Millions of Canadians to Pay More in Taxes

Yesterday’s budget was proclaimed to get after the wealthy. According to the government, only .1% of the population was hit by the new capital gains tax.

Either they can’t do basic math, or they were lying to Canadians.

Some 10% or more of Canadians own more than one home. It could be the cottage you bought some years ago and now use for family gatherings, or that duplex you bought to help subsidize your retirement.

If you had purchased that cottage for $250,000 10 years ago and sold it for $750,000 now, here’s how you would be taxed.

For the first $500,000, you would pay no extra tax. You would pay nothing on the first $250,000 as that is what you paid for it. On the next $250,000, you would pay the current capital gain of approximately $65,000. On the next $250,000 in gain, however, you would pay $90,000 or an extra $25,000. So, yesterday’s new tax would cost you an additional $25,000.

Remember, when you leave the planet, your children or anyone who inherits the property will pay the tax as if it were sold on the date of your death.

The numbers above are approximate, so check with your accountant to be sure of the exact amounts.

But instead of the 40,000 Canadians reported to be impacted by the new tax, it’s closer to 4 million of us.

Most don’t know it yet.

We all have until June 24 before the tax kicks in, but there isn’t much you can do. If you try to sell your cottage before the effective date of June 24, you will likely take a hit. Many will try to do that.

Prices of cottages should plunge.  

Was it a lie, or can the finance minister not do basic math?

I think we all know the answer. 

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