CRA Will Apply Capital Gains Tax Changes During Prorogation

The federal government has confirmed that the Canada Revenue Agency (CRA) will continue to implement the capital gains tax changes first proposed in last year’s federal budget, even though those measures have not yet received final approval in Parliament, which is currently prorogued until March 24.

According to the Department of Finance, long-standing parliamentary convention allows taxation proposals introduced by a notice of ways and means motion to be treated as effective for administrative purposes once the motion is tabled. In practice, that means the CRA is authorized to apply the proposed changes while the legislative process remains unfinished, unless Parliament subsequently resumes and the government indicates it will not pursue the measures.

In September, the Liberal government tabled a notice of a ways and means motion that accompanied draft legislation increasing the taxable portion of capital gains. The proposed policy would raise the inclusion rate for capital gains from one-half to two-thirds, and it would apply to individuals with capital gains income above $250,000, while also affecting corporate tax treatment. Because the proposal was introduced through a ways and means motion, Finance officials say the CRA can begin administering the changes for reporting and compliance purposes.

CRA to issue taxpayer forms by January 31

Despite the prorogation of Parliament, the Department of Finance has indicated that the CRA will issue the taxpayer forms and related guidance required to align 2025 reporting with the proposed capital gains rules by January 31. That timetable is intended to give taxpayers, accountants and tax preparers the information and forms they need to meet filing obligations under the draft measures.

Finance officials also made clear that administration of the policy is conditional. If Parliament resumes sitting and the government signals it will not proceed with the proposed capital gains changes, the CRA will halt implementation and withdraw any administrative measures put in place. Until such a decision is made, however, CRA activity will reflect the current notice of ways and means motion.

The Department’s clarification about administrative practice came amid political developments that intensified uncertainty about the fate of the proposal. Prime Minister Justin Trudeau announced his resignation and the decision to prorogue Parliament, an action that cleared the House of Commons docket of bills and motions that had not yet received royal assent. That procedural reset has raised questions about what measures introduced but not enacted will mean for taxpayers while Parliament is suspended.

What this means for taxpayers

For individuals and businesses who may be affected, the practical implications are straightforward: taxpayers should prepare to report capital gains in accordance with the proposed inclusion rate and consult the CRA’s upcoming forms and guidance when preparing their returns. Tax professionals, accountants and financial advisers will be watching for the exact wording of forms and any accompanying explanatory notes so they can advise clients accurately.

At the same time, because the measures have not completed the legislative process, taxpayers should remain alert for any updates from the Department of Finance or the CRA that could change the administrative approach if Parliament reconvenes and the government alters course. Until an official change is announced, the CRA will continue to follow the convention tied to the notice of ways and means motion.

Read more news:

• Changes to Canada’s tax brackets, CPP contributions and more in 2025
• For 2025, experts predict economic growth, but slower gains and more volatility
• Canada has new rules for high-interest loans—here they are
• Changes to flight passenger rights in Canada