Trudeau prorogues parliament, putting proposed capital gains changes in limbo

With Prime Minister Justin Trudeau announcing the prorogation of parliament, doctors are in a wait-and-see mode as to whether this will finally kill the Liberal government’s proposed increases to the capital gains inclusion rate.Trudeau announced on Monday he would be resigning as prime minister and Liberal leader, while proroguing parliament until March 24, 2025 to give his party time to pick his successor.Under the current rules, only 50% of capital gains are included in taxable income—this is known as the inclusion rate. The proposed tax changes would have increased the inclusion rate for corporations to 67%. For individuals, the higher inclusion rate would have applied to capital gains income above $250,000. But the move to prorogue parliament has also killed all bills that were still in the legislative process, including the one that would have implemented these tax changes. The tax proposal was widely maligned by doctors’ groups, such as the Canadian Medical Association, who said the proposal would hurt physician recruitment and retention, given more than half of physicians in Canada are incorporated.Read: Proposed tax changes will hurt physician recruitment, retention: CMA prezWhen Parliament resumes in March, the government could reintroduce the bill, but it’s unclear if they’ll be able to pass the bill before a confidence vote which could topple the government.“If [the Liberals] get to fire the first shot, which I think they probably do, then they might do that and the NDP would probably back them up because it's a tax increase. So that could happen. But they’d have to have a bill, table it, and pass it through a vote,” Dr. Mark Soth, a Hamilton, Ont.-based practicing academic intensivist who writes the Loonie Doctor physician finance blog, told the Medical Post on Monday.NDP Leader Jagmeet Singh has committed to voting no-confidence at the earliest opportunity, making it more likely that the government could fall without the bill getting passed.Despite the fact that the bill hasn’t passed, the Canada Revenue Agency (CRA) has still been administering the new capital gains inclusion rate. In an email statement to the Medical Post on Tuesday, a spokesperson for the Department of Finance said it is “consistent with standard practice” for the CRA to start administering new taxation proposals after the the government tables a notice of ways and means motion, which is the Parliamentary procedure to introduce changes to the tax system.“In the event that Parliament is prorogued, or dissolved, the CRA will generally continue to administer proposed legislation consistent with its established guidelines,” Finance Canada said. “Upon resumption of Parliament, if no bill is passed in the House of Commons, and the government signals its intent to not proceed with the proposed measures, the CRA would cease to administer them.”Two weeks ago, the CRA told the Financial Post it would still administer the measure even if Parliament prorogues, and would only stop if the government due to non-confidence motion “directly related to the proposed measure” or if the government “signals its intent not to proceed.”If that happens. Dr. Soth says physicians who still ended up paying the higher capital gains tax can refile their taxes for a refund.“We've all had to operate as if it's been implemented,” Dr. Soth said. “(If) it turns out that it dies and you did have capital gains over the past year which were subjected to the higher inclusion rate, then your accountant can refile your taxes to get have less corporate tax and more of a go to your capital dividend account.”“There's nothing for us to do . . . other than wait with bated breath and hope that it doesn't get passed.”

Trudeau prorogues parliament, putting proposed capital gains changes in limbo

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