The Canadian Finance Minister just dropped a bombshell— the capital gains tax hike is now delayed until January 1, 2026.
This tax hike—raising the inclusion rate from 50% to 66.67%—was introduced in June 2024, but it’s now facing legal and political challenges that could stop it altogether.
Conservative leader Pierre Poilievre has vowed to repeal the tax if elected—but with obstacles piling up and this new deferral, he might not even have to.
Adding to the uncertainty, President Donald Trump has imposed new tariffs on imports from Canada. This latest trade dispute puts even more pressure on the Canadian economy, making the capital gains tax hike even less likely. With businesses and investors already bracing for economic fallout, the government may have to prioritize defending Canadian industries over pushing through an unpopular tax increase.
The Canadian Taxpayers Federation is also taking the government to court, arguing that the CRA has no legal basis to collect the higher tax since the legislation was never officially passed. If the courts side against the government, the increase could be struck down before the next election.
Meanwhile, support within the Liberal Party is crumbling. Chrystia Freeland, the former finance minister who introduced the change, now says she’d scrap it if she becomes Liberal leader. Other leadership candidates are distancing themselves from the policy as well.
With the latest deferral, court battles, and political shifts, the odds of this tax increase never taking effect are growing. But nothing is set in stone yet, and the new capital gains could still become a reality.
So what should investors, business owners, and retirees do now? In this video, I’ll break down the latest developments and how you can prepare.
Pierre Poilievre’s Stance and Election Odds
Pierre Poilievre has called the tax hike a direct attack on investors, business owners, and retirees, arguing that it hurts investment, slows business growth, and makes Canada less competitive. He has promised to reverse it if elected.
But how likely is a Poilievre victory? I’m not a political expert, so instead of guessing, I looked at betting markets—which tend to be somewhat accurate at predicting elections.
For example, In the 2024 U.S. presidential election, as you likely know, former President Donald Trump defeated Vice President Kamala Harris. Leading up to the election, several betting platforms had shown Trump as the favourite, with odds reflecting a higher probability of his victory. For instance, Polymarket displayed a 65% chance of a Trump win prior to the election.
Currently, Poilievre’s Conservative Party has a staggering -2000 odds to win, meaning he has around a 95% chance of victory. The next federal election is set for October 20, 2025, so it’s possible that the tax changes could be reversed before the end of this year.
With odds this strong, a Conservative victory seems highly likely, making a tax reversal possible. However, given the court challenges and internal Liberal divisions, this tax hike could be overturned before Poilievre even takes office.
Before we continue, if tax savings are on your mind, check out our guide on 7 powerful income-splitting strategies to legally reduce your tax bill.
Should Canada Reverse the 66.67% Capital Gains Tax Hike?
Let’s look at the key reasons for and against rolling back the tax hike.
Reasons Against Reversal
- Revenue loss – The tax was expected to generate about $17 billion over five years for housing, dental care, and pharmacare. Reversing it means the government must find new revenue or cut spending.
- Favors the wealthy? – The Liberals framed this as a way to make wealthier Canadians pay more. A rollback could be seen as benefiting the top 1%, making it politically risky.
- Uncertain economic impact – Even if reversed, investment and business growth may not increase significantly due to high corporate taxes, rising wages, and economic uncertainty.
Reasons for Reversal
- Hurts business growth – Higher capital gains taxes discourage investment, slow business exits, and limit reinvestment in Canada.
- U.S. tariff threats – Donald Trump has warned of new tariffs on Canadian goods. Combined with Canada’s tax hike, this could push businesses and investment south.
- Already high business costs – With corporate taxes, regulations, and labor costs already high, this tax increase adds another burden, making it harder for companies to grow, sell, or reinvest.
Potential Scenarios: Court Challenges and Political Outcomes
The future of the capital gains tax depends on both legal and political developments. Here are three possible outcomes:
πΉ Best Case – Full reversal through the courts or a new government
- If the judicial review succeeds, the courts could block the CRA from enforcing the higher inclusion rate, effectively reversing the tax hike before the next election.
- If Poilievre wins and follows through on his promise, the inclusion rate would likely return to 50% for everyone.
- This would benefit investors, business owners, and retirees, reducing tax burdens on business sales, real estate, and investments.
πΉ Middle Ground – Partial rollback or a temporary freeze
- The courts could delay the tax hike while the case is being reviewed, forcing the government to adjust or scale back the policy.
- If a new Liberal leader distances themselves from the tax, they might reduce the inclusion rate slightly but not restore it fully back to 50%.
- Poilievre, if elected, might lower the inclusion rate but not all the way back to 50%, applying different rules for corporations vs. individuals.
πΉ Worst Case – No reversal, and legal challenges fail
- If the courts rule in favour of the government, the CRA will continue collecting at the higher rate, and the inclusion increase will remain.
- If Poilievre wins but doesn’t follow through—due to economic pressures or competing priorities—the tax stays in place.
- If the Liberals remain in power, a reversal might be off the table.
- Businesses and investors will have to adjust to the new tax reality and plan accordingly.
While a full reversal is possible, investors and business owners should prepare for multiple outcomes—especially since legal battles and political promises don’t always translate into quick policy changes.
Given the widespread opposition to the capital gains tax increase and the multiple legal and political challenges it faces, plus on top of this the new deferral to Jan 1, 2026 and the Trump tariffs, I’d estimate a 80% chance of a full reversal, a 5% chance of a partial rollback, and a 15% chance that the tax remains unchanged.
What Should Investors and Business Owners Do?
Since this tax is highly likely to be reversed, the best approach is to prepare for all scenarios.
β Stay informed – Keep track of court rulings, political shifts, and election timelines. Any reversal will likely take some time.
β Use tax-efficient strategies – Protect your wealth by maximizing TFSAs, RRSPs, and corporate structures to reduce taxable capital gains.
β Plan for multiple outcomes – If you’re selling a business or real estate, consider whether to sell now in case they do decide to go forward with the tax.
Between court challenges, political infighting, and a possible Poilievre victory, this tax hike is on shaky ground.
That said, nothing is guaranteed, so investors and business owners should plan strategically to protect their wealth—just in case this tax sticks around longer than expected.
Tax changes can be unpredictable, but your financial strategy shouldn’t be. At Blueprint Financial, we specialize in helping investors, business owners, and retirees minimize taxes and build a solid financial future.
π Want expert guidance? Visit our website to book a strategy session with our team. Don’t leave your financial future up to government decisions—plan ahead, save money, and secure your wealth.
If youβre looking for other ways to reduce your taxes in Canada, check out our video on how to legally pay less tax—you won’t want to miss these strategies!