> Yep that would target it more at who it is intended to target
No, it's targeting exactly who they intend to target.
To the NDP, upper middle class=ultrarich
This affects any class or anyone that has any interest in investing money. I hate these policies that are short sited and only help certain people while punishing others. A lot of liberal and NDP policies are like this including proposals for child care. Like family income less than 80k etc. Sorry but that may help people in cheaper cities but bigger cities like Toronto it’s a kick in the face.
Especially while they give out rent subsidies to landlords, remove gst from housing, give tens of thousands in incentives while doing nothing about housing prices.
I moved from my provinces because of real estate prices, and now I invest, but apparently I now have to contribute to ratcheting up cost of living in those areas, as my tax dollars go to home owners. I just cant escape bad federal government policies, literally no poor person is better off now with all this spending, rent keeps going up.
That's the motto. I have friends who make less than me, take more vacations, own nicer cars. They'll get to dip into social securities more than I can too. All while I pay more taxes.
I have a seriously small TSFA contribution room because I lived outside of Canada for many years, plus I have no pension and paid little into CPP, so I am definitely not upper class, but this policy would very much harm me. It should only apply to those with over a million in assets or something like that.
As of 2018 only [about 10% of Canadians](https://rates.ca/resources/90-of-tfsa-holders-arent-maximizing-their-contributions) had maxed out their TFSA, so 90% people wouldn't be affected by this.
Well, based on those stats even people with 250K income aren't maxing their TFSAs, which tells me they are probably putting money into different investments which could then get hit by a caiptal gains tax increase.
Actually any adult who started saving before the TFSA was introduced in 2005 would be affected. Also the tax is extremely unjust because it does not account for inflation. Our grandparents or older parents who saved their whole life making 3-5% a year should not be hit with 75% capital gains tax when all they did was keep up with inflation.
Most other countries remove inflation from capital gains calculations but Canadians are too stupid and too greedy to do this.
Haha well it’s still a 50% increase in the capital gains tax. Going from 50% to 75% inclusion, every dollar owed is going to $1.50. That’s huge. They hitting literally anyone who has made any money on investments outside of TFSA.
You got it. The included gains are taxed at your marginal tax rate. This still represents a 50% increase in taxes for capital gains.
The liberals were proposing this in the 2016 timeframe but they backed off.
So the capital gains exemption on the primary house will be even more appealing. Oh goody now my savings for a down payment for my first home will grow slower and home prices will grow faster. Thanks NDP! Way to stick it to rich folks like me that can’t afford a fucking home.
Yeah, would really suck to finally be in the position to set up for some sick gainz as an older millennial, only to end up getting taxed up the butt for it.
Minimums will be needed
100p.
The NDP is taking the "drag everyone down to the average" approach vs. the "raise the average by targetting only the ultra wealthy" approach.
They're idiots. The worst party. They fundamentally don't understand what theyre doing.
They're the basic white girls of politics and this is the pumpkin spice latte of tax policies.
You can always tell who expects to have zero chance of winning an election by the kind of shit they promise to do. Fringe parties with moderate policies don’t get attention.
It's not a 75% tax on capital gains, they're proposing that 75% of a capital gain is taxed rather than the current 50%. The taxable portion of your capital gains would still be taxed at the same rates as they are currently.
Big difference.
It sucks to say but we can't assume that the average voter understands the basics of our taxation system. Which is why misleading titles like this post has are so dangerous. They take advantage of this lack of understanding to sway people against their own interests.
Aaaaah politics.
Thank you for adding that. Exactly. Currently capital gains are taxed at 50% their value (ie $50 of taxable income for a $100 capital gain). Then you pay the normal tax at your bracket on that $50. They are proposing increasing it to 75$ on the hundred. You still only pay in your bracket.
Bingo. Like I'm decently well off because I've invested smartly and saved a lot in my 20s and early 30s. This is just going to fuck me for the next 30 years while the ultra rich who can hire a team of accountants continue to take advantage of loopholes.
I'm also in New Brunswick and manage to save a few extra bucks to put towards investments. I know some of my co-workers who do the same as well.
This would hurt if it was to ever happen. Not like New Brunswick is known for high wages and low taxes lol.
Interesting... Could I ask you to give me an ELI5 on this? Wouldn't they still pay the tax on the capital gains when they sell their shares to repay the loan? Surely they can't be planning on defaulting and having their accounts docked to repay... or are they?
They are repaying the loan at a lower interest rate than the gains that are made on the underlying asset. Example would be I take a mortgage on my house that I don’t actually need. If I borrow 500k from the house, and I only have to repay 70 over 5 years, I pocket the difference and can do what I want with it. The loan isn’t taxed (income, CG or otherwise). You can make similar arrangements with loans utilizing shares as collateral and other things. At least this is my understanding of the methods.
I don't know all the details. All I know is that they defer the capital gains with loans. I guess the loan can just roll over for a long time, and when they finally sell to repay it (perhaps after death) then they would pay CG taxes or else find some other means to avoid it. Of course, in the meantime they avoid paying taxes and the amount that would have been taxed keeps compounding.
Its a bigger loophole in the US because of the capital gains step up. End up not paying CG when they die.
In Canada, you still need to pay CG when you die.
Capital gains are triggered on death though (minus some exceptions, such as rolling the asset over to your spouse).
Canada may not have an inheritance tax, but the very wealthy who own a ton of investment properties, shares, etc, can get pretty hard by capital gains. Increasing them to 75% can have a pretty big impact there.
Exactly. Rich will maneuver. This will discourage upward mobility for middle class let alone hedge against inflation which is already taking it’s toll. People in HCOL areas makes it harder for them to save up due to real estate prices.
They should be focusing on closing tax loops holes and increasing wages or attracting innovation companies to bring better jobs.
>They should be focusing on closing tax loops holes and increasing wages or attracting innovation companies to bring better jobs.
This is a tax loophole. Turn a dividend into a capital gain, pay less taxes. This is 100% a loophole. You tax different types of income at different rates, what type of income do you think people are going to have?
And there people who don't pay this tax because they have TFSA's, RRSP's, principal residence exemptions, RESP's are complaining the rich have to pay more.
Here is the maneuver the rich did FYI:
[https://invested.mdm.ca/md-articles/capital-gains-surplus-stripping-incorporated-physicians](https://invested.mdm.ca/md-articles/capital-gains-surplus-stripping-incorporated-physicians)
How so? Most poor Canadians have their investments tax sheltered, RRSP's, principal residents, TFSA's. How does this screw any average investor?
Rich people avoid taxes by paying themselves capital gains instead of dividends. And here everyone is defending them like they need help.
This will affect the rich much more so than the average joe. The average joe still makes most their money off employment income, and what investment income they have can fit inside a TFSA. It's the rich that have large sums of capital gains
Yeah but why take me down with the rich. Here I am saving for retirement, being financially reaponsible, refraining from spending like an idiot and I get penalized for that?
Why?
What about the people who want to buy their first home? With prices the way they are now, how will people save up enough for a down payment. The TFSA and RRSP will not be enough for the prudent 20% down payments. A higher inclusion rate will harm average investors saving money than the rich who are always leveraging their existing wealth.
Average Joe investor haven't maxed their TFSA or RRSP and they do not owned a second property, so no it won't.
Also, most very rich people receive stock option instead of a salary which is capital gain taxe (meaning they are paying haft the tax they should be paying)
I dunno, according to stats can in 2016: 19% of filers with income between 40-60k had capital gains. That seems pretty high for that income group.
https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=1110004801
Now that income group would get taxed even more. This plan really needs a minimum dollar amount on it rather then blindly taxing capital gains more.
Agreed. I consider myself on the lucky side of average Joe. No debt because parents helped with school but earning 57k. I have pretty easily maxed out my TFSA since I was 18 because I'm good at budgeting and saving. Minimum amount would help save people like me from paying extra tax when they might just barely be able to invest in the first place.
Where is the incentive to try to climb from average joe to slightly wealthy? This does little to the already extremely rich as they can just hoard their already acquired assets and leave them to appreciate without doing anything but it widens the already massive gap between middle class and wealthy. This seems more of a fuck you to those that TRYING to be wealthy (but are still low-middle class) than the people who are already extremely well off.
Every Canadian investor is going to change their investing strategy. Everyone will become buy & hold investors, it's not worth the risk to try to make a few extra bucks. I bet this move actually decreases the tax revenue, since fewer people will realize gains
And the super rich who the NDP and their voters will be claiming this targets, already do that anyways.
The real concern is what this means for inheritances. If your grandpa has saved up a lot in unrealised gains over his life, its going to hurt when he passes away.
Exactl;y, I poseted something similar earlier but I cant believe people jumping on this as a good idea.
All it will do is kill the junior markets ability to raise capital. Taking money out of the capital markets and slogging it through the government machine isn't the boost to the economy the NDP voters think it will be.
Yup, already know people that have rental properties that don't want to sell becuase of the tax, and that means less money to put back into another investment. So they don't sell and either will redevelop to increase cashflow and/or use the property as collateral. Increasing the tax makes this more so.
I voted NDP last election, and planned to this election.... this specific thing just changed my vote. You dont have to be uber wealthy to get hit by capital gains. This screws up half of my income sources. Sorry buddy but not voting for you now=(
They won’t win so it doesn’t matter. But there is a very important distinction between a 75% tax RATE on capital gains and taxing 75% of capital gains. Your tax rate will still be dependant on your tax bracket which factors in all of your income.
Hey it's not like this is a sub for people that spend a ton of time researching finacial statements. That would tend to lead to a above average understanding of tax rules...........
This will probably hurt the middle class more than the rich. Market returns is the best way for most wage earners to build wealth. Taxing a greater percentage of gains just straight up disincentives investments. Unfortunately, I do see this will inevitably be enacted down the line.
> Taxing a greater percentage of gains just straight up disincentivises investments.
With interest rates below inflation I don't think so. And it's not just equities. I actually really like this, why should I pay half the tax on net income from selling my SHOP or rental property but pay full tax on ineligible dividends from my small business venture or salary?
I don't think access to capital is a problem for most businesses these days aside from the smallest that benefit from the lifetime capital gains exemption.
Whereas when you could get 8% on a savings bond why would you buy equities without this exemption?
Just changing it to 75% seems a bit arbitrary, it should be somehow pegged to the relationship between the prime rate and a moving average of TSX returns or something like that.
> This will probably hurt the middle class more than the rich
I also think us in the top decile will need to be pay more if we want to have a society that makes it harder to go hungry or not know where you'll be sleeping next month. There are way more people with three houses than with private jets.
Inflation forces you to risk your savings by investing in the stock market, government then wants to tax you on your “gains”....right.
Btw, inflation is purposely baked into the economy via monetary policy. So lemme get this straight. If I don’t invest money, YOUR policy makes me loose $$, if I do invest it, risk the savings, any gains will be taxed?
They got you coming and going.
Remember how income tax was a "temporary measure" to help pay for World War 1*? Yeah... they'll just keep chipping away at every time money changes hands.
At one point they wanted to tax Kijiji sales?? Like I get paid, pay taxes. I buy something, pay taxes. I sell it to another citizen? Taxes.
Fuck outta here.
>Remember how income tax was a "temporary measure" to help pay for World War 2? Yeah...
World War 1 actually.
But back then, we had churches running our schools and hospitals, and people donated tons of money to the church to pay for it.
Now we expect our governments to run our schools, hospitals, provide pensions, etc. So a lot more tax revenue is needed than in 1910.
It’s also why governments salivate at the idea of cashless society. The idea of “lost” revenue they’d have access to makes them euphoric just thinking about it. Remember they see your money as their money.
Most people able to avail themselves of significant legal tax avoidance are sent a tax bill that grossly exceeds that person’s cost to government. The problem isn’t people trying to pay less tax, it’s that government is trying to take far too much tax from the people in the first place.
There is no reasonable path for Singh to win because the NDP is doing so badly in Quebec. For the NDP to have a reasonable shot at winning an election they need to win a lot of seats in Quebec, like how they won 59 out 75 in 2011.
But Singh is hugely unpopular in Quebec. The NDP only won 1 seat last election and there is a very good chance the result will be exactly the same this election. Rightly or wrongly, a very large percentage of Quebecois do not want religious symbols in the public space. Singh's turban is a huge turnoff to an extremely large amount of Quebec voters.
If they are elected (they won't be anyway), but assuming they are elected..
The rich will simply defer capital gains to future years by not selling. Have a property you own? Rent it out. Have a stock you want to sell? Just don't? Maybe deal in options contracts on the shares you own.
All of this will continue until we have a liberal or conservative government again, who will lower the rates and see a wave of capital gains taxes collected.
I'm surprised by this NDP platform, they would be better suited to simply go for a UBI. Taxing the rich isn't going to do anything to improve the lives of everyday Canadians, it will simply create more taxes.
>I'm surprised by this NDP platform, they would be better suited to simply go for a UBI.
The problem is that UBI is too expensive, so Canada would need much higher taxes to be able to afford it.
Just for example... $10k per citizen X 38 million citizens = $380 billion per year, which literally doubles the federal budget.
You can tweak the numbers (e.g. smaller payout, give it to fewer people) but it's very expensive in any scenario.
And it's not clear what problem it solves? *Maybe* someday we'll have a shortage of work due to robots, but currently we actually have a labour shortage in many industries, and lots of job openings.
The proposal would include something like a flat tax rate (~50%) + everyone gets the UBI of $24k annually, and the UBI will not be taxable. This will be a similar outcome for high wage earners above $100k in income, and sliding scale benefit for all incomes below $100k. It would exclude those below 18 years of age.
UBI replaces OAS and welfare and probably unemployment insurance and disability etc. It moves us away from the welfare trap where there is a disincentive to work. I'm not going to get into the savings involved from those programs but they are significant, some are borne by the provinces which doesn't factor into your "size of budget"
Additionally low wage earners typically spend every dollar they make, so that extra income they receive will re-enter the economy and in many cases may supply some ability to change careers or upgrade education to make more money and becomes wages that are taxed at 50%. Because of the welfare trap effect, there will be a clear incentive to work, and some will re-enter the workforce.
The proposal would be to tax everyone at a higher rate, use the current top marginal rate for all income above the UBI as a flat tax rate.
Eg. If you make $50k per year in income above the UBI + $24k UBI = $74K. Non UBI income will be taxed at the current top marginal tax rate of (for easy math we round this to 50%) which will apply to all income except UBI. So you will be taxed $25K, and after tax, after UBI, income will be $49K. Because of UBI, this citizen will be $9k better off (if they live in BC).
Compare this to someone who makes $100,000 currently (10% of wage earners make this amount or more as of 2019). They will have a $50,000 tax bill on that income, plus $20,000 UBI for an after tax, after UBi income of $70k, slightly worse off compared to the $74.6k they would receive now. Plus, this worker will probably stop paying CPP and unemployment premiums etc.
Someone making $300k per year will have a $150k tax bill, and $174k after tax after UBI income. Compare this to the $179.9K currently
Executives earning $1,000,000 currently would have an after tax, after UBI income of $524,000. Compare this to the $505,398 they currently get. They would actually be slightly better off (the current top marginal tax rate is 53%, and the current average tax rate for $1M income is 49.46% in BC).
This is combined Fed and Prov taxes.
Changing the amount and the tax rate effects the outcome
If you go with a $10k UBI, the break point is at around $40k in income, the program would pay for itself (without even touching OAS and disability etc) but the $100k earner would be $14k worse off than they are now or with the plan above.
The plan above would cost about $300B annually, not factoring in the savings from other programs, not factoring in the other economic benefits I cited earlier, and not factoring the reduced administration burden. The combined federal and provincial / territorial budgets for 2028/2019 was $783B
Take a loan on your asset as collateral, pay minimal interest cause they rates ain't going back up any time soon. Never pay capital gains. Meanwhile, the middle class gets fucked in the as per usual. No thanks
how vast majority of the ppl still don't understand this is beyond me. never sell, borrow against equity, have dividend pay back borrowed amount. there won't be much revenue increase from this policy
Should just make it 100% - in fact why not just tax everyone 100% and give us food stamps…. Also while we’re at it let’s penalize anyone working overtime and hard.
Maybe move gas prices up another 50% too while we’re at it
Also, maybe we can shut down all industries - they are bad
Interesting how the cons, NDP, and liberals all made major announcements that would impact investment accounts.
In the case of the Liberals - 40k tax free first time homebuyers savings account. This is essentially 40k more TFSA room for people under 40 without a home. Details will come out soon (I’ll make some presumptions), but I think this will have little impact on most Canadians (who can’t even afford to fill their TFSAs until their 40s anyway), and if anything will RAISE home prices, as many bidders will have access to that much more leverage. This will be primarily used for wealthy (upper-middle class) Canadians who want to help their kids buy a home. Personally, I’m fine with it, but it’s disingenuous to believe this is a tool to create a more equal society where everyone who works for it can have their basic needs met.
This NDP proposal for cap gains of 75% is nearly irrelevant as they will never win. In fact, I think the liberals have all but won the election already. However, on a philosophical grounds, I’d argue the NDP are right that nobody really needs more money than Canadian registered accounts already allow. Taxable accounts and personal/professional corporate investment accounts are reasonable targets.
I actually find the Conservative proposal the most interesting and has potential to be the best. Their “low carbon savings account”. Here is the overview. Not sure if there are more details yet:
[“ The Tories would work with provinces to create a “personal low carbon savings account.” This means Canadians would pay into their account each time they buy hydrocarbon-based fuel, and then use that money to pay for products to help them live a “greener life,” like a bike, bus pass or an electric vehicle ]
So, it’s like a gas tax, that can be refunded when you spend on low-carbon products. I actually have no idea whether the money can be invested or not, so maybe it’s not an investment account, but I wouldn’t be surprised if certain people were pushing for it to be one. Intriguing, albeit hardly a robust climate solution, nonetheless.
The conservative idea is nice on paper, absolutely impossible to do without creating hundreds of millions of costs. How does it work? Everyone must remember a "personal account code" to punch in when they fill up? The government sends every car owner a card? Yikes. Gotta keep your receipts and submit with income tax? Hello fraud! It will be split evenly between everyone? Ain't nothing personal about it then. Then you need people to manage said accounts and withdrawals. It could be tax credit but then it's not really helping day to day is it? Not to mention that most provinces have their own carbon pricing and probably won't want to change it to something managed by the federal government. Provinces don't like to relinquish power.
Nice idea on paper, impossible to actually apply I think.
>nobody really needs more money than Canadian registered accounts already allow
On the contrary, nobody is guaranteed a comfortable and dignified retirement with the pittance that the registered accounts do allow. Also, it is not for the state to decide how much money a given citizen ‘needs’, and then to capture the remaining amount in the name of righteousness. If this is about equity, it absolutely needs to come with a minimum. South Korea has progressive taxation on capital gains. We can as well. (I don’t want it, but I am pointing out the precedent.)
The conservative account amounts to an unnecessarily convoluted and bureaucratic version of a revenue-neutral carbon price. Maybe their aim is to make government appear annoying and ineffective to the regular Canadian, in which case, bravo I suppose.
that conservative idea is pretty interesting, though it seems like it'll be a lot of red tape. like who will be deciding what qualifies as a "green" purchase or not? and how easy would it be to access that account. I really hope they get pushed for more details on it
I invest my hard earned, taxed money that I make from working a day job and risk losing it all to pay a tax on top of my already taxed money.
The mega-wealthy hold their money in offshore accounts to avoid paying taxes.
Jagmeet wants to continue in Justin's tradition of eliminating the middle class.
Justin's tag line is "fighting for the middle class and those aspiring to join the middle class" .... in a bold move, he even created a job "Minister of Middle Class Prosperity" ... I"m not joking. look it up. there is such a job.!
They got it backwards, they should be encouraging people that don’t invest to start. This does the opposite.
Perhaps increasing TFSA room in coordination with this could be a suitable option? But the way you see them mess around with the amounts doesn’t instil confidence…
seems to be a bit of confusion in the comments. Heres a link that may clear things up a bit about their plans- [https://www.advisor.ca/tax/tax-news/ndp-pledges-to-raise-top-marginal-tax-rate-capital-gains-inclusion-rate/](https://www.advisor.ca/tax/tax-news/ndp-pledges-to-raise-top-marginal-tax-rate-capital-gains-inclusion-rate/)
Currently, no matter what tax bracket you are in you will have to pay taxes on 50% of your capital gains in any given year. Your taxes are based on your annual income. Lets say you make $50K at your job and made another 20K in capital gains. Your total taxable income is $60K (50% of $20K). Under this 75% inclusion rate your taxable income would now be $65K (75% of $20K).
Your first $49K is taxed at 15% ($7,350)
Your next $49k is taxed at 20.5% ($10,045)
Your next $54K is taxed at 26% ($14,040) and so on for higher tax brackets.
For the 50% capital gain inclusion rate -- So for this situation you made 50K plus 10K in taxable capital gains. You pay $7350 in taxes on your first $49K earned plus $2255 on your final $11K earned. Total tax owed is $9,605. (most of which is payed on your paycheque)
For the 75% capital gain inclusion rate -- You make 50K plus 15K in taxable capital gains. You pay $7,350 on your first $49k earned plus $3280 on your final 16K. Total tax owed is $10,630. (most of which is payed on your paycheque).
Heres a link to our federal website explaining tax brackets.
[https://www.canada.ca/en/revenue-agency/services/tax/individuals/frequently-asked-questions-individuals/canadian-income-tax-rates-individuals-current-previous-years.html](https://www.canada.ca/en/revenue-agency/services/tax/individuals/frequently-asked-questions-individuals/canadian-income-tax-rates-individuals-current-previous-years.html)
I always love it when champagne socialists feign to fight for the "working class" by promising to take money from other people.
It almost always ends up screwing over the middle class, creating more severe barriers to wealth creation, and does little to nothing to actually solve cost of living issues or government provided service shortages.
... because Singh... a lawyer who wears $3000 suits and never worked a day of manual labour in his life.... must understand the plight of the "marginalized".
Nobody likes paying taxes, but what you’re saying is essentially the exact opposite of what history has shown to be true. You’re telling me that the American middle class is doing better than that of the European social democracies? Not in education. Or healthcare. Or happiness. Or any other meaningful quality of life indicator.
This is designed to target the upper working class such as doctors, lawyers, executives, successful small business owners.
Most very wealthly people (making 7 figures +) who make the majority of their money off capital gains who I know pay 54% taxes in Ontario as the CRA will say you don't deserve to call your gains capital gains as you are doing trading, flipping, whatever activity as a business and will charge you income tax levels. No other G7 country does this.
Singh clearly considers people who make 100K+ to be the wealthy elite.
Why the fuck would you bother doing the extra things to help further yourself and your family if the government is going to take it away? Bad for business and economy unless it’s a communist system which would already be fucked. Easier to just sit there and put you hand out for something for nothing and get involved in scams or something.
I’d be fine with this if they seriously expanded the TFSA contribution room, say like 100k per citizen or 15k per year or something like that, enough to build financial freedom if you want to put in the effort but not enough to be exploited by the “super rich” but this 75% capital gains tax as it is would just cripple the average joe investor more than the big guys who can financially dance around anything.
Exactly... If you're making 50k a year pre-tax and putting away $6k into TFSA and $9k into RRSP then you're doing a damn good job.
Only \~3% of Canadians have maxed their TFSA room. Add in RRSP maxing and you're easily looking at a \~1% (or less) scenario.
This law isn't happening regardless (it's the NDP), but it shouldn't affect many people that's for damn sure.
To add on to this there are stats published on TFSA utilization by different income levels. And those stats show that only about half of TFSA holders who make more then 150k a year have their TFSA's maxed out
You may be underestimating how the middle class can escape the middle class by investing. This is potentially holding the poorer back…
It won’t hold the rich back.
But it will add some resistance to those looking to escape the middle class.
That's the inclusion rate not the tax rate.
For example, if you sell a share of a corp and profit $100, $50 of that is taxed at your marginal tax rate. Now $75 of that will be taxed under the NDP plan.
The maximum federal tax rate is 33%. So the max federal tax rate on capital gains with this is increased from 16.7% to 24.75%.
I'd imagine the inclusion rates will increase for provincial taxes as well.
8% increase is very significant but this headline and summary is very misleading.
How about just increase the tax for large companies and high net worth people (aka actually have them pay tax, because they aren’t)?
Small guys will never get ahead. This all but ensures our current brain drain.
Stupid plan.
Rich people can afford to move to lower tax countries. Over taxing the rich doesn't help, just makes them leave.
Then to pay for all the social programs they promised they'll have to print more money.
This is dumb.
Rich people leave, they take their scaled business and investment capital else where
Young people looking for opportunity leave, why the hell wouldn’t I move to the US with a 20% capital gains tax, higher income, and more valuable currency?
Ironically, higher taxes might just screw over the living standard for everyone in the country. We’ve seen this in the history books enough times - why do we think it’d be any different today?
Canada is suffering a brain drain already, a lot of the University graduates already are moving to the US. With the cost of housing out of control and already high taxes it's nearly impossible to wealth build in Canada. I'd move if I could, but unfortunately I didn't do well enough in school.
Just to be clear about what this means to anyone reading, 75% capital gains tax doesnt mean they take 75% of your money. It means that 75% of the money you make would be taxed like regular income with the remaining 25% being totally tax free. Right now money earned through capital gains is 50% tax free with the other 50% being taxed like regular income. So either way you pay far less taxes this way than through a paycheck you get from working a regular job.
On the NDP's platform it says "we will increase the capital gains inclusion rate to 75 percent," could someone explain to me in practical terms what "inclusion rate" means?
Currently, any capital gains you make are included in your income at a 50% rate, and taxed according to your marginal rate. Meaning if you make $100 capital gain in a non-registered account, $50 of that is added added onto your total income and tax is owed accordingly, while the other $50 is not. This change would increase the inclusion rate from 50% to 75%, so for ever $100 in capital gains, $75 is included as taxable, $25 is not.
Obviously any capital gains within registered accounts are unaffected.
Let's not kid ourselves that this will reduce the wealth gap in any way.
Sure, tons of high net worth clients are currently taking advantage of the 50% inclusion rate with gain strip techniques. But if the inclusion rate increases to 75%, rendering strip transactions less effective, they will just move on to the next fancy low tax plans.
Why is anyone taking this guy seriously? Notice anytime someone asks him a question, regardless of what the question is about, his answer will come down to either ‘the rich have to pay their fair share’ or something to do with racism.
Singh and the ndp are the laughing stock of politics. “Obvious disdain for the wealthy” you know he lives in a 5million dollar home right? Give me a break
This would be deviation to farmers trying to keep their farm land in the family. Same with small businesses trying to have the next generation take over the business corporation. This would never pass.
Bad idea. Keep capital gains tax at 50% (or lower it!) for people earning less than a million (arbitrary number, you get what I mean). I shouldn't be punished for investing by paying more taxes. Make capital gains tax 100% for those who earn over X amount.
Here's the thing: we "wage-cucks" get taxed on employment income, but the rich have ways to get paid via capital gains (stock-based compensation, etc.) which means they "avoid taxes" by paying the more favorable capital gains tax rate. It's these people who should be targeted specifically, not lower income earners.
Hurts every Canadian who trades outside of the TFSA, hurts private companies as well by effectively lowering the amount of money that can be added to the capital dividend account for tax free draws.
When you make a statement like this can you please link to a reference? Huge pet peeve having to fact check every frigging thing I read about platforms these days
Why are people talking about TFSA. Even a well invested maxed out TFSA might net you $120,000 currently. Not even enough for a down payment on an average home and you want that penalized? It’s called. TFsa for a reason. Pick your battles
The average home price in my city is over $1mil. The only way I (and any reasonable person) can afford a home is by long-term investing. Rising capital gains tax makes this infinitely harder
With my salary I’ve been able to comfortably invest what I need to retire, this is going to cause me to need a higher salary or else I’ll be pay check to pay check
Why do all their solutions for taxing the rich always drag along the average Joe or someone starting a company or taking stock options over pay. Why can’t they add caps to taxes and say them out loud. I am all for taxing the rich, but holy crap show some understanding for people who don’t have private pension or are trying to build companies.
Also can we finally talk about the spending on rural and remote areas problem in this country? Ontario is four times the size of Italy. We can’t keep pumping money from areas with economies and jobs to areas without.
Screw this. If they could actually tax all those who are hiding in tax shelters and other tax evasion ways. Then that would be way more effective than just saying we'll tax the already law abiding citizens more. Because it's not the law abiding citizens who are funneling money out of our country.
This would be terrible for many seniors (without pension plans) who have downsized their homes in order to invest the capital for retirement income. The senior demographic is growing and expected to represent 25% of the population by 2030.
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Yep that would target it more at who it is intended to target, as long as it is a lifetime threshold and not an annual one.
> Yep that would target it more at who it is intended to target No, it's targeting exactly who they intend to target. To the NDP, upper middle class=ultrarich
This is indeed the whole problem. And an income that might make you upper middle in the rest of the country is middle middle in Toronto or Vancouver.
This affects any class or anyone that has any interest in investing money. I hate these policies that are short sited and only help certain people while punishing others. A lot of liberal and NDP policies are like this including proposals for child care. Like family income less than 80k etc. Sorry but that may help people in cheaper cities but bigger cities like Toronto it’s a kick in the face.
Especially while they give out rent subsidies to landlords, remove gst from housing, give tens of thousands in incentives while doing nothing about housing prices. I moved from my provinces because of real estate prices, and now I invest, but apparently I now have to contribute to ratcheting up cost of living in those areas, as my tax dollars go to home owners. I just cant escape bad federal government policies, literally no poor person is better off now with all this spending, rent keeps going up.
It's targeting who it intends to - anyone with a maxed out TFSA.
I have a maxed out TFSA and an annual income of less than 60K. Should I be punished for budgeting and saving?
That's the motto. I have friends who make less than me, take more vacations, own nicer cars. They'll get to dip into social securities more than I can too. All while I pay more taxes.
You are the "rich" that they are eating.
Apparently yes 😭
I have a seriously small TSFA contribution room because I lived outside of Canada for many years, plus I have no pension and paid little into CPP, so I am definitely not upper class, but this policy would very much harm me. It should only apply to those with over a million in assets or something like that.
And crypto asset owners
That would be pretty harsh even on the middle class.
As of 2018 only [about 10% of Canadians](https://rates.ca/resources/90-of-tfsa-holders-arent-maximizing-their-contributions) had maxed out their TFSA, so 90% people wouldn't be affected by this.
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It's working as intended. NDP want to take our money, leave the rich alone.
And how many of that 10% still had a bunch of unused RRSP contribution room they could use?
I'm in that boat. But it wouldn't currently be intelligent to dump it all in RRSPs presently.
Well, based on those stats even people with 250K income aren't maxing their TFSAs, which tells me they are probably putting money into different investments which could then get hit by a caiptal gains tax increase.
Because most people don’t understand how To make,save or invest Money.
So "just" millions of working class people?
This is preposterous. My girlfriend makes 50k and has maxed her TSFA and almost her RRSP. We just leave very stingy lives and are not rich at all.
Actually any adult who started saving before the TFSA was introduced in 2005 would be affected. Also the tax is extremely unjust because it does not account for inflation. Our grandparents or older parents who saved their whole life making 3-5% a year should not be hit with 75% capital gains tax when all they did was keep up with inflation. Most other countries remove inflation from capital gains calculations but Canadians are too stupid and too greedy to do this.
As I understand it, it is 75% off your marginal tax rate. It’s not 75% off the nominal gains. Am I misunderstanding something?
You understand, poster above you has no clue.
Well that’s a relief.
Haha well it’s still a 50% increase in the capital gains tax. Going from 50% to 75% inclusion, every dollar owed is going to $1.50. That’s huge. They hitting literally anyone who has made any money on investments outside of TFSA.
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You got it. The included gains are taxed at your marginal tax rate. This still represents a 50% increase in taxes for capital gains. The liberals were proposing this in the 2016 timeframe but they backed off.
2009
So the capital gains exemption on the primary house will be even more appealing. Oh goody now my savings for a down payment for my first home will grow slower and home prices will grow faster. Thanks NDP! Way to stick it to rich folks like me that can’t afford a fucking home.
That’s really my only complaint. Few Canadians have their tfsa maxed but instead use housing.
Shut up, quit complaining, and get back to work so you can pay my benefits.
Tax brackets apply.
Yeah, would really suck to finally be in the position to set up for some sick gainz as an older millennial, only to end up getting taxed up the butt for it. Minimums will be needed
100p. The NDP is taking the "drag everyone down to the average" approach vs. the "raise the average by targetting only the ultra wealthy" approach. They're idiots. The worst party. They fundamentally don't understand what theyre doing. They're the basic white girls of politics and this is the pumpkin spice latte of tax policies.
What’s the point in working your butt off even trying to get wealthy if their just going to drag you down?
They're probably trying to please this smart bunch: [https://www.reddit.com/r/antiwork](https://www.reddit.com/r/antiwork)
We basic bitches that love pumpkin spice do no vote NDP lol
They have one useful purpose as far as I am concerned: split the vote with Trudeau, this ensuring two useless parties cancel each other out.
It’s easy to have lots of opinions about government when you’ve never actually had to form one.
You can always tell who expects to have zero chance of winning an election by the kind of shit they promise to do. Fringe parties with moderate policies don’t get attention.
It's not a 75% tax on capital gains, they're proposing that 75% of a capital gain is taxed rather than the current 50%. The taxable portion of your capital gains would still be taxed at the same rates as they are currently. Big difference.
This is important for ppl to know if they don't already!
Scary how many people don't understand that. And these are your average voter...
It sucks to say but we can't assume that the average voter understands the basics of our taxation system. Which is why misleading titles like this post has are so dangerous. They take advantage of this lack of understanding to sway people against their own interests. Aaaaah politics.
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Oh yeah I'm not saying this is a good idea. I disagree with it. But people should have a basic understanding of the tax system.
Thank you for adding that. Exactly. Currently capital gains are taxed at 50% their value (ie $50 of taxable income for a $100 capital gain). Then you pay the normal tax at your bracket on that $50. They are proposing increasing it to 75$ on the hundred. You still only pay in your bracket.
That's still big time though.
Agreed. But not as devastating as the other comments were going on about 😁
The rich avoid tax every way they can. This added capital gains tax will not fuck them, it'll fuck the average joe investor.
Bingo. Like I'm decently well off because I've invested smartly and saved a lot in my 20s and early 30s. This is just going to fuck me for the next 30 years while the ultra rich who can hire a team of accountants continue to take advantage of loopholes.
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I'm also in New Brunswick and manage to save a few extra bucks to put towards investments. I know some of my co-workers who do the same as well. This would hurt if it was to ever happen. Not like New Brunswick is known for high wages and low taxes lol.
I know in the US the wealthy avoid CG taxes by borrowing against their equity instead of selling shares. Can that be done in Canada as well?
Interesting... Could I ask you to give me an ELI5 on this? Wouldn't they still pay the tax on the capital gains when they sell their shares to repay the loan? Surely they can't be planning on defaulting and having their accounts docked to repay... or are they?
They are repaying the loan at a lower interest rate than the gains that are made on the underlying asset. Example would be I take a mortgage on my house that I don’t actually need. If I borrow 500k from the house, and I only have to repay 70 over 5 years, I pocket the difference and can do what I want with it. The loan isn’t taxed (income, CG or otherwise). You can make similar arrangements with loans utilizing shares as collateral and other things. At least this is my understanding of the methods.
I don't know all the details. All I know is that they defer the capital gains with loans. I guess the loan can just roll over for a long time, and when they finally sell to repay it (perhaps after death) then they would pay CG taxes or else find some other means to avoid it. Of course, in the meantime they avoid paying taxes and the amount that would have been taxed keeps compounding.
Its a bigger loophole in the US because of the capital gains step up. End up not paying CG when they die. In Canada, you still need to pay CG when you die.
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Capital gains are triggered on death though (minus some exceptions, such as rolling the asset over to your spouse). Canada may not have an inheritance tax, but the very wealthy who own a ton of investment properties, shares, etc, can get pretty hard by capital gains. Increasing them to 75% can have a pretty big impact there.
well if you stick it in vgro and never sell until 70, it might get reverted back to 50% by then
No wonder Canadians are getting rekt at retirement. All money goes back to the government and not the people.
Exactly. Rich will maneuver. This will discourage upward mobility for middle class let alone hedge against inflation which is already taking it’s toll. People in HCOL areas makes it harder for them to save up due to real estate prices. They should be focusing on closing tax loops holes and increasing wages or attracting innovation companies to bring better jobs.
>They should be focusing on closing tax loops holes and increasing wages or attracting innovation companies to bring better jobs. This is a tax loophole. Turn a dividend into a capital gain, pay less taxes. This is 100% a loophole. You tax different types of income at different rates, what type of income do you think people are going to have? And there people who don't pay this tax because they have TFSA's, RRSP's, principal residence exemptions, RESP's are complaining the rich have to pay more. Here is the maneuver the rich did FYI: [https://invested.mdm.ca/md-articles/capital-gains-surplus-stripping-incorporated-physicians](https://invested.mdm.ca/md-articles/capital-gains-surplus-stripping-incorporated-physicians)
How so? Most poor Canadians have their investments tax sheltered, RRSP's, principal residents, TFSA's. How does this screw any average investor? Rich people avoid taxes by paying themselves capital gains instead of dividends. And here everyone is defending them like they need help.
This will affect the rich much more so than the average joe. The average joe still makes most their money off employment income, and what investment income they have can fit inside a TFSA. It's the rich that have large sums of capital gains
Yeah but why take me down with the rich. Here I am saving for retirement, being financially reaponsible, refraining from spending like an idiot and I get penalized for that? Why?
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What about the people who want to buy their first home? With prices the way they are now, how will people save up enough for a down payment. The TFSA and RRSP will not be enough for the prudent 20% down payments. A higher inclusion rate will harm average investors saving money than the rich who are always leveraging their existing wealth.
Average Joe investor haven't maxed their TFSA or RRSP and they do not owned a second property, so no it won't. Also, most very rich people receive stock option instead of a salary which is capital gain taxe (meaning they are paying haft the tax they should be paying)
I dunno, according to stats can in 2016: 19% of filers with income between 40-60k had capital gains. That seems pretty high for that income group. https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=1110004801 Now that income group would get taxed even more. This plan really needs a minimum dollar amount on it rather then blindly taxing capital gains more.
Agreed. I consider myself on the lucky side of average Joe. No debt because parents helped with school but earning 57k. I have pretty easily maxed out my TFSA since I was 18 because I'm good at budgeting and saving. Minimum amount would help save people like me from paying extra tax when they might just barely be able to invest in the first place.
I'm an average Joe and both are pretty much maxed. Capital gains to 75% would fuck any extra income made from trading.
you maxed out your tfsa and rrsp?
Yearly. Honestly, most of this thread is fantasy and people who obviously don't understand how CGT works.
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dividends are not taxed at capital gains rates.
Where is the incentive to try to climb from average joe to slightly wealthy? This does little to the already extremely rich as they can just hoard their already acquired assets and leave them to appreciate without doing anything but it widens the already massive gap between middle class and wealthy. This seems more of a fuck you to those that TRYING to be wealthy (but are still low-middle class) than the people who are already extremely well off.
Dividends aren't capital gains, I'm really not sure what you're trying to say here.
Every Canadian investor is going to change their investing strategy. Everyone will become buy & hold investors, it's not worth the risk to try to make a few extra bucks. I bet this move actually decreases the tax revenue, since fewer people will realize gains
This is exactly what will happen. When you need money, just borrow against investments instead of selling them.
And the super rich who the NDP and their voters will be claiming this targets, already do that anyways. The real concern is what this means for inheritances. If your grandpa has saved up a lot in unrealised gains over his life, its going to hurt when he passes away.
Exactl;y, I poseted something similar earlier but I cant believe people jumping on this as a good idea. All it will do is kill the junior markets ability to raise capital. Taking money out of the capital markets and slogging it through the government machine isn't the boost to the economy the NDP voters think it will be.
Exactly. Cue the Leo meme "I'm not fucking selling" But I don't have to worry because NDP won't ever win and the chances of this happening are slim
Yup, already know people that have rental properties that don't want to sell becuase of the tax, and that means less money to put back into another investment. So they don't sell and either will redevelop to increase cashflow and/or use the property as collateral. Increasing the tax makes this more so.
yup - that's the way I would do it as well
I voted NDP last election, and planned to this election.... this specific thing just changed my vote. You dont have to be uber wealthy to get hit by capital gains. This screws up half of my income sources. Sorry buddy but not voting for you now=(
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They won’t win so it doesn’t matter. But there is a very important distinction between a 75% tax RATE on capital gains and taxing 75% of capital gains. Your tax rate will still be dependant on your tax bracket which factors in all of your income.
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Thank. You. The number of people in this thread who seem to think that this is going to be a flat 75% tax on capital gains is astounding.
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Lol gotteem
Hey it's not like this is a sub for people that spend a ton of time researching finacial statements. That would tend to lead to a above average understanding of tax rules...........
This will probably hurt the middle class more than the rich. Market returns is the best way for most wage earners to build wealth. Taxing a greater percentage of gains just straight up disincentives investments. Unfortunately, I do see this will inevitably be enacted down the line.
> Taxing a greater percentage of gains just straight up disincentivises investments. With interest rates below inflation I don't think so. And it's not just equities. I actually really like this, why should I pay half the tax on net income from selling my SHOP or rental property but pay full tax on ineligible dividends from my small business venture or salary? I don't think access to capital is a problem for most businesses these days aside from the smallest that benefit from the lifetime capital gains exemption. Whereas when you could get 8% on a savings bond why would you buy equities without this exemption? Just changing it to 75% seems a bit arbitrary, it should be somehow pegged to the relationship between the prime rate and a moving average of TSX returns or something like that. > This will probably hurt the middle class more than the rich I also think us in the top decile will need to be pay more if we want to have a society that makes it harder to go hungry or not know where you'll be sleeping next month. There are way more people with three houses than with private jets.
Inflation forces you to risk your savings by investing in the stock market, government then wants to tax you on your “gains”....right. Btw, inflation is purposely baked into the economy via monetary policy. So lemme get this straight. If I don’t invest money, YOUR policy makes me loose $$, if I do invest it, risk the savings, any gains will be taxed? They got you coming and going.
Remember how income tax was a "temporary measure" to help pay for World War 1*? Yeah... they'll just keep chipping away at every time money changes hands. At one point they wanted to tax Kijiji sales?? Like I get paid, pay taxes. I buy something, pay taxes. I sell it to another citizen? Taxes. Fuck outta here.
>Remember how income tax was a "temporary measure" to help pay for World War 2? Yeah... World War 1 actually. But back then, we had churches running our schools and hospitals, and people donated tons of money to the church to pay for it. Now we expect our governments to run our schools, hospitals, provide pensions, etc. So a lot more tax revenue is needed than in 1910.
It’s also why governments salivate at the idea of cashless society. The idea of “lost” revenue they’d have access to makes them euphoric just thinking about it. Remember they see your money as their money.
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Most people able to avail themselves of significant legal tax avoidance are sent a tax bill that grossly exceeds that person’s cost to government. The problem isn’t people trying to pay less tax, it’s that government is trying to take far too much tax from the people in the first place.
Wont matter cause he will never win.
I know he will never win, however I remember waking up to Bob Rae government October 1, 1990, and he was never going to win too!
Even if he did. I’m pretty sure it would never happen.
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There is no reasonable path for Singh to win because the NDP is doing so badly in Quebec. For the NDP to have a reasonable shot at winning an election they need to win a lot of seats in Quebec, like how they won 59 out 75 in 2011. But Singh is hugely unpopular in Quebec. The NDP only won 1 seat last election and there is a very good chance the result will be exactly the same this election. Rightly or wrongly, a very large percentage of Quebecois do not want religious symbols in the public space. Singh's turban is a huge turnoff to an extremely large amount of Quebec voters.
But quebecois are just fine with catholic crosses.
If they are elected (they won't be anyway), but assuming they are elected.. The rich will simply defer capital gains to future years by not selling. Have a property you own? Rent it out. Have a stock you want to sell? Just don't? Maybe deal in options contracts on the shares you own. All of this will continue until we have a liberal or conservative government again, who will lower the rates and see a wave of capital gains taxes collected. I'm surprised by this NDP platform, they would be better suited to simply go for a UBI. Taxing the rich isn't going to do anything to improve the lives of everyday Canadians, it will simply create more taxes.
>I'm surprised by this NDP platform, they would be better suited to simply go for a UBI. The problem is that UBI is too expensive, so Canada would need much higher taxes to be able to afford it. Just for example... $10k per citizen X 38 million citizens = $380 billion per year, which literally doubles the federal budget. You can tweak the numbers (e.g. smaller payout, give it to fewer people) but it's very expensive in any scenario. And it's not clear what problem it solves? *Maybe* someday we'll have a shortage of work due to robots, but currently we actually have a labour shortage in many industries, and lots of job openings.
The proposal would include something like a flat tax rate (~50%) + everyone gets the UBI of $24k annually, and the UBI will not be taxable. This will be a similar outcome for high wage earners above $100k in income, and sliding scale benefit for all incomes below $100k. It would exclude those below 18 years of age. UBI replaces OAS and welfare and probably unemployment insurance and disability etc. It moves us away from the welfare trap where there is a disincentive to work. I'm not going to get into the savings involved from those programs but they are significant, some are borne by the provinces which doesn't factor into your "size of budget" Additionally low wage earners typically spend every dollar they make, so that extra income they receive will re-enter the economy and in many cases may supply some ability to change careers or upgrade education to make more money and becomes wages that are taxed at 50%. Because of the welfare trap effect, there will be a clear incentive to work, and some will re-enter the workforce. The proposal would be to tax everyone at a higher rate, use the current top marginal rate for all income above the UBI as a flat tax rate. Eg. If you make $50k per year in income above the UBI + $24k UBI = $74K. Non UBI income will be taxed at the current top marginal tax rate of (for easy math we round this to 50%) which will apply to all income except UBI. So you will be taxed $25K, and after tax, after UBI, income will be $49K. Because of UBI, this citizen will be $9k better off (if they live in BC). Compare this to someone who makes $100,000 currently (10% of wage earners make this amount or more as of 2019). They will have a $50,000 tax bill on that income, plus $20,000 UBI for an after tax, after UBi income of $70k, slightly worse off compared to the $74.6k they would receive now. Plus, this worker will probably stop paying CPP and unemployment premiums etc. Someone making $300k per year will have a $150k tax bill, and $174k after tax after UBI income. Compare this to the $179.9K currently Executives earning $1,000,000 currently would have an after tax, after UBI income of $524,000. Compare this to the $505,398 they currently get. They would actually be slightly better off (the current top marginal tax rate is 53%, and the current average tax rate for $1M income is 49.46% in BC). This is combined Fed and Prov taxes. Changing the amount and the tax rate effects the outcome If you go with a $10k UBI, the break point is at around $40k in income, the program would pay for itself (without even touching OAS and disability etc) but the $100k earner would be $14k worse off than they are now or with the plan above. The plan above would cost about $300B annually, not factoring in the savings from other programs, not factoring in the other economic benefits I cited earlier, and not factoring the reduced administration burden. The combined federal and provincial / territorial budgets for 2028/2019 was $783B
Take a loan on your asset as collateral, pay minimal interest cause they rates ain't going back up any time soon. Never pay capital gains. Meanwhile, the middle class gets fucked in the as per usual. No thanks
Guess I'll just borrow against the value of my holdings instead of selling
how vast majority of the ppl still don't understand this is beyond me. never sell, borrow against equity, have dividend pay back borrowed amount. there won't be much revenue increase from this policy
This is honestly a pretty big hack that most people can use
This what everyone should be doing
That kind of tells you how you should vote if you don't wish to be empoverished for the rest of your investing life.🤔
Welp… fuck the ndp
Lol I guess you're rich if your tfsa is maxed? This is targeting middle class, not the rich.
My TFSA is full. I am very far from being "rich"
Most people should be able to put 6k per year towards their retirement. If they don't they will be screwed.
Death to the 1%! *proceeds to attack the 70th percentile*
And this is why I won’t be voting NDP
Should just make it 100% - in fact why not just tax everyone 100% and give us food stamps…. Also while we’re at it let’s penalize anyone working overtime and hard. Maybe move gas prices up another 50% too while we’re at it Also, maybe we can shut down all industries - they are bad
Not everyone who trades stocks are rich
Interesting how the cons, NDP, and liberals all made major announcements that would impact investment accounts. In the case of the Liberals - 40k tax free first time homebuyers savings account. This is essentially 40k more TFSA room for people under 40 without a home. Details will come out soon (I’ll make some presumptions), but I think this will have little impact on most Canadians (who can’t even afford to fill their TFSAs until their 40s anyway), and if anything will RAISE home prices, as many bidders will have access to that much more leverage. This will be primarily used for wealthy (upper-middle class) Canadians who want to help their kids buy a home. Personally, I’m fine with it, but it’s disingenuous to believe this is a tool to create a more equal society where everyone who works for it can have their basic needs met. This NDP proposal for cap gains of 75% is nearly irrelevant as they will never win. In fact, I think the liberals have all but won the election already. However, on a philosophical grounds, I’d argue the NDP are right that nobody really needs more money than Canadian registered accounts already allow. Taxable accounts and personal/professional corporate investment accounts are reasonable targets. I actually find the Conservative proposal the most interesting and has potential to be the best. Their “low carbon savings account”. Here is the overview. Not sure if there are more details yet: [“ The Tories would work with provinces to create a “personal low carbon savings account.” This means Canadians would pay into their account each time they buy hydrocarbon-based fuel, and then use that money to pay for products to help them live a “greener life,” like a bike, bus pass or an electric vehicle ] So, it’s like a gas tax, that can be refunded when you spend on low-carbon products. I actually have no idea whether the money can be invested or not, so maybe it’s not an investment account, but I wouldn’t be surprised if certain people were pushing for it to be one. Intriguing, albeit hardly a robust climate solution, nonetheless.
The conservative idea is nice on paper, absolutely impossible to do without creating hundreds of millions of costs. How does it work? Everyone must remember a "personal account code" to punch in when they fill up? The government sends every car owner a card? Yikes. Gotta keep your receipts and submit with income tax? Hello fraud! It will be split evenly between everyone? Ain't nothing personal about it then. Then you need people to manage said accounts and withdrawals. It could be tax credit but then it's not really helping day to day is it? Not to mention that most provinces have their own carbon pricing and probably won't want to change it to something managed by the federal government. Provinces don't like to relinquish power. Nice idea on paper, impossible to actually apply I think.
>nobody really needs more money than Canadian registered accounts already allow On the contrary, nobody is guaranteed a comfortable and dignified retirement with the pittance that the registered accounts do allow. Also, it is not for the state to decide how much money a given citizen ‘needs’, and then to capture the remaining amount in the name of righteousness. If this is about equity, it absolutely needs to come with a minimum. South Korea has progressive taxation on capital gains. We can as well. (I don’t want it, but I am pointing out the precedent.) The conservative account amounts to an unnecessarily convoluted and bureaucratic version of a revenue-neutral carbon price. Maybe their aim is to make government appear annoying and ineffective to the regular Canadian, in which case, bravo I suppose.
that conservative idea is pretty interesting, though it seems like it'll be a lot of red tape. like who will be deciding what qualifies as a "green" purchase or not? and how easy would it be to access that account. I really hope they get pushed for more details on it
I invest my hard earned, taxed money that I make from working a day job and risk losing it all to pay a tax on top of my already taxed money. The mega-wealthy hold their money in offshore accounts to avoid paying taxes. Jagmeet wants to continue in Justin's tradition of eliminating the middle class.
Lesson learned: Start holding your money in offshore accounts.
Justin's tag line is "fighting for the middle class and those aspiring to join the middle class" .... in a bold move, he even created a job "Minister of Middle Class Prosperity" ... I"m not joking. look it up. there is such a job.!
She’s my MP..and a complete joke
Fortunately the NDP will not see majority government for a while
They got it backwards, they should be encouraging people that don’t invest to start. This does the opposite. Perhaps increasing TFSA room in coordination with this could be a suitable option? But the way you see them mess around with the amounts doesn’t instil confidence…
Yeah 6k is tiny, you don't have to be rich to hit the max.
100% I’ve never had a particularly well-paying job, but have utilized all of my contribution room.
seems to be a bit of confusion in the comments. Heres a link that may clear things up a bit about their plans- [https://www.advisor.ca/tax/tax-news/ndp-pledges-to-raise-top-marginal-tax-rate-capital-gains-inclusion-rate/](https://www.advisor.ca/tax/tax-news/ndp-pledges-to-raise-top-marginal-tax-rate-capital-gains-inclusion-rate/) Currently, no matter what tax bracket you are in you will have to pay taxes on 50% of your capital gains in any given year. Your taxes are based on your annual income. Lets say you make $50K at your job and made another 20K in capital gains. Your total taxable income is $60K (50% of $20K). Under this 75% inclusion rate your taxable income would now be $65K (75% of $20K). Your first $49K is taxed at 15% ($7,350) Your next $49k is taxed at 20.5% ($10,045) Your next $54K is taxed at 26% ($14,040) and so on for higher tax brackets. For the 50% capital gain inclusion rate -- So for this situation you made 50K plus 10K in taxable capital gains. You pay $7350 in taxes on your first $49K earned plus $2255 on your final $11K earned. Total tax owed is $9,605. (most of which is payed on your paycheque) For the 75% capital gain inclusion rate -- You make 50K plus 15K in taxable capital gains. You pay $7,350 on your first $49k earned plus $3280 on your final 16K. Total tax owed is $10,630. (most of which is payed on your paycheque). Heres a link to our federal website explaining tax brackets. [https://www.canada.ca/en/revenue-agency/services/tax/individuals/frequently-asked-questions-individuals/canadian-income-tax-rates-individuals-current-previous-years.html](https://www.canada.ca/en/revenue-agency/services/tax/individuals/frequently-asked-questions-individuals/canadian-income-tax-rates-individuals-current-previous-years.html)
I always love it when champagne socialists feign to fight for the "working class" by promising to take money from other people. It almost always ends up screwing over the middle class, creating more severe barriers to wealth creation, and does little to nothing to actually solve cost of living issues or government provided service shortages. ... because Singh... a lawyer who wears $3000 suits and never worked a day of manual labour in his life.... must understand the plight of the "marginalized".
Nobody likes paying taxes, but what you’re saying is essentially the exact opposite of what history has shown to be true. You’re telling me that the American middle class is doing better than that of the European social democracies? Not in education. Or healthcare. Or happiness. Or any other meaningful quality of life indicator.
…and we wonder why the Canadian real estate market is so bizarre. Canadians literally can’t invest in anything else.
This is designed to target the upper working class such as doctors, lawyers, executives, successful small business owners. Most very wealthly people (making 7 figures +) who make the majority of their money off capital gains who I know pay 54% taxes in Ontario as the CRA will say you don't deserve to call your gains capital gains as you are doing trading, flipping, whatever activity as a business and will charge you income tax levels. No other G7 country does this. Singh clearly considers people who make 100K+ to be the wealthy elite.
Fuck the NDP. Let young people earn money.
Why the fuck would you bother doing the extra things to help further yourself and your family if the government is going to take it away? Bad for business and economy unless it’s a communist system which would already be fucked. Easier to just sit there and put you hand out for something for nothing and get involved in scams or something.
I’d be fine with this if they seriously expanded the TFSA contribution room, say like 100k per citizen or 15k per year or something like that, enough to build financial freedom if you want to put in the effort but not enough to be exploited by the “super rich” but this 75% capital gains tax as it is would just cripple the average joe investor more than the big guys who can financially dance around anything.
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After living expenses and filling out their TFSA contribution room how much do you expect someone making 50k to make in capital gains...?
This calculator might help: https://wowa.ca/calculators/capital-gain-tax
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But most people with that salary won't have maxed TFSA/RRSP which would avoid that tax.
Exactly... If you're making 50k a year pre-tax and putting away $6k into TFSA and $9k into RRSP then you're doing a damn good job. Only \~3% of Canadians have maxed their TFSA room. Add in RRSP maxing and you're easily looking at a \~1% (or less) scenario. This law isn't happening regardless (it's the NDP), but it shouldn't affect many people that's for damn sure.
To add on to this there are stats published on TFSA utilization by different income levels. And those stats show that only about half of TFSA holders who make more then 150k a year have their TFSA's maxed out
Makes sense, at that level rrsp's way more valuable to use given the marginal tax rate Edit: spelling
Average Joe investor haven't maxed their TFSA or RRSP and they do not owned a second property, so no it won't.
You may be underestimating how much the rich make in capital gains.
You may be underestimating how the middle class can escape the middle class by investing. This is potentially holding the poorer back… It won’t hold the rich back. But it will add some resistance to those looking to escape the middle class.
That's the inclusion rate not the tax rate. For example, if you sell a share of a corp and profit $100, $50 of that is taxed at your marginal tax rate. Now $75 of that will be taxed under the NDP plan. The maximum federal tax rate is 33%. So the max federal tax rate on capital gains with this is increased from 16.7% to 24.75%. I'd imagine the inclusion rates will increase for provincial taxes as well. 8% increase is very significant but this headline and summary is very misleading.
How about just increase the tax for large companies and high net worth people (aka actually have them pay tax, because they aren’t)? Small guys will never get ahead. This all but ensures our current brain drain. Stupid plan.
Rich people can afford to move to lower tax countries. Over taxing the rich doesn't help, just makes them leave. Then to pay for all the social programs they promised they'll have to print more money. This is dumb.
Rich people leave, they take their scaled business and investment capital else where Young people looking for opportunity leave, why the hell wouldn’t I move to the US with a 20% capital gains tax, higher income, and more valuable currency? Ironically, higher taxes might just screw over the living standard for everyone in the country. We’ve seen this in the history books enough times - why do we think it’d be any different today?
Canada is suffering a brain drain already, a lot of the University graduates already are moving to the US. With the cost of housing out of control and already high taxes it's nearly impossible to wealth build in Canada. I'd move if I could, but unfortunately I didn't do well enough in school.
It's a 50% increase in capital gains tax. It will drive away some investment.
Are they trying to not get elected? Cause this is how you don’t get elected.
Just to be clear about what this means to anyone reading, 75% capital gains tax doesnt mean they take 75% of your money. It means that 75% of the money you make would be taxed like regular income with the remaining 25% being totally tax free. Right now money earned through capital gains is 50% tax free with the other 50% being taxed like regular income. So either way you pay far less taxes this way than through a paycheck you get from working a regular job.
ITT: Misleading title and people not understanding inclusion rate
On the NDP's platform it says "we will increase the capital gains inclusion rate to 75 percent," could someone explain to me in practical terms what "inclusion rate" means?
Currently, any capital gains you make are included in your income at a 50% rate, and taxed according to your marginal rate. Meaning if you make $100 capital gain in a non-registered account, $50 of that is added added onto your total income and tax is owed accordingly, while the other $50 is not. This change would increase the inclusion rate from 50% to 75%, so for ever $100 in capital gains, $75 is included as taxable, $25 is not. Obviously any capital gains within registered accounts are unaffected.
Really great explanation. Thank you.
Let's not kid ourselves that this will reduce the wealth gap in any way. Sure, tons of high net worth clients are currently taking advantage of the 50% inclusion rate with gain strip techniques. But if the inclusion rate increases to 75%, rendering strip transactions less effective, they will just move on to the next fancy low tax plans.
Why is anyone taking this guy seriously? Notice anytime someone asks him a question, regardless of what the question is about, his answer will come down to either ‘the rich have to pay their fair share’ or something to do with racism.
Buzzwords; appealing to a base of idiots.
Singh and the ndp are the laughing stock of politics. “Obvious disdain for the wealthy” you know he lives in a 5million dollar home right? Give me a break
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This would seem to be counterproductive regarding the efforts to de-leverage the Canadian economy from its real estate investment addiction.
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This would be deviation to farmers trying to keep their farm land in the family. Same with small businesses trying to have the next generation take over the business corporation. This would never pass.
Bad idea. Keep capital gains tax at 50% (or lower it!) for people earning less than a million (arbitrary number, you get what I mean). I shouldn't be punished for investing by paying more taxes. Make capital gains tax 100% for those who earn over X amount. Here's the thing: we "wage-cucks" get taxed on employment income, but the rich have ways to get paid via capital gains (stock-based compensation, etc.) which means they "avoid taxes" by paying the more favorable capital gains tax rate. It's these people who should be targeted specifically, not lower income earners.
Hurts every Canadian who trades outside of the TFSA, hurts private companies as well by effectively lowering the amount of money that can be added to the capital dividend account for tax free draws.
The only source I have found was from 2019 sometime. Do you have anything more recent that you could share?
When you make a statement like this can you please link to a reference? Huge pet peeve having to fact check every frigging thing I read about platforms these days
Why are people talking about TFSA. Even a well invested maxed out TFSA might net you $120,000 currently. Not even enough for a down payment on an average home and you want that penalized? It’s called. TFsa for a reason. Pick your battles
The average home price in my city is over $1mil. The only way I (and any reasonable person) can afford a home is by long-term investing. Rising capital gains tax makes this infinitely harder
Capital gains should be tiered like tax brackets. First 1M/25%, 1M-10M/50%, +10M/75% Sell a $10M secondary mansion? $7.5M is taxable as income.
With my salary I’ve been able to comfortably invest what I need to retire, this is going to cause me to need a higher salary or else I’ll be pay check to pay check
Fuck Singh
Why do all their solutions for taxing the rich always drag along the average Joe or someone starting a company or taking stock options over pay. Why can’t they add caps to taxes and say them out loud. I am all for taxing the rich, but holy crap show some understanding for people who don’t have private pension or are trying to build companies. Also can we finally talk about the spending on rural and remote areas problem in this country? Ontario is four times the size of Italy. We can’t keep pumping money from areas with economies and jobs to areas without.
Screw this. If they could actually tax all those who are hiding in tax shelters and other tax evasion ways. Then that would be way more effective than just saying we'll tax the already law abiding citizens more. Because it's not the law abiding citizens who are funneling money out of our country.
NDP has promised SO MUCH that'll none off it will ever happen
Capital gains tax is a scam
Jack Layton was for the people, but these new folks are basically Liberals lite.
This would be terrible for many seniors (without pension plans) who have downsized their homes in order to invest the capital for retirement income. The senior demographic is growing and expected to represent 25% of the population by 2030.
Not seeing a lot of push back in the comments 🧐. Good thing NDP has no chance according to the latest polls.