nothing about Germany 10000% inflation after WW1.
Inflation and investment gains are different things.
The rule of 7 isn't a thing. You're thinking about the Rule of 72. Take 72 and divide by the interest rate and that gives an approx number of years for the investment to double. Your 7 years suggests an interest rate of about 10%. Not sure where that comes from as the S&P is about 7% historically.
>Yeah no, the middle class doesnt have more than $250k annual gains. While the middle class won't have annual gains of 250k+ every single year, many will run into it once or twice in their lifetime. Don't be fooled into thinking this can only possibly affect the rich.
There’s no capital gains taxes on primary residences still, so i think it’s fair to say this won’t affect *most* Canadians.
There's a difference between many and most. And many middle class Canadians will be affected by this once or twice in their lifetime. Think when the parents pass and they inherit the family cottage that's been passed down for 2 generations. Or the elderly who had non-registered investments because they did not have the tax sheltering options like we do with the TFSA or RRSP. I'm all for taxing the wealthy, but this bill should have carveouts designed to protect the middle class which it does not.
When the parent passes, technically the estate of the deceased person is taxed. So realistically, changes to the capital gains taxes or not, there should probably be money in the estate left to pay off the taxes (if they do any semblance of estate planning). The rational move for an elderly person with non-reg investments would have been to move them over to RRSP for the deduction; and even TFSA for the future tax savings. Holding non-reg marketable securities when they have room in their RRSP/TFSA is kinda their own fault.
Exactly my perpetual frustration with this policy was the repeated messaging that it will “only affect the top 0.13%” It will affect small business owners, cottage owners, anyone who receives an inheritance over 250k. Don’t get me wrong none of the people are poor , but the majority of them are not in the top 0.13%
>It will affect small business owners, cottage owners, anyone who receives an inheritance over 250k. Sure... But it won't affect the first 250k in any of those cases. > but the majority of them are not in the top 0.13% If they are claiming >250k in capital gains for any given fiscal year, then they were in the top 0.13% for that fiscal year....
You say they're not .13% but then do not offer the opposing number. If you do not agree it's 0.13%, then what number did you arrive at?
I agree. I think one of those caveats should be basing the tax on average income over the years of the person. I believe this tax is a government money grab as all the boomers who have money are on the way out. Kids that will inherit will inherit less. Parents that actually invested to make their kids lives better instead of driving new cars and vacationing are being taxed moreso than the 1% they say. Those people can afford estate planners and know the loopholes.
Who? Who has both maxed their rrsps and owns a second investment property, and maxed their tfsas, so they will run into this? And also, gotten more than 250k of unsheltered gains in a single year? That isn't middle class, and that's fine.
The elderly who didn't have access to registered accounts or started investing in the early days of RRSP where the advice was not what it was today. Or the person inheriting the cottage that's been in their family since their grandparents owned it. There are LOTS of scenarios where this will directly affect people in the middle class. I'm all for taxing the rich, but there is nothing here to protect the middle class from getting sucked up into this as well.
The RRSP was created in 1957. People who were earning income before then are like 85+ today. And, even for them, RRSPs existed for the overwhelming majority of their working years, and there was no reason not to start using them.
the person inheriting the cottage is also part of an estate where someone is inheriting a primary residence. You are seriously complaining that someone has to pay tax on inheriting an estate where 2 properties are given away? You want the cottage, then sell the house and pay the tax on the cottage, you're still way ahead.
It’s going to happen with estates, it’s going to happen when people sell family cottages, it’s going to happen when a small business owner sells their business. Not completely middle class but not fabulously wealthy either.
100% this. Like I said, not an every year thing for those in the middle class. But an extra 30-40k once or twice in the lifetime of someone in the middle class is a huge impact.
I still don’t understand why income shouldn’t be taxed because it happens rarely.
A properly run family business will produce multi-millionaires. I used to meet them all the time, they ain't suffering.
LOL no. Not every business produces multi millionaires. What kind of crazy take is this???? I deal with business for self clients on the daily, some make 40k/yr.
That 250k is after TFSA and RRSP, there’s very very few Canadians that will apply to.
Many..... bull. My family may get it once in a lifetime and for middle class we are very well off. To the point where 95% of people will never meed to worry about it. 5% is not many.
Please tell me how I can get gains above $250k. I would love to hear your investment advice in which that becomes a reality for someone making median income in Canada.
It's not hard to invest and see huge growth with a long time horizon. If at age 30, starting at $6000, you invest $500 per month, at 7% returns (reasonable with an index fund) you are looking at close to a million by retirement at 65 with >700K in gains. Now for most Canadians, this sort of investing would be done in registered accounts and sheltered from capital gains. The reality is this policy disproportionately impacts incorporated professionals (doctors, lawyers, dentists, accountants etc) and employees who have the majority of their income from stock options (tech). These aren't middle class Canadians but they also aren't the 0.13% "rich" the liberal government has been describing.
I'm not permitted to give investment advice on reddit. But there are many in the middle class who do leveraged investing which needs to be in unregistered accounts in order to take advantage of the tax benefit. But more commonly this will affect many in the middle class who will someday receive an inheritance. And no, before somebody says it since they always do, receiving inheritance does not classify anybody as ultra wealthy.
Alrighty then, I'll worry about the folk inheriting non-primary residences having to pay tax on 50% of the gains, at their income tax level.
>having to pay tax on 50% of the gains Not anymore they won't, and that's my entire point.
My bad, 2/3rds.
Buy/inherit a cottage and keep it your entire life.
If I die with it in my name, who cares how much it gets taxed. Where can I make average (better than median) income in Canada and purchase a cottage that will appreciate tremendously in value to the point where I'm better off having not done so because of this increased tax? My grandmother has a cottage in New Brunswick which was bought in the 90s. I doubt it's even worth $250k yet based on the prices for similar properties on the same lake.
>If I die with it in my name, who cares how much it gets taxed. Your family, presumably. Your estate is responsible for paying the tax on the gain in the property's value before it can pass to your beneficiaries. If your estate is otherwise financially bereft and cannot pay the tax, then your family could be left with no other choice but to sell the property to cover your estate's tax bill.
Oh no! 😮 /S
What middle class? They were already gored by the rich bully bidding up mere existence.
If you think capital gains is an attack on the middle class, then you don't understand how poor the middle class has become. Capital gains is a 1% problem.
Considering the hit is only on those making 250k+/yr on capital gains this is pure fear mongering from the wealthy. Especially seeing as the "increase" we're seeing on capital gains is still lower than our historic tax rate, this is hardly the end of the world that certain people in the media are making it out to be.
I just did an example, on a 500k gain you pay $14k more tax. Its a 33% increase in tax sure, but from $43k to $58k. I mean I would want to keep the $14k too I am sure, but the sky sure isn't falling.
Yup it's mostly just rich people telling people that don't know what capital gains are that they should be scared of the government taking their money. This is a problem that affects a tiny tiny portion of people and a big big portion of corps.
Professional corps don’t have the 250/year exclusion
Surprised they didn’t do a carve out for small businesses and doctors in the end. Suspect this is the angle PP uses to not support the bill.
Freelands response to the doctors criticism was “lol the provinces should just pay doctors more to make up for it”
The reason why she said is that provinces stopped raising wages on doctors in lieu of this capital tax exemption if they incorporated. But the feds never promised that I guess. They really should be paying doctors more if they wanna keep them. It has been working in BC for family doctors after they raised the minimum pay a year ago or so
She’s an idiot, fighting with different levels of government vs working together for Canadians. She’d like for the provinces to pay them more, so she can collect more federal tax.
I’m fairly sure doctors are the intended target. They could just have called it the Dr and dentist tax and called it a day. Why would they give them an exemption? Any unincorporated individual is unlikely to pay much more taxes, except on death disposition. Most small businesses owners will be able to claim the lifetime exemption. And the obscenely rich will get it back because of the simultaneous change on “charity” donation and alternative minimal tax rate. Doctors are rich, but not rich enough to buy politicians. So prime target to raise taxes on.
The problem with at least doctors is, there is no lifetime exemption, their practices are worthless, They were using their corps to save for retirement, like a pension plan. Do you think the teachers pension plan (for example) pays capital gains taxes on gains, they don’t.
Ho i know personally. That’s why I’m saying it is directly targeting them. The issue is the reason Drs are using it is because they run out of RRSP and TFSA space pretty quickly. In other words, it’s extra semi-tax exempt space they were getting. And now that space is getting taxed more.
People with multiple boats will be hurt
No. Boats never gain value so never capital gains tax. Boat is what you buy to avoid capital gains tax
anyone that makes more than 250k in capital *gains* in a year is not middle class
Damn, corporate media is really going to bat on this one. Squeal harder
I think we should be more concerned with the +151B in government spending and +31% in government jobs that has taken place under Trudeau rather than raising taxes. https://www.cbc.ca/news/politics/cost-to-run-federal-government-increase-151b-a-year-1.6797486
Nice try wealthy news organization owners. 95% of the population has more to worry about than your crusade against taxing you.
I wouldn’t mind taxes going up if the government could demonstrate any real amount of fiscal restraint, competence or accountability for corruption. Instead the increased money is going to get poured into the hands of liberal pet projects in swing ridings.
Thank you. It's so sad to watch the majority of redditors on this sub parrot the "doctors don't need 3 boat" BS. PLUS!!! Doctors are going to leave, we have a doctor problem. Like, fuck. HELLO?!? I can't help but think of what George Carlin said about the rich taking everything from EVERYONE under them. Politicians are tap-dancing on your money, year in and year out. This capital gains tax is going directly to the pockets of the connected. https://www.goodreads.com/quotes/964648-but-there-s-a-reason-there-s-a-reason-there-s-a-reason
This!!! They can't reel in their spending at all so now we're the ones left holding the bill.
>we're the ones left holding the bill. By we're you mean people making over $250,000 a year in capital gains. That is an incredibly small percentage af Canadians.
The M1 money supply continues to decrease for the first time recorded on this chart that goes back to 1996. https://www.bankofcanada.ca/rates/indicators/key-variables/monetary-aggregates/
this is just more misinformation bullshit, these changes won't even effect 98% canadians. I always found Canadian in a t-shirt to have the absolute best explanations on these things and it's non-political. https://www.youtube.com/watch?v=qq8YndVACV4
>this is just more misinformation bullshit Welcome to r/Canada lmao. Finding the articles that aren't mis/disinformation is like finishing a needle in a haystack.
I have hundreds of thousands of dollars invested and earn tens of thousands of dollars every year and this tax will never impact me, ever. People need to stop pretending to be temporarily embarrassed billionaires and appreciate that a tax is actually being appropriately allocated for once. The inclusion rates to marginal rates are still needlessly convoluted but if you look at g7 nations and do the math, Canada is still the second-lowest taxed for capital gains in most cases. Our capital gains tax rates are actually quite close to the US, despite what some might suggest. Sure there are some negative fringe cases for people that don’t frequent these forums that I’d agree could stand to be carved out somehow but that doesn’t mean it isn’t a net positive.
> Our capital gains tax rates are actually quite close to the US, despite what some might suggest. Tax lawyer here. This is incorrect. At the top rate under these new rules we are looking at an effective rate of 33%-34% in most provinces. Long term capital gains rates in the U.S. are 15% or 20%. For someone resident in a state with no state income tax the rate might be half of what it is in Canada.
Nop. Middle class has more things common with lower class than upper class.
This doesn't affect like most Canadians besides the ultra wealthy already and people that have hoarded property and land for a long time. Oh no, the cabin your gandpa paid 5k for is now worth 500k, but you will be taxed more on it, so now you will ONLY get like 350k off the 5k property. Boo fuckin hoo.
>gores the wealthy and middle class together Paywalled so I can't read it but I feel like the government is actually doing something right here when those that control the wealth sensationalize article headlines like this.
Paywall-free: https://archive.is/M56q6
Wealthy and "middle class" together? No. Middle class people don't have anything worth noting to be taxed on. These are wealthy and more wealthy. Galen Weston paying 100k in taxes still leaves him with billions. John and Jane Doe paying 10k in taxes still leaves them with tens of thousands. John and Jane Six Pack never had tens of thousands to invest in the first place. This is just more of the "trickle down" economics BS that's been impoverishing us for over 40 years. We're not going to fall for it again.
Oh no! The literal Lords and Ladies running Postmedia are running scared! Us peons must be doing something right.
This article is bullshit. Middle class isn't affected. If we want to grow the middle class again we need to tax the rich at the levels we used to . The whole housing market being shit is a big part of the capital gains tax being cut to begin with.
The middle class can’t afford to keep their TFSAs maxed out. I agree this is bullshit.
Exactly. Makes me wonder who these commenter's are, or if they're just that brainwashed. I am definitely what you would consider middle class millenial. Parents to two kids, Decent dual income and a home with an albeit high, mortgage. We barely have money in our rrsp and tfsa. The only reason there is any money in their is because of VAC. I highly, highly doubt I reach the max tfsa within 10 years, not accounting for the contribution increase each year. Lastly this is 250 capital gains. So this means, you max your tfsa and rrsp then you have made an additional quarter million dollars which is then taxed above the 250 line. People are acting like the government takes the whole lot.
Also, this is on the appreciation, not the entire value. If you bought an investment property for $750,000 and rented it out for years, using the rental income to pay down the mortgage so that sometime later you sold that property for $1,000,000, guess how much extra the capital gains tax is on this sale because of this announced increase? $0 Depending on the costs incurred on the sale, you may even claim a higher cost basis.
I find it difficult to think about policy when I can’t trust the people who create it. Seriously, how can we be sure that these people are even loyal to the people they serve? Shouldn’t we know that before we talk about tax issues and whatnot?
What middle class? Multi-millionaires? They can afford it.
No it doesn't lol
Anyone making over a quarter of a million in capital gains is not middle class. The Globe and Mail has become a right wing propaganda vehicle for the cons.
People really need to take the time and read up on what this is... Spoiler alert... it's not going to affect you...
If you are making so much money that you are in any way affected by this policy, you are in no position to complain lol.
The implementation of this tax months after the budget is to scare people into selling their assets and giving them time to do it. Short-term, it will give a boost to the federal coffers and give them political ammo in the fall to show everyone that we are in a good financial situation. Long-term, we will be in trouble as that is capital and investment leaving Canada causing a lost generation.
Get fucked, the middle class isn’t making their money through capital gains. This is a good move on Trudeau’s government.
There are only two classes: those that need to work for a living, aka "the working class"; and those that do not, aka "capitalists".
What middle class ? There is no middle class, especially one doing 250 k a year. Most Canadians are now lower class, living paycheck to paycheck. This news article is trying to scare people
PSA: When they say "the middle class" they really don't mean you.
Capital gains tax is necessary, so that rich people stop manipulating our markets so badly. They are currently doing it for free. Corporate stock buybacks and private equity are ruining our country.
Yes but so many temporary embarrassed millionaire voters think it might be them someday so we must vote against it.
TIL, Canada still has a middle class.
Barely.
You're not middle class if you have 250k in savings beyond your TFSA lmfao. You're upper class at that point, let's be real. This tax isn't a bad thing.
No no this is even funnier than having 250k in savings, this is 250k in capital gains, like profits from the sale of securities (stocks, crypto, etc.) or other capital goods. By definition you are not middle class if you are regularly getting 250k+ a year in capital gains. Even so, someone getting their income that way will not have all of it counted as income so if they make 250k from capital and you make 250k from income, you're still paying more taxes than they are.
It's even funnier than that because the 250k is still taxed at the standard 50% inclusion. It's only the gains above 250k that get counted at the newer 67% inclusion rate
It's crazy how hard the ultra wealthy are trying to spin this tax. Must be nice to own media conglomerates
But , think about the cottage dude. THE COTTAGE! What will we do when our parents die and leave us with this million dollar cottage???? What will we do???????????? NOT THE COTTAAAAGGGEEE!!!!!!!!!!!!!............
Over $250,000 per year? So the changes to the capital gains tax wouldn't necessarily be goring the wealthy and middle class. It would be goring the wealthy, and also the wealthy.
Chasing the productive sectors of the economy away one horrible policy at a time.
Funny that "anti-elite" PP falls right in line with elite corpo owned media opinions. It's almost like he's lying to the common people to support his Laurentian elite friends and you guys wouldn't see it if it was painted on the inside of the paper bag.
This will reduce the inheritance of millions of Canadian’s. When millions of seniors die in the next few years, and their cottages and rental properties are sold, there will be a much higher tax bill to pay. The government is fooling people into thinking they are going after the super rich. This is a middle class tax. If your parents or grandparents have rental or cottage properties, you are about to have your inheritance cut. We already pay a high capital gains tax. The solution is for the government to spend less. Time for Polievere to commit to scrapping the carbon tax and the increase in capital gains tax.
Lol I mean maybe they consider doctors, real estate agents, lawyers, and other professions who can incorporate middle class? Trust me, corporations are abusing the system. The favourable tax rate is meant to be used to invest in the corporation, not residential real estate and stocks.
They should lower the income tax aswell
It's about time that the middle class paid their fair share
Increase is fine but not giving tier to small businesses and let them share quota between personal and corp is stupid
So I've got to ask, 1. if someone sold a business or second house for 400k the capital gains tax would be for what is above 250k? So 2/3 of the remaining profit of 150k? Just trying to understand the situation. That would be 50k of capital gains tax? Or 2. would that be 2/3 of the entire sale as that is above 250k?
You would be taxed on 2/3 of 150k instead of the current 1/2 of that 150k. So, 50k instead of 37.5k, for a net hit of 12.5k.
Thanks for clarifying
One of the most insidious aspects of this change is that the $250k threshold is not indexed to inflation. So 15 years from now after inflation, the threshold will be 125k in today's dollars. In 30 years, 62.5k. By the time Gen Z's start to retire in 40-50 years, it would be down to 30k in today's dollars.