Prime Minister Carney Cancels Capital Gains Tax Hike

OTTAWA – Prime Minister Mark Carney announced today that the federal government will not proceed with the proposed increase in the capital gains inclusion rate. The decision comes as part of the government’s broader strategy to boost private investment, strengthen economic growth, and support entrepreneurs, builders, and small business owners across the country.

The proposed hike in the capital gains inclusion rate had been a point of contention, particularly among small business owners and investors concerned about its potential impact on economic activity. By reversing course, the government aims to incentivize risk-taking and ensure Canada remains a competitive environment for investment and job creation.

Additionally, the government will maintain its planned increase in the Lifetime Capital Gains Exemption (LCGE) limit to $1,250,000, benefiting entrepreneurs selling small business shares, as well as those in farming and fishing industries. The legislative process for this adjustment will proceed in the coming months.

My government is cancelling the capital gains tax hike. We’re going to incentivize builders, innovators, and entrepreneurs to grow their businesses right here in Canada and create more good-paying jobs.

It’s time to build the strongest economy in the G7.

— Mark Carney (@MarkJCarney) March 21, 2025

Carney framed the decision as a commitment to making Canada a more attractive place for investment and business growth.

“Canada is a country of builders. Cancelling the hike in capital gains tax will catalyze investment across our communities and incentivize builders, innovators, and entrepreneurs to grow their businesses in Canada, creating more higher-paying jobs. It’s time to build one Canadian economy – the strongest economy in the G7.”

The announcement signals a shift in approach from the new government, prioritizing policies aimed at accelerating development, encouraging innovation, and driving economic competitiveness. The move is expected to resonate with the business community, particularly in sectors reliant on capital investment.

Economic and Political Reactions

Industry leaders and financial analysts are likely to react positively to the reversal, citing improved investor confidence and a more stable fiscal environment. However, opposition parties and advocacy groups calling for wealth redistribution may push back against the decision, arguing that it disproportionately benefits wealthier investors.

With Canada’s economic growth at the forefront of the government’s agenda, this policy shift underscores Prime Minister Carney’s commitment to fostering a business-friendly climate while balancing fiscal responsibility.

GTA Today will continue to monitor reactions and legislative developments as they unfold.