More than half of Canadian small business owners say that the capital gains inclusion tax hike will affect them, according to the Canadian Federation of Independent Businesses.
The polling, released Thursday, challenges the Liberal government’s claims that only the highest earners in Canada will be affected.
Fifty-five percent of small business owners surveyed said it would eventually affect the sale of their business. Forty-five percent% said it would affect their private investments, and 41% said it would affect investments held within their corporations.
Effective June 25, the capital gains tax hike will force Canadians earning over $250,000 in capital gains annually to pay tax on two-thirds of their gains instead of half. All capital gains for businesses and trusts, regardless of the amount, will be subject to the increase.
Prime Minister Justin Trudeau said the capital gains tax increase would generate an additional $20 billion in revenue, to help offset the $111.2 billion in new spending his government’s budget calls for.
CFIB president Dan Kelly said it’s important for people to know this isn’t just a tax on the super-rich.
“Even the federal budget admits that 307,000 Canadian corporations had net capital gains in 2022 alone. Like individual Canadians, companies often record capital gains as a one-time or occasional event, not every year. The impact of the hike in the inclusion rate needs to be measured over the long term, not just in any one given year,” said Kelly.
The details of the increase weren’t made public until June 10, which Kelly also took issue with.
“With details of the changes in the inclusion rate only coming out in last week’s Ways and Means Motion, business owners were only given two weeks to make informed decisions, leaving virtually no time to change gears,” said Kelly.
The Canadian Federation for Independent Business has called on the Liberals to scrap the increase, or at the very least, grandfather in existing capital gains.
Kelly said he’d also like to see businesses given the same $250,000 threshold that individual investors have.
Many of the concerns were initially stated in a letter the Canadian Federation of Independent Businesses sent to Freeland on May 29.
Small businesses publicly opposing the upcoming capital gains hike join the growing chorus of large businesses, healthcare and tech leaders, farmers, policy experts, and everyday Canadians.
Conservative Lleader Pierre Poilievre warned that the tax increase would result in businesses, jobs, doctors, and food production leaving Canada.
“Running out of money, and worried about a debt downgrade from rating agencies, Finance Minister Freeland has announced a job-killing tax on healthcare, homebuilding, small businesses, and farmers,” said Poilievre.
The CFIB survey comes just a day after different polling showed that almost a quarter of Canadians expect to be hit by the tax hike.
While 23% of Canadians believe they will pay more due to the capital gains inclusion rate over the next five years, the Liberals claim the change would only affect one in 769 Canadians.