Fresh Hope for Abolition of Canadian Capital Gains Tax

Stephen Harris

1 November 2006

Canada's Conservative Minister of Finance, Jim Flaherty, has said that the government will proceed with its attempt to cut capital gains tax after postponing the measure for further consultation earlier in the year. Mr Flaherty told members of the press that his department is "looking at a series of possibilities" with respect to capital gains which could be included in next year's budget. The Conservatives initially proposed to abolish capital gains tax on all profits that were reinvested within six months. The change was opposed because of the potential cost in terms of foregone tax revenues and the proposal was postponed in March after Mr Flaherty conceded that the government will find it "challenging" to push it through in the short term. Nonetheless, Flaherty said that the government will persist with the policy, arguing that it would help to free up "trapped" capital and encourage more investment throughout the economy. "Canadians who invest, or inherit cottages or family heirlooms, should be able to sell those assets and plough their profits back into the economy without taking a tax hit," he said. Mr Flaherty added that the government plans to release a fiscal update later this month.