Western Standard - July 09, 2024


Capital Gain Tax： Finance Minister Freeland says it’s about intergenerational fairness


Episode Stats


Length

5 minutes

Words per minute

142.1874

Word count

738

Sentence count

25


Summary

Summaries generated with gmurro/bart-large-finetuned-filtered-spotify-podcast-summ .

The Finance Minister says that only 1.4% of Canadian taxpayers will be affected by the new capital gains tax introduced by the Trudeau government. But what does this mean for ordinary people who may get a once-in-a-lifetime capital gain?

Transcript

Transcript generated with Whisper (turbo).
00:00:00.000 Now, Jack, we're talking a lot about companies reinvesting, corporations, paying taxes, but I have a feeling that ordinary Canadians are going to feel this too, even though the finance minister says that it's only a very small and rarefied group at the top of the income charts that will.
00:00:22.160 Well, you, I believe, have done some calculations on how many people will be affected by the capital gains tax and the kind of things that are likely to be subject to capital gains, small businesses, family cottages, those sorts of things.
00:00:40.640 Can you just expand on what it means for ordinary people who may get a once-in-a-lifetime capital gain?
00:00:49.960 How many are there?
00:00:51.960 Well, I think, first of all, the minister was very wrong in the way that the data was reported, where she said only 1.4% of taxpayers will be affected.
00:01:05.960 And this kind of gives an idea that the people who get over $250,000 in capital gains because the new rate applies to only capital gains in excess of $250,000.
00:01:20.580 And it was the impression that was given that these people tend to get capital gains like that every year, and so it's the same small number of people that are going to be affected.
00:01:33.200 That was totally wrong because on a lifetime basis, there are many people that get more than $250,000 of capital gains in a year, but they may only do it once or twice in their lifetime.
00:01:47.380 A good example of that, of course, is someone who buys a cottage in 1980, and let's say the cost of that cottage was $100,000, and then they sell it for 45 years later for, let's say, $500,000.
00:02:03.340 So there's a capital gain of $400,000, but some of that is just simply due to inflation, and often this kind of money is what people use for their retirement as well, just like all the money that's put into a pension fund or an RSP.
00:02:19.680 There's a huge amount of money that pays out an annual pension every year.
00:02:25.900 So when you actually look at the data, and I did this, there's a lot of people who without the $250,000 in capital gains, and this was just in the recent data,
00:02:41.140 if they didn't get over $250,000 in capital gains, their actual income, taxable income, half the population was below $100,000, so a lot of middle class people were affected.
00:02:55.040 In fact, 10% of the population would have only had $18,000 in taxable income, and that might be surprising,
00:03:02.160 but I'm not surprised because there could be people who die leaving in the state that's subject to the capital gains tax at that point,
00:03:09.660 and they don't have a lot of income at that point, and it also could be farmers, for example.
00:03:14.760 They tend not to have a lot of money every year, not a lot of cash, but the one thing they do have is land.
00:03:21.360 And of course, when they die, or if they sell their land, and that's the time when they get a lot of money through, you know,
00:03:28.380 by selling their property, which is, of course, part of their retirement income when they do retire.
00:03:35.440 So there's a lot of middle class people that are going to be affected.
00:03:39.220 So I found, I was given some data that Statistics Canada has put together,
00:03:45.240 and what it showed is that in 2011, for example,
00:03:50.740 there were about 44,000 people that had capital gains more than $250,000.
00:04:00.120 However, out of that 44,000, two-thirds only claimed capital gains of that amount in that year.
00:04:09.700 In the next 10 years, they didn't claim it at all.
00:04:12.900 So two-thirds of that 44,000 people only claimed capital gains more than $250,000 in just one year
00:04:22.040 and had less than that in other years.
00:04:25.440 We didn't have any, you know, we didn't have capital gains, so we'd go over the $250,000 mark.
00:04:31.980 And so that's, I did a calculation, sort of taking into account the whole population,
00:04:38.100 to find how much on a lifetime basis people actually do pay this capital gains tax rate
00:04:44.560 that will now be over $250,000.
00:04:48.920 And I calculated, and this is a rough estimate, I admit,
00:04:52.780 because I didn't have all the data I would have liked,
00:04:55.800 but I estimated about 1.25 million people are affected by the capital gains tax increase for this year.
00:05:03.800 Not just 44,000 people.
00:05:08.100 Bye.