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Quebec follows Ottawa in increasing capital gains inclusion

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Quebec's decision to follow Ottawa's lead and increase its capital gains inclusion rate is drawing criticism from the province's manufacturing sector.

“This measure will affect the investments of manufacturing companies, which is undesirable since we are in a difficult economic period and companies need to invest in modernization and decarbonization,” Véronique Proulx, CEO of Manufacturiers et Exportateurs du Québec, said in a statement.

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Proulx's comments came after the government announced in a statement late Thursday that it would follow Ottawa's lead and adjust its tax system to bring it in line with five measures included in Tuesday's federal budget, including the key measure of increasing the inclusion rate of capital gains.

Ottawa announced that starting June 25, two-thirds instead of half of capital gains – gains from the sale of assets – will be subject to tax. The increase in the inclusion rate applies to capital gains of more than $250,000 from individuals, as well as all capital gains from corporations.

Other measures in the federal budget that Quebec is considering include increasing the cumulative exemption for capital gains and creating an incentive program for Canadian entrepreneurs.

The provincial finance ministry said it intended to apply the changes on the same dates as the federal budget.

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