The Canadian government is making a significant change to the capital gains tax. On Monday, Deputy Prime Minister and Finance Minister Chrystia Freeland presented a notice of ways and means motion in parliament, which is the first stage before legislation is tabled.

In April, the 2024 Federal Budget proposed that the inclusion rate on capital gains will increase from 50% to 66.7%. This means more of the profit from the sale of assets, like vacation homes, investment and rental properties, will be taxed at a higher rate.

The change targets individuals earning over $250,000 in capital gains, while principal residences remain exempt. The federal government estimates this will raise $19.4 billion over five years, which will be used to build nearly 4 million new homes and support economic growth, particularly benefiting Millennials and Gen Z.

The changes are expected to go into effect on June 25, 2024 after a vote later this week.